Environmental pricing reform

From Wikipedia, the free encyclopedia
Jump to navigation Jump to search

Environmental pricing reform (EPR) is the process of adjusting market prices to include environmental costs and benefits.[1]

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.[2]

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 creation of markets for ecological services.[3]

A similar term, "ecological fiscal reform" differs in more narrowly dealing with fiscal (i.e. tax) policies as opposed to using non-fiscal regulations to achieve the government's environmental goals.[4]

See also[edit]


  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. ^ Mankiw, Gregory N. (2012). Principles of Economics (6th ed.). Mason: South-Western Cengage Learning. pp. 196.
  3. ^ 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.
  4. ^ Beauregard-Tellier, Frédéric (17 March 2006). "Ecological Fiscal Reform". Parliament of Canada. Archived from the original on 3 January 2015. Retrieved 3 January 2015.

External links[edit]