the pasture equates to environment, the cows are industry [...]That's your problem right there. You're treating the cows as somehow separate from the environment. For this example, let's consider the pasture as an island so that you have nowhere else to go. The actual externality of cows eating grass is poop, which fertilizes the soil to some degree but can poison it in excess. Overgrazing is not an externality as such; it's depletion, and then all your cows die and so do you. Maybe you get to eat a few of the cows while you wait for more grass to grow but after they're gone you won't be able to live on the grass. The benefits of temporarily having more cows than you can sustainably graze is an illusion, because you can't eat them all as soon as the grass runs out. You too are part of the ecosystem.
(Ok, in the real world you have other land available, trade, and so on. But that just distributes the problem over a large population and area, postponing the point where carrying capacity becomes an issue. And more often than not, profits are retained by one party while pollution is dumped on another whose suffering the profiteer has no desire to alleviate. In this example that particular cheat code is not operational.)
There are two reasons this might happen: external forcing of the ecosystem (drought, being hit by a meteor etc.), or letting your herd expand faster than the pasture can grow new grass, which is essentially borrowing time from the future and dying when you've done so. The uncertain risk of external forcing inclines us to hedge against its possibility by accumulating excess, but since the known and increasing risk of feedback can't be directly compared with the uncertain external risk people tend to 'rationalize it' by making irrational appeals to possibility rather than probability. The most obvious example of this today is people who object to any and all environmental regulation by dismissing predictions of environmental problems as too vague while simultaneously insisting that mitigating them will definitely lead to economic catastrophe, even though weather and climate modeling is considerably more rigorous than economic modeling and the extremely harsh and obvious value and life destruction of environmental disasters.
More pollution is necessarily worse. You can hedge it in the short term, but in the long term you mitigate it or you die - and while in the long run, we are all dead, dying faster than you need to is maladaptive. Running the system too fast increases entropy and that is a one-way ticket.