If plant owners had to pay for externalities they would make sure the plant doesn't release pollution.

Does money really solve all problems though? This is what is a bit naive about economics. Would people living downwind from the plant be ok with getting XX million dollars if they had to die early from cancer and miss out on 40 years of their lives? Why not move the plant somewhere where it's not getting anybody sick instead of trying to solve all problems with giving victims money. Money is not the universal and only solution to all problems.

Money's not a universal solution. But in this particular case it would help. If re plant owners had to pay for the damage they inflicted on those around them, then given a choice between a site where they had to pay because people were there and a site where they did not have to pay because people were not there, what would they choose?

Also, enforcing economic solutions does not necessarily prevent adding other non economic solutions. For an economic activity, such as production of these chemicals, economic solutions can go a really really long way to bettering behavior.

i think the point is that the plant would become prohibitively expensive so the economical and profitable thing would be to produce in a cleaner way.

Unfortunately the other option is to move the plant to the third world and kill poor people who can't afford to fight back.