THE EXTERNAL COSTS OF THE PRODUCTION OF ELECTRICAL ENERGY AND THE ENVIRONMENTAL PROTECTION POLICY

Abstract

In this article, the economic foundations for external costs and the manner of evaluating them are presented. Two basic methods for determining external costs are described: the impact pathway method (or the costs of damages method) and the costs of control method. The range of analysis, priority impacts, pressures on the environment, receiving environment, pollution distribution in the environment (assessment of exposure), the functional link between exposure and impact, monetary valuation and risk assessment are defined. It is concluded that the costs of reducing emission progressively increase with the level of reduction. Therefore, an environmental protection policy based exclusively on stipulated standards is not an ideal solution because it generates unnecessarily high expenditures. It has been demonstrated that easing the regulations toward market-oriented measures could yield financial savings of equal ecological benefit.