Economic assessment and sustainable development Mark Hayden * External costs of energy and their internalisation in Europe: Dialogue with industry, NGO,

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Economic assessment and sustainable development Mark Hayden * External costs of energy and their internalisation in Europe: Dialogue with industry, NGO, and policy-makers December 9, 2005 * European Commission DG Economic and Financial Affairs

Economic assessment and sustainable development Non-declining welfare Flows of goods and services Trade-offs Externalities & external costs

The value of a statistical life US: $6 million + EU: 1 million Why the difference?

Valuing externalities Externalities Willingness to pay Hedonic pricing Willingness to accept Avoided damage

Methodology Willingness to pay – for what? Public understanding of risk & probability –5 in 1000 or 10 in 1000 Anchoring Public goods/free riding Mean or median?

Uncertainty Physical impacts Values of impacts Costs Policy effectiveness How can we communicate this to decision makers?

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