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Environmental Economic Concepts

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Environmental Impact Assessment (EIA)

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A process used to evaluate the environmental effects of a proposed project or development, taking into account inter-related socio-economic, cultural, and health impacts.

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Command-and-Control Regulation

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Government policies that dictate precise limits or commands to achieve environmental objectives, often without consideration of cost or efficiency.

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Sustainable Development

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Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It emphasizes a balance between environmental, economic, and social goals.

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Payment for Ecosystem Services (PES)

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A market-based conservation tool designed to provide financial incentives to landowners for the preservation of natural resources, paying for the ongoing provision of ecosystem services.

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Tragedy of the Commons

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A situation where individual users, acting independently according to their own self-interest, deplete or spoil shared resources through collective action.

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Externality

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A cost or benefit arising from an economic activity that affects an unrelated third party; can be positive or negative.

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Discount Rate

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The rate at which future benefits and costs are discounted to present value, reflecting the time preference for money and investment risk.

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Environmental Risk Assessment (ERA)

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A process to evaluate the likelihood of adverse effects stemming from exposure to chemical, physical, or biological agents in the environment.

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Integrated Assessment Models (IAMs)

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Mathematical models that combine knowledge from multiple disciplines to analyze complex environmental issues, especially climate change, and assess policy impacts.

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Greenwashing

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The practice of making an unsubstantiated or misleading claim about the environmental benefits of a product, service, technology, or company practice.

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Cap and Trade

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A market-based policy tool that aims to reduce greenhouse gases by setting a cap on emissions and allowing the trading of emission permits.

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Resource Scarcity

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A situation where resources are insufficient to meet all current and future demands.

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The Marginal Cost of Abatement

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The cost to reduce an additional unit of pollution; often increases as more abatement occurs.

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Ecological Footprint

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A measure of human demand on Earth's ecosystems, representing the amount of natural capital used by a given population or activity.

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Circular Economy

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An economic system aimed at minimizing waste and making the most of resources by reusing, repairing, refurbishing, and recycling existing materials and products.

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Biomagnification

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The process by which the concentration of toxic substances increases in each successive link in the food chain.

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Environmental Justice

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The fair treatment and meaningful involvement of all people, regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.

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Biological Diversity (Biodiversity)

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The variety of life in the world or in a particular habitat or ecosystem, including species diversity, genetic diversity, and ecosystem diversity.

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Environmental Kuznets Curve

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A hypothesized relationship between environmental quality and economic development where pollution rises with income, but eventually falls after reaching a certain level of income.

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Carbon Tax

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A tax placed on carbon content of fuels to internalize the externality of greenhouse gas emissions.

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Green GDP

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A measure of economic growth with the environmental costs of growth subtracted from the GDP.

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Social Cost of Carbon (SCC)

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An estimate of the economic costs associated with a small increase in carbon dioxide emissions, including tangible effects like crop losses and intangible effects like the loss of biodiversity.

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Non-market Valuation

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Techniques used to estimate economic values for ecosystem services that are not provided in market transactions.

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Ecosystem Services

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The benefits people obtain from ecosystems, including provisioning, regulating, cultural, and supporting services.

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Coase Theorem

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A theory positing that if property rights are well-defined and transaction costs are low, negotiations between parties can lead to efficient outcomes regardless of who holds the rights.

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