Environmental Economics

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Our Work

Our work covers a range of issues bringing economic analysis into European policy making. We are at the forefront in the analysis and valuation of biodiversity and ecosystem services, including providing a substantial contribution to the key international initiative 'The Economics of Ecosystems and Biodiversity' (TEEB). We also carry out substantial work on the use of market-based instruments, the cost and benefits of environmental policy, the development of sustainability indicators and the uptake of eco-innovation.

In light of current and future environmental challenges and the acknowledged need for Europe to follow a more sustainable growth path, our research aims to contribute to the integration of environmentally-sound economic signals into decision making, encourage resource efficiency and recognise the true value of environmental resources and ecosystems.

IEEP is at the forefront in the analysis of ways of valuing biodiversity and ecosystem services. Institute staff led by Patrick ten Brink have made a substantial contribution to the important international initiative entitled The Economics of Ecosystems and Biodiversity (TEEB), especially the reports addressing policy questions. Our Environmental Economics Programme collaborates extensively with our Biodiversity Programme to improve policy makers’ and the general public’s understanding of the benefits of nature and biodiversity. We also help to develop tools and measures that can improve nature conservation on a global scale, such as Payments for Ecosystem Services (PES) and REDD-plus (Reducing Emissions from Deforestation and Forest Degradation).

We recognise the importance of placing the right price on resources so as to increase the sustainability of consumption and production, as well as the importance of appropriately pricing externalities, in line with the polluter-pays and user-pays principles. We have been exploring how to reflect such prices in the markets, notably by examining the use of market-based instruments including environmental taxes and charges and environmental tax reform (ETR). We have also been assessing the potential for reforming environmentally harmful subsidies (EHS) and exploring incentives that reward pro-environmental behaviour, including green public procurement (GPP). We are also exploring the scope for improvement in environmental standards through eco-innovation in a range of research projects.

IEEP aims to understand and assess the benefits and costs of environmental policy, in order to provide a balanced view to policy makers, both within and outside the EU.

We also work on the development and uptake of indicators of sustainability, recognising that well-being and policy effectiveness cannot be measured only in economic terms, but should also take into account environmental and social implications. In this way we can effectively move beyond reliance on Gross Domestic Product (GDP) as a measure of economic welfare towards a more comprehensive evaluation of societal performance.

More about our work in this area...

Latest in Environmental Economics

The Economics of Ecosystems and Biodiversity for Water and Wetlands

This new IEEP-led report presents insights on the importance of wetlands in delivering ecosystem services that are needed to support human life, and also for people’s livelihoods and the world’s economies. The report shows that demonstrating and using the values of ecosystem services related to water and wetlands can lead to better informed, more cost-effective, and fairer decision- making.
The Economics of Ecosystems and Biodiversity for Water and Wetlands

This new IEEP-led report presents insights on the importance of wetlands in delivering ecosystem services that are needed to support human life, and also for people’s livelihoods and the world’s economies. The report shows that demonstrating and using the values of ecosystem services related to water and wetlands can lead to better informed, more cost-effective, and fairer decision- making.
Reforming environmental taxes and harmful subsidies: challenges and opportunities

This policy paper provides a brief introduction and overview to the issues of environmental tax reform and environmentally harmful subsidies and outlines recent developments in the EU. It also outlines the remaining challenges in these areas and the potential role of the 7th EAP in helping to deliver the ETR and EHS agendas.
Improving measurement to manage through the 7th EAP: the role of indicators and accounting

This policy paper provides a brief overview of the context and state of play in the area of “measurement to manage”. It also outlines the needs for future action in this area and the potential role of the 7th EAP in improving the availability and use of indicators and accounts in the EU.
Socio-economic importance of ecosystem services in the Nordic countries

New TEEB-inspired regional assessment (published on 31 January) shows that nature and its ecosystem services are of high socio-economic significance for the Nordic countries. In order to be truly sustainable, Nordic economic systems need to build on a more comprehensive appreciation and understanding of the value of natural capital.
Reforming environmentally harmful subsidies for a resource efficient Europe

The EU has a long-standing commitment to removing or phasing out environmentally harmful subsidies (EHS). However, progress has been slow and EHS remain an issue in most EU countries. The Eurozone crisis and stagnating economic performance in many countries provide an opportunity to put new momentum behind this agenda.
Increasing regional prosperity by investing in nature: Guidance to mainstream biodiversity

Investment in natural capital through the conservation of biodiversity and ecosystems has a lot to offer for regional development. A new publication authored by IEEP provides guidance on integrating biodiversity into EU Regional Development Fund (ERDF) in 2014-2020.
Nature and its role in the transition to a Green Economy

This new IEEP-authored report highlighting the importance of nature to the economy aims to clarify and help mainstream nature’s role in the transition to a green economy in the context of sustainable development and poverty eradication.
Resource mobilisation at the heart of CBD COP discussions

The eyes of the world’s biodiversity community are on Hyderabad as Parties to the Convention tackle the pressing challenges faced in implementing the Strategic Plan for Biodiversity 2011-2020, including mobilising sufficient resources to translate the Plan into concrete action.
Investments in improving the environment and in remediation of environmental damage – Comparative study of different measures funded through the use of economic environmental instruments

The effective utilisation of revenue from market based instruments is a way to achieve both environmental improvements in line with the promotion of a Green Economy, and to mitigate greenhouse gas emissions. Given the existing shortfall in climate finance, the potential to generate revenue through auctioning under the EU-ETS should not be overlooked.
Systemic approach to adaptation to climate change and renewable energy harnessing (Biomass and Mini-hydro)

Biochar has the potential to both mitigate greenhouse gases, and to act as an adaptation measure in terms of responding to the impacts of climate change. Based on its compatibility with the appropriate soil properties, it could increase the resilience of soil to erosion.
Refreshing Europe's water policy

The latest edition of IEEP's newsletter is now available with a lead article on efforts to reinvigorate EU water policy. Plus CAP reform, nature in the Green Economy, using straw for biofuels, emissions trading revenues ...
What do we mean by Green Economy?

What is the Green Economy? What policy actions can contribute to achieving it? And how have EU-funded research projects supported these actions?
Green Economy in the European Union

Elements of the green economy concept are relatively well integrated in EU strategic documents - but the focus is on achieving green/sustainable growth, rather than achieving a ‘green economy’.
After Rio, it’s up to us to shape the Future We Want

Despite some new commitments on Green Economy, oceans, and Sustainable Development Goals, progress on much of the Rio agenda will depend on actions taken by individual countries, blocs (like the EU), companies and civil society networks.
Rio+20: Flagging the key issues however flimsy the agreement

Key agendas for the future were given an airing in Rio, whilst the agreement itself remained timid, not least on the Green Economy. IEEP played an active role in keeping this issue in the Rio bloodstream.
Estimating the Overall Economic Value of the Benefits provided by the Natura 2000 Network

Estimated benefits provided to EU citizens from the EU’s Natura 2000 Network could be in the range of €200 to €300 billion a year.
Guidance to identify and address incentives which are harmful to biodiversity

Developed and tested by IEEP, this guidance document is a tool to identify incentives harmful to biodiversity to help the UK draw up a reform roadmap and thus meet a commitment under the CBD.
Nature and its role in the transition to a Green Economy

Published timely before the Rio+20 Conference, this executive summary of a paper by IEEP highlights the role of nature in the transition to a green economy.
Recognising the value of water and wetlands

New TEEB study announced at Rio+20 to highlight how conservation and restoration of wetlands can benefit biodiversity and provide cost-effective and sustainable solutions in the context of a Green Economy.

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Highlights

Cutting-edge Book on the Economics of Ecosystems Out Now

Described by Nicholas Stern as a 'landmark' work, a full account of The Economics of Ecosystems and Biodiversity, edited by institute staff, is now published by Earthscan.
The Economics of Ecosystems and Biodiversity in National and International Policy Making

The study demonstrates the value of ecosystems and biodiversity to the economy, society and individuals. It underlines the urgent need to transform our approach to natural capital, and demonstrates how we can practically take into account the value of ecosystems and biodiversity in policy decisions to promote the protection of our environment and contribute to a sustainable economy and to the wellbeing of societies.