External Costs

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The New Economy knowledge base brings together core concepts, methods and perspectives from the regenerative economy. Articles explain footprint, compliance, circular product design, regenerative strategy, food systems and regional policy in practical terms, with clear links to life-cycle assessment (LCA), social cost-benefit analysis (MKBA), CO2 footprint, carbon sequestration, biobased materials and circular business models.

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Knowledge base · Climate strategy

External costs

External costs are social costs that are not, or insufficiently, reflected in the market price, such as climate damage, health damage, water pollution, air pollution or biodiversity loss.

Definition

Because these costs are not borne by the party causing them, they distort the true cost of a product, service or choice to society.

Applied in practice

New Economy maps external costs within SCBAs by valuing them with a shadow price, making the full social account visible alongside direct costs and benefits.

Related terms

SCBAShadow priceFair price
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All terms, searchable

Search the register or browse by letter. Each article opens with the definition, followed by how it works, why it matters and how New Economy applies it, with related terms and source projects.

Index · 40 terms
B
Baseline Measurement Knowledge base · Carbon and footprintBaseline measurementA baseline measurement maps the starting point of CO₂ emissions or impact as a reference point for reduction targets.DefinitionThe baseline measurement records… Carbon and footprint BECCS BECCS combines bio-energy with carbon capture and storage. Biomass absorbs CO₂ while growing; when it is used for energy production, the CO₂ released is captured and stored long-term.DefinitionBecause… Carbon and footprint Biobased BiobasedBiobased means that a material or product is made from renewable, biological raw materials instead of fossil ones.DefinitionBiobased materials can hold carbon for a long time and return… Biobased Broad Prosperity Knowledge base · Climate strategyBroad prosperityBroad prosperity looks beyond economic growth to health, living environment, social cohesion and effects on future generations.DefinitionThe concept is measured by Statistics Netherlands… Climate and strategy
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Carbon Sequestration Knowledge base · Carbon and footprintCarbon sequestrationCarbon sequestration is the removal of CO₂ from the atmosphere and its storage in soil, biomass, nature, water, long-lived materials or geological… Carbon and footprint Carbon Sequestration House The Carbon Sequestration House applies Quality Function Deployment (House of Quality) to carbon removal and links ten methods to 26 policy objectives. Carbon and footprint CCS and CCU CCS stands for carbon capture and storage: capturing and storing CO₂. CCU stands for carbon capture and utilization: capturing CO₂ and using it as a raw material in… Carbon and footprint CDR (Carbon Dioxide Removal) Knowledge base · Carbon and footprintCDR carbon dioxide removalCDR, carbon dioxide removal, removes CO₂ from the atmosphere and stores carbon temporarily, long-term or permanently in nature, soil, materials… Carbon and footprint Circular Economy Knowledge base · Circular economyCircular economyA circular economy is an economic system in which raw materials, products and materials retain their value for as long as possible through… Climate Adaptation Knowledge base · Climate adaptationClimate adaptationClimate adaptation is the process of adjusting areas, buildings and systems to the effects of climate change, such as heat, drought, flooding and… CO₂ Footprint Knowledge base · Carbon and footprintCO₂ footprintA CO₂ footprint quantifies the greenhouse gas emissions of an organisation, product, project or chain, usually expressed in CO₂ equivalents.DefinitionThe footprint generally… Carbon and footprint CSDDD (Corporate Sustainability Due Diligence Directive) Knowledge base · Carbon and footprintCSDDD Corporate Sustainability Due Diligence DirectiveThe CSDDD is the European directive on human rights and environmental due diligence in the value chain.DefinitionThe directive… Carbon and footprint CSRD corporate sustainability reporting directiveThe CSRD is the European directive that requires large and listed companies to report on sustainability according to fixed standards, including climate, environment, social effects… Carbon and footprint
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Digital Product Passport A Digital Product Passport is a digital information carrier with data on the materials, origin and circularity of a product.DefinitionThe passport makes information on composition, repair and recyclability… Circular economy and design Double Materiality Knowledge base · Carbon and footprintDouble materialityDouble materiality assesses both an organisation's impact on people and the environment and the financial effects of sustainability issues on the organisation.DefinitionThe… Carbon and footprint Doughnut Economics Knowledge base · Climate strategyDoughnut economicsDoughnut economics is an economic model that aims to meet human needs within the ecological limits of the planet.DefinitionThe model places a social… Climate and strategy Drawdown Drawdown is the point at which the concentration of greenhouse gases in the atmosphere begins to decline rather than rise.DefinitionThe concept ranks climate solutions by their contribution to… Climate and strategy
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EPD (Environmental Product Declaration) Knowledge base · Circular economy and designEPD Environmental Product DeclarationAn EPD, Environmental Product Declaration, is a standardised document with the environmental performance of a product based on an… Circular economy and design External Costs Knowledge base · Climate strategyExternal costsExternal costs are social costs that are not, or insufficiently, reflected in the market price, such as climate damage, health damage, water pollution,… Climate and strategy
F
Food Strategy Knowledge base · Food and living environmentFood strategyA food strategy is a coherent vision for the future of a region's food system, from production to consumption.DefinitionThe strategy connects… Food and environment Food Waste Knowledge base · Food and living environmentFood wasteFood waste is food that was intended for human consumption but is lost or discarded somewhere between production and the consumer.DefinitionWaste… Food and environment
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GHG Protocol The GHG Protocol is a widely used standard for measuring and reporting greenhouse gas emissions, divided into scope 1, scope 2 and scope 3.DefinitionThe Greenhouse Gas Protocol gives… Carbon and footprint Good Business Knowledge base · Climate strategyGood businessGood business creates measurable value for people, nature and the economy at the same time and substantiates that contribution with data, beyond CSR… Climate and strategy
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LCA (Life Cycle Assessment) Knowledge base · Circular economy and designLCA life cycle assessmentAn LCA maps the environmental impact of a product, material or service over its entire life cycle: from raw… Circular economy and design
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MPG Environmental Performance of BuildingsThe MPG, Environmental Performance of Buildings, expresses the environmental impact of the materials in a building in a single score.DefinitionThe MPG is calculated using the… Built environment
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NBS (Nature-Based Solutions) Knowledge base · BiodiversityNBS nature-based solutionsNature-based solutions are measures that use natural processes to address societal challenges, such as water storage, carbon storage and cooling.DefinitionA single intervention often… Biodiversity
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QALY quality-adjusted life yearA QALY is a measure of health gain that combines the length and quality of life into a single number.DefinitionIn a social cost-benefit analysis, the QALY… Climate and strategy
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R-ladder (Waste Hierarchy) Knowledge base · Circular economy and designR-ladder (waste hierarchy)The R-ladder ranks circular strategies by value retention: first use less and extend product life, then reuse, repair and remanufacture,… Circular economy and design Regenerative RegenerativeRegenerative means that an activity actively restores natural and social systems, rather than merely causing less damage.DefinitionWhere sustainable aims for less harm, regenerative aims for net restoration of… Regenerative Advisory Knowledge base · RegenerativeRegenerative advisoryRegenerative advisory is strategic guidance that moves organisations from sustainable to regenerative, substantiated with impact data and aimed at concrete development.DefinitionThe advisory translates regenerative… Regenerative Design Knowledge base · RegenerativeRegenerative designRegenerative design focuses on products, buildings and systems that restore and strengthen ecosystems rather than only limiting damage.DefinitionWhere circular design keeps raw materials in…
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SCBA (Social Cost-Benefit Analysis) Knowledge base · Climate strategySCBA social cost-benefit analysisAn SCBA weighs social costs and benefits against each other, including effects without a direct market price, such as health, CO₂,… Climate and strategy Science Based Target A Science Based Target is an emission reduction target aligned with the climate pathway of the Paris Agreement.DefinitionThe target is underpinned by scientific climate scenarios and sets out… Climate and strategy Scope 3 Scope 3 covers indirect chain emissions outside an organisation's own operations, such as purchased goods, transport, the use phase, waste processing and investments.DefinitionFor many organisations, scope 3 is… Carbon and footprint Shadow Price Knowledge base · Climate strategyShadow priceA shadow price assigns a social value to an effect without a clear market price, such as CO₂ emissions, health, time savings, biodiversity… Climate and strategy Social Impact Knowledge base · Social impactSocial impactSocial impact is the measurable effect of an organisation, product or project on people and society, such as health, employment, liveability and equal…
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True Price Knowledge base · Climate strategyTrue priceA true price includes not only direct production costs but also social costs and benefits, such as climate damage, health, water, soil, biodiversity… Climate and strategy Truly Circular Business Knowledge base · Circular economy and designTruly circular businessTruly circular business keeps raw materials in circulation at the highest possible value through the R-ladder, beyond recycling, closing material… Circular economy and design Truly Sustainable Business Knowledge base · Climate strategyTruly sustainable businessTruly sustainable business substantiates every sustainability claim with data and steers toward net positive, beyond the less-bad approach of conventional sustainability.DefinitionWhere conventional… Climate and strategy
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Urban Mining Knowledge base · Circular economy and designUrban miningUrban mining is the recovery of raw materials from existing buildings, infrastructure and discarded products, treating the city itself as a… Circular economy and design
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