Environmental pricing reform

Environmental pricing reform (EPR) or Ecological fiscal reform (EFR) is a fiscal policy of adjusting market prices to account for environmental costs and benefits; this is accomplished by the utilization of any forms of taxation or subsidy to incentivize or disincentivize practices with environmental impacts.[1][2]

Part of a series about
Environmental economics
Carbon price
Climate change
Concepts
Energy transition
Policies

An externality (a type of market failure) exists where a market price omits environmental costs and/or benefits. In such a situation, rational (self-interested) economic decisions can lead to environmental harm, as well as to economic distortions and inefficiencies.[3]

Environmental pricing reform can be economy-wide, or more focused (e.g. specific to a sector (such as electric power generation or mining) or a particular environmental issue (such as climate change). A "market-based instrument" or "economic instrument for environmental protection" is an individual instance of Environmental Pricing Reform. Examples include green tax-shifting (ecotaxation), tradeable pollution permits, or the subsidization of markets for ecological services.[4]

See also

References
  1. Thompson, David (May 2010). "The Power of Prices and the Failure of Markets" (PDF). The Edmonton Sustainability Papers. City of Edmonton. Archived from the original (PDF) on 10 May 2015. Retrieved 3 January 2015.
  2. Beauregard-Tellier, Frédéric (17 March 2006). "Ecological Fiscal Reform". Parliament of Canada. Archived from the original on 3 January 2015. Retrieved 3 January 2015.
  3. Mankiw, Gregory N. (2012). Principles of Economics (6th ed.). Mason: South-Western Cengage Learning. pp. 196. ISBN 9780538453059.
  4. OECD (2015-06-25). Taxing Energy Use 2015: OECD and Selected Partner Economies. Taxing Energy Use. OECD. doi:10.1787/9789264232334-en. ISBN 978-92-64-23232-7.


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