In our line of work, climate change and worldwide depletion of natural resources will continue to be the most important challenges the coming decades. As an economist graduating in welfare theory and with a doctorate in applied environmental economics, it’s my job to analyse these problems, identify what’s driving them and suggest ways to conserve nature and the environment for future generations.
In all of this, ‘right prices’ are indispensable. Prices steer society towards value creation. At the moment, though, the pricing mechanism is not working as it should, because environmental and climate damage are being ignored. If this damage is to be included, it first needs to be calculated. This is the business of environmental pricing (formerly known as shadow pricing) that I’ve been enthusiastically involved in for the past twelve years. It’s not only government that’s interested in how to put a price on its environmental footprint; in recent years a growing number of companies are also coming on board.
On its own, though, pricing is not enough. ‘Right prices’ need to be transposed into policies, so environmental damage can be factored into decisions by consumers and producers alike. The European Emissions Trading Scheme, EU ETS, is one such policy instrument I’ve been following and studying for 15 years now. This scheme is interesting for its complexity and the huge amount of data available, making it a real Eldorado for researchers.