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Environmental Bads

Author

Listed:
  • Diewert, W. Erwin
  • Fox, Kevin J.

Abstract

The existing environmental accounting literature typically uses the Weitzman (1976) consumer perspective to measure the welfare effects of environmental bads (pollution, environmental degradation). We show that the consumer perspective is the “wrong” perspective to measure the welfare effects of bads: it is impossible to measure completely the welfare effects of externalities using a consumer framework. In contrast, production-based approaches are shown to be useful in this context.

Suggested Citation

  • Diewert, W. Erwin & Fox, Kevin J., 2026. "Environmental Bads," Discussion Papers escoe-dp-2026-03, Economic Statistics Centre of Excellence.
    • Handle: RePEc:eoe:escoed:escoe-dp-2026-03
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    File URL: https://www.repository-escoe.com/id/eprint/90/1/ESCoE%20DP%202026-03.pdf
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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