Economic instruments are increasingly being discussed and applied in the area of environmental policy. This is driven by various considerations, from the need for fiscal consolidation to concerns over impacts on the environment, human health, biodiversity, energy, resource use and food security. Economic instruments are an important part of the policy mix to support the shift to a green, inclusive economy. In addition, such instruments help to improve price signals in the economy. Well-designed instruments can have a range of benefits and support financial, economic, social, and environmental policy objectives. As well as individual instruments, packages of instruments are important, for example in the case of fiscal reform such as the reform of environmentally harmful subsidies (EHS) and environmental tax reform (ETR).
Efforts to date have mainly focused on the areas of energy, transport and climate. The use of economic instruments to address pollution and natural resource use has been limited to date, but is increasing in Europe, and focuses more on achieving environmental objectives than raising revenue.
The main objective of this project is to contribute to a broader development and application of market-based instruments (MBIs), and in particular environmental taxes, in the field of environmental policy. This will involve improving the knowledge base, stimulating exchanges of experience and best practice, and helping organisations to become better prepared to participate in policy-making processes at both national and EU levels. The project will focus on pollution and resource taxes addressing some key environmental challenges, such as air pollution and health; water quality and availability; the circular economy; waste and resources; biodiversity, sustainable land use, or marine litter.
The project consortium is led by the Institute for European Environmental Policy (IEEP), with joint contractors Danish Centre for Environment and Energy (DCE), Aarhus University and ENT Environment and Management. The other consortium partners are: Eunomia Research & Consulting Ltd, Green Budget Europe, the Institute for Environmental Studies at VU University (IVM), Cambridge Econometrics, Denkstatt GmbH, PBL – Netherlands Environmental Assessment Agency, Galovic Consulting, Stockholm Environment Institute Tallinn Centre (SEI Tallinn) and Ekokonsultacijos JSC. The consortium also includes several independent experts.