Environmental Bads

W. Erwin Diewert and Kevin J. Fox

Discussion Papers from Economic Statistics Centre of Excellence

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.

Keywords: Pollution; green accounting; externalities; welfare; productivity (search for similar items in EconPapers)
JEL-codes: D24 D62 Q51 (search for similar items in EconPapers)
Date: 2026-02-18
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