Green Accounting in Europe

Green Accounting in Europe

A Comparative Study, Volume 2

The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Anil Markandya and Marialuisa Tamborra

Using spatially desegregated data on measures of pollution to derive economic damage estimates, the main purpose of the book is to gauge the environmental damage sustained as a result of economic activities and to offer an insight into how the information generated can be used in conjunction with conventional economic accounts. The first few chapters review recent developments in both green accounting and pathway analysis. The book goes on to evaluate the progress made in estimating dose response functions and valuing environmental damages. The authors discuss the methodology used for the estimation of damages caused by ambient air pollution and the cost of defensive expenditures. They also present the results of the analysis and draw important policy conclusions for environmental accounting, particularly in the EU.

Chapter 14: Marginal Cost Estimates of Greenhouse Gas Emissions

Richard S.J. Tol, Samuel Fankhauser and Onno Kuik

Subjects: economics and finance, environmental economics, environment, environmental economics


* Richard S.J. Tol, Samuel Fankhauser, Onno Kuik and Joel B. Smith 14.1 INTRODUCTION Many economic activities generate waste in the form of greenhouse gases that are emitted into the atmosphere. The build-up of greenhouse gases in the atmosphere is believed to affect the world’s future climate. Climate change continues to figure prominently as one of the major environmental concerns for the future. Some people argue climate change is a problem because it could cause unacceptable hardship for particularly vulnerable populations (for example, those living on small island states). Others are concerned about the potential threat to certain unique and valuable systems (such as coral reefs). Still others worry that climate change will increase the probability of large-scale climate instabilities (for example, a shutdown of the Gulf Stream), and will have costly impacts on economies through floods and storms. A fourth group wonders about the total (or aggregate) impacts of climate change. They argue that emission reduction is costly too, that balancing abatement costs against the damages avoided from climate change is a way of determining what action should be taken (cf. Smith et al., 2001). The subject of this chapter – the marginal costs of climate change – particularly addresses the need for and problems in calculating aggregate costs of climate change. Economic activities that emit greenhouse gases generate intertemporal externalities. The future damage of current emissions should be accounted for in a system of green accounts. A key challenge when assessing the impacts of climate change is synthesis, that is,...

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