Environmental Economics

Environmental Economics

Work on Environmental Economics at IIED seeks to identify and promote practical means of bringing environmental values into the market place, in ways that benefit poor people and countries.
This includes evaluating the economic consequences of environmental change; finding ways to internalise environmental values in public policy and market behaviour, and to ensure that environmental protection is both cost-effective and pro-poor.

Our work on Environmental Economics aims to identify and promote practical means of bringing environmental values into the market place, in ways that benefit poor people and countries. This includes evaluating the economic consequences of environmental change; finding ways to internalise environmental values in public policy and market behaviour, and to ensuring that environmental protection is both cost-effective and pro-poor. We apply economic methods to a range of sectors and issues. Particular emphasis is placed on capacity strengthening through collaborative research and networking with individuals and organisations in the South.

We are currently involved in research on four areas:

• Incentives, compensation and markets for environmental services: Exploring the potential for and economic, social and environmental impact of economic instruments and compensation mechanisms aimed at internalising environmental externalities and changing the incentives within the market. A central focus of our work is the extent to which these mechanisms can work in favour of the poor. We give particular attention to markets and payments for environmental services where beneficiaries of environmental services (such as carbon sequestration, watershed protection and biodiversity conservation) begin to pay the providers of such services.

• Valuation: Using valuation techniques to help policymakers recognise and operationalise the value of natural resources and ecosystem services by building these values into decisions and into planning, and assessing trade-offs involved. We aim to build capacity in valuation techniques and their application in specific contexts. For example, we are currently working with the Business and Biodiversity Offsets Programme to develop guidance on valuing the costs and benefits of biodiversity offsets for local communities.

• Financing conservation: Examining how the financing shortfall of conservation can be met through innovative approaches to conservation, improved cost-effectiveness in both traditional and non-traditional approaches, better accounting of the costs, benefits and development contribution of conservation, and new sources and mechanisms for finance, including payments for environmental services.

• Economics of climate change: Help policymakers recognise the economic implications of climate change and the costs and benefits of adaptation through innovative methodologies adapted to realities of least developed countries.