Environmental Externalities: Analysis and Advocacy

Much effort has been expended in recent years to identify, quantify and monetize the unpriced environmental costs borne by society from the production and consumption decisions of the members of society. Some attempts have been made to evaluate methods for internalizing those costs with the expectation that this will lead to better choices. A number of such methods have actually been used in the regulation of energy utilities and some government policy settings. Vermont’s legislature and regulators have grappled with this problem in the electric and natural gas industries and for energy generally for some years. This paper describes these efforts, some of their outcomes and their reception. Several challenges facing the process of internalizing environmental costs are considered.