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Definition and Sociological Motivations
editEnvironmental pricing reform (EPR) is the process of adjusting market prices to include environmental costs and benefits.[1] In theory, if prices are adjusted in this regard, both the environment and individuals will benefit. Pricing reforms can be progressive and tailored to individual communities in order to produce these benefits, avoiding adverse distributional effects.[2] One study suggests that by shifting the tax burden to polluters rather than employment, it is possible to benefit both the environment and aid in higher employment rates.[3]
Examples
editEnvironmental 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.[4]
Ecological Fiscal Reform
editA 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.[5] One example of this involves raising taxes on motor fuels as a way to reduce pollution as well as increase tax revenue.[6]
Conflicts
editAn 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.[7] Such inefficiencies are illustrated in irrigation and water pricing in Europe, where more efficient and cheap irrigation tactics, while more convenient and accessible, can possibly have detrimental effects on the environment.[8]
- ^ 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.
- ^ Yusuf, A.A (2008). "The distributional impact of environmental policy: the case of carbon tax and energy pricing reform in Indonesia" (PDF). EEPSEA Research Report – via EBSCO Host.
- ^ Barker, Terry; Gardiner, Ben (1996), Carraro, Carlo; Siniscalco, Domenico (eds.), "Employment, wage formation and pricing in the European Union: Empirical modelling of environmental tax reform", Environmental Fiscal Reform and Unemployment, Fondazione Eni Enrico Mattei (FEEM) Series on Economics, Energy and Environment, Dordrecht: Springer Netherlands, pp. 229–272, doi:10.1007/978-94-015-8652-8_9, ISBN 978-94-015-8652-8, retrieved 2020-12-04
- ^ 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.
- ^ Beauregard-Tellier, Frédéric (17 March 2006). "Ecological Fiscal Reform". Parliament of Canada. Archived from the original on 3 January 2015. Retrieved 3 January 2015.
- ^ "Environmental Fiscal Reform: Progress, Prospects and Pitfalls" (PDF). Organisation for Economic Co-operation and Development.
- ^ Mankiw, Gregory N. (2012). Principles of Economics (6th ed.). Mason: South-Western Cengage Learning. pp. 196.
{{cite book}}: Cite has empty unknown parameter:|coauthors=(help) - ^ Massarutto, Antonio (2003). "Water pricing and irrigation water demand: economic efficiency versus environmental sustainability". European Environment. 13 (2): 100–119. doi:10.1002/eet.316. ISSN 1099-0976.