Environmental double dividends

environmental standards might be lower under such a scheme, in practice it has been shown to be an efficient and low-cost way to meet environmental goals. (OECD, 1994b.)

environmental double dividends This refers to the fact that when efforts are made to reduce a certain type of pollutant, emissions of other types of pollutant will be reduced as a by-product. For example, greenhouse gases (GHGs) tend to be associated with other pollutants and toxic substances. Action taken to reduce GHG emissions will also reduce the other pollutants. These may also be called ancillary or secondary benefits.

The environmental double dividend should not be confused with the double dividend. This measures the economic benefits, in terms of increased efficiency of resource allocation, which follow from using the revenue from an environmental tax to reduce other distortional taxes such as those on labour. The first dividend derives from reducing the distortion from having unpriced environmental goods, and the second comes from reducing the distortion of taxes on desirable factors, such as labour. (Goulder, 1995.)

environmental dumping This occurs when countries with relatively lax environmental standards export goods to countries with relatively stricter standards. The exporting country benefits from a competitive advantage which accrues because the environmental costs of producing goods are not included in the products' prices. There is an effective subsidy to production. (Lang and Hines, 1993; Krishnan et al, 1995.) This is similar to the pollution haven debate.

environmental economics Environmental economics follows neoclassical economics in having as its central concern the efficient allocation of scarce resources among competing uses. This branch of economics brings scarce environmental resources into mainstream economic analysis. It addresses issues of pollution control, the efficient setting of emissions standards, waste management and recycling, the industrial activity of environmental externalities, the conservation of natural resources, the valuation of natural resources, and so on. The objective of environmental economics is to identify policies which will move the economic system towards an efficient allocation of natural resources.

Environmental economics is distinct from ecological economics to the extent that it adheres more closely to conventional, neoclassical economics. That is, it emphasizes the desirability of attaining environmental objectives by means of using market mechanisms, like adjusting price signals, in order to influence the behaviour of households and firms. There is, however, a significant overlap between environmental and ecological economics. (Tolba and El-Khaly, 1992.)

environment-economy interaction The interdependence between the environment and the economy arises from the fact that the environment provides the raw materials for economic activity as well as directly providing welfare, and because the way in which the economy is managed impacts on the environment. Thus, environmental damage caused by economic activity will in turn affect both welfare and the performance of the economy.

environmental effectiveness principle The environmental effectiveness of a policy or instrument used in environmental regulation may be measured by

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