Environmental economics
Negative externality
A cost imposed on others that is not fully reflected in the decision-maker’s private costs.
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Pollution, shared resources and the economics of a changing planet.
How do we value and protect shared resources?
Start with a concept below, or follow a connected learning path. Definitions are starting points: assumptions and evidence determine how an idea applies.
Environmental economics
Carbon tax
A price imposed on greenhouse-gas emissions or their carbon content to create an incentive to reduce them.
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Emissions trading
A system in which covered emitters trade allowances under an emissions limit.
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Common-pool resource
A resource that is difficult to exclude people from using, but whose use reduces what remains for others.
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Public good
A good that is non-rival in use and difficult to exclude non-payers from enjoying.
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Social cost
The full cost of an activity, including private costs and external costs imposed on others.
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Marginal abatement cost
The additional cost of reducing one more unit of pollution.
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Environmental discounting
Using a discount rate to compare benefits and costs occurring at different times.
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