Full Title: Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use
Author(s): National Academy of Sciences
Publisher(s): National Academy of Sciences
Publication Date: January 1, 2010
Full Text: Download Resource
Description (excerpt):
Modern civilization is heavily dependent on energy from sources such as coal, petroleum, and natural gas. Yet, despite energy’s many benefits, most of which are reflected in energy market prices, the production, distribution, and use of energy also cause negative effects. Beneficial or negative effects that are not reflected in energy market prices are termed “external effects” by economists. In the absence of government intervention, external effects associated with energy production and use are generally not taken into account in decision making.
When prices do not adequately reflect them, the monetary value as- signed to benefits or adverse effects (referred to as damages) are “hidden” in the sense that government and other decision makers, such as electric utility managers, may not recognize the full costs of their actions. When market failures like this occur, there may be a case for government interventions in the form of regulations, taxes, fees, tradable permits, or other instruments that will motivate such recognition.