Environmental Economics Glossary

The reduction or elimination of pollution or environmental damage, often measured in terms of cost per unit reduced.

A market-based regulatory system that caps total emissions and allows firms to buy and sell emission permits.

The total amount of greenhouse gases emitted directly and indirectly by an individual, organization, event, or product.

A tax levied on the carbon content of fuels or on CO2 emissions, designed to reduce greenhouse gas output.

The proposition that well-defined property rights and low transaction costs allow private parties to resolve externalities efficiently.

Regulatory approach that directly prescribes environmental standards or technologies rather than using market incentives.

A resource that is rivalrous but non-excludable, making it susceptible to overuse, such as fisheries or groundwater.

A survey-based technique for estimating the economic value of non-market environmental goods and services.

A systematic method of comparing the costs and benefits of a policy or project, typically expressed in monetary terms.

The rate used to convert future costs and benefits into present values for economic comparison.

The benefits that humans derive from natural ecosystems, including clean water, pollination, climate regulation, and recreation.

A government-issued authorization allowing the holder to emit a specified quantity of a pollutant.

A cost or benefit that affects a party who did not choose to incur that cost or benefit through a market transaction.

The tendency for individuals to benefit from a shared resource or public good without contributing to its provision.

A measure of economic output adjusted to account for environmental degradation and natural resource depletion.

A method of estimating environmental values by observing their effect on market prices, such as real estate values.

The cost of reducing one additional unit of pollution, which varies across firms and technologies.

A situation in which the free market fails to allocate resources efficiently, often due to externalities, public goods, or information asymmetry.

The world's stock of natural resources and ecosystems that yield a flow of goods and services over time.

The economically efficient level of pollution where the marginal cost of abatement equals the marginal damage cost.

A tax on activities that generate negative externalities, set to equal the marginal external cost at the optimal output level.

The principle that the party responsible for producing pollution should bear the costs of managing it.

A good that is non-rivalrous and non-excludable, meaning one person's use does not reduce availability to others.

An estimate of the total economic damage caused by emitting one additional ton of carbon dioxide.

Meeting present needs without compromising future generations' ability to meet their own needs.