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.
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.
EU waste law: the challenge of better compliance

Waste management in the EU is improving, but implementation by the Member States of EU waste legislation remains patchy. This paper makes suggestions on how better compliance could be achieved.
Feasibility of implementing a radical ETR and its acceptance

The study provides an analysis of the legal feasibility and political acceptability of a radical Environmental Tax Reform (ETR) within the broader context of EU policies. It explores the scope for using ...
Guidelines on the Use of Market-based Instruments to Address the Problem of Marine Litter

Policymakers who are concerned with the negative impacts of litter, solid waste and debris in their ports, bays and coastal waters have long searched for effective ways to reduce this problem. This report ...
Using Market Based Instruments for European Environment Policy

The European Environment Agency (EEA) has recently released two reports on the development of market based instruments across Europe. Both reports are mainly based on work from a team led by IEEP, which ...
Using the Market for Cost-Effective Environmental Policy - EEA Report 2006

This report is one of two recent reports from the European Environment Agency (EEA) on the development of market based instruments across Europe. Both reports are mainly based on work from a team led by ...
Market Based Instruments for Environmental Policy in Europe

This report is one of two recent reports from the European Environment Agency (EEA) on the development of market based instruments across Europe. Both reports are mainly based on work from a team led by ...
Market based instruments for environmental policy in Europe - EEA Technical Report 2005

Market based instruments are increasingly being used across Europe. The development of these instruments is covered in recent European Environment Agency (EEA) reports - Using the market for cost-effective ...