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

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.
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.
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.
The Green Economy and Natural Capital

It’s time to account for the value of ecosystems and biodiversity in a Green Economy, this is IEEP’s message for the Rio Earth Summit.
Benefit Assessment Manual for Policy Makers: Assessment of Social and Economic Benefits of Enhanced Environmental Protection in the ENPI countries

This benefit Assessment Manual, originally for internal use, has been turned into a Benefit Assessment Manual for policy makers and experts for wider dissemination and provides an understanding of the methodologies applied for the country benefit assessments.
Analysis for European Neighbourhood Policy (ENP) Countries and the Russian Federation on social and economic benefits of enhanced environmental protection – Egypt Country Report

There are considerable benefits from taking immediate action to address the environmental problems facing Egypt, including in the area of air pollution, water quality and infrastructures and waste management, and safeguarding its natural heritage.
Regional Synthesis Report: ENPI South - Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, occupied Palestinian territory, Syria and Tunisia

Investing in improving environmental standards in the ENPI South countries would offer huge benefits in terms of cost savings, improved security (food, water, energy and climate), and improved quality of life.
Consolidated report: Qualitative analysis key results and policy implications

There are still needs and opportunities for using sustainability indicators at different stages of the policy processes across all environmentally relevant policy areas.
Opportunities for a better use of indicators in policy-making

There remain a wide range of opportunities for making use of sustainability indicators at different stages of the policy process across all environmentally relevant policy areas.
Value of ecosystem services – putting the ‘green’ into green economy

Presentation by Marianne Kettunen of IEEP on the value of ecosystem services in the context of green economy at Nordic conference on Green Growth, in Oslo, Norway March 2012.