A
avoided cost(s) costs avoidable through environmental preservation or improvement.

B
business as usual a policy of maintaining the status quo; for example, estimates of greenhouse gas emissions levels if no policy measures counteract global climate change.

C
carbon sinks portions of the ecosystem with the ability to absorb certain quantities of carbon dioxide, such as forests and oceans.

carbon tax a per-unit tax on goods and services based on the quantity of carbon dioxide emitted during the production or consumption process.

Clean Development Mechanism a component of the Kyoto Protocol that allows industrial countries to receive credits for helping developing countries reduce their carbon emissions.

climate stabilization the policy of reducing fossil fuel use to a level that would not increase the potential for global climate change.

common property resource(s) a resource not subject to private ownership and available to all, such as a public park or the oceans.

cost-benefit analysis (CBA) a tool for policy analysis that attempts to monetize all the costs and benefits of a proposed action to determine the net benefit.

cost-effectiveness analysis a policy tool that determines the least-cost approach for achieving a given goal.

D
discount rate the annual rate at which future benefits or costs are discounted relative to current benefits or costs.

E
economic optimum a result that maximizes an economic criterion, such as efficiency or profits.

efficiency standards regulations that mandate efficiency criteria for goods, such as fuel economy standards for automobiles.

elasticity of demand the sensitivity of quantity demanded to prices; an elastic demand means that a proportional increase in price results in a larger proportional change in quantity demanded; an inelastic demand means that a proportional increase in price results in a smaller proportional change in quantity demanded.

energy-efficient technology a technology that minimizes the amount of energy used to perform a specific task, such as the use of compact fluorescent light bulbs to supply light.

environmental externalities environmental impacts of an economic activity that are not reflected in the market costs or prices associated with the activity.

external benefit(s) a benefit, not necessarily monetary, not reflected in a market transaction.

external cost(s) a cost, not necessarily monetary, not reflected in a market transaction.

externalities an effect of a market transaction on individuals or firms other than those involved in the transaction.

F
feedback loops/effects the process of changes in a system leading to other changes that either counteract or reinforce the original change.

G
global climate change the changes in global climate, including temperature, precipitation, and storm frequency and intensity, that result with changes in greenhouse gas concentrations in the atmosphere.

global commons global common property resources such as the atmosphere and the oceans.

global warming the increase in average global temperature as a result of emissions from human activities.

greenhouse effect the effect of certain gases in the earth’s atmosphere trapping solar radiation, resulting in an increase in global temperatures and other climatic changes.

greenhouse gases gases such as carbon dioxide and methane whose atmospheric concentrations influence global climate by trapping solar radiation.

I
internalizing externalities using approaches such as taxation to incorporate external costs and benefits into market decisions.

J
joint implementation cooperative agreements between nations to reduce carbon emissions.

L
local and regional pollutants pollutants that cause damage only within the area where they are emitted.

M
marginal net benefit the net benefit of the consumption or production of an additional unit of a resource; equal to marginal benefit minus marginal cost.

P
pollution tax(es) a per-unit tax based on the level of pollution.

preventive and adaptive strategies the contrasting perspectives of trying to prevent environmental damage versus trying to adapt to damage once it occurs.

R
renewable energy sources energy sources supplied on a continual basis such as wind, water, biomass, and direct solar energy.

research and development (R) efforts to increase technical knowledge for the production of new products or improvement of existing products.

revenue recycling using revenues from tax increases on certain products or activities to reduce other taxes.

revenue-neutral tax shift policies designed to balance tax increases on certain products or activities with reductions in other taxes, such as a reduction in income taxes that offsets a carbon-based tax.

S
social optimum an allocation of resources that maximizes net social benefits (equal to social benefits minus social costs).

stock pollutant a pollutant that accumulates in the environment, such as carbon dioxide and chlorofluorocarbons (CFCs).

subsidies government assistance to an industry or economic activity; subsidies can be direct, through financial assistance, or indirect, through protective policies.

T
technology transfer the process of sharing technological information or equipment, particularly among nations.

transferable pollution permits tradable permits that allow a firm to emit a certain quantity of a pollutant.