A Pedagogical Note on Modeling the Economic Benefit of Emissions Abatement vs. the Economic Harm from Emissions

Abstract

The number of undergraduate-level textbooks on environmental economics has increased in recent years, but the textbook treatment of optimal emissions (abatement) varies markedly from textbook to textbook. In particular, there is no consensus as to whether to model the economic “bad” (i.e. emissions) or the economic “good” (abatement).  This inconsistency can lead to some needless confusion for students introduced to environmental economics for the first time, particularly those students outside of the formal economics major, such as students of business administration and public policy.  As a means of mitigating this confusion, I propose a simple example that instructors can use in lecture, test question, or student assignment format, that illustrates the duality between modeling emissions and abatement.