Ecological fiscal reform

Environmental pricing reform

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

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.

Environmental pricing reform can be economy-wide, or more focussed (e.g. specific to a sector or environmental issue such as climate change. A "market based instrument" or "economic instrument for environmental protection" is an individual instances of Environmental Pricing Reform. Examples include green tax-shifting (ecotaxation), tradeable pollution permits, or the creation of markets for ecological services.

A similar term, "ecological fiscal reform" differs in more narrowerly dealing with fiscal (i.e. tax) policies, and arguably in its focus on ecology instead of environment.

See also


  • Redefining Progress -
  • Sustainable Prosperity -
  • Green Budget Germany -
  • OECD/EEA database on instruments used for environmental policy and natural resources management -

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