onomi    on epts and erminolo ies        22.17
     and communications between the various
     departments/divisions of the business firm) and its
                                                             environmentAl Accounting
     external operations (i.e., all its dealings with the The method of accounting which includes the
     suppliers, customers, etc.).                         ecological and environmental damages done
                                                          by the economic activities in monetary terms.
        e-commerce                                        Integrated environment and economic (green)
                                                          accounting attempts at accounting for both
     Method of buying and selling goods and services
                                                          socioeconomic performance and its environmental
     over the Internet – a kind of direct marketing i.e.
     without the help of any middle arrangement of        effects and integrates environmental concerns into
     sales.                                               mainstream economic planning and policies. The
                                                          green GDP of an economy is measured by the same
                                                          method—experimented in Costa Rica, Mexico,
        economies of scAle
                                                          Netherlands, Norway, and Papua New Guinea,
     The long-run reduction in average/unit cost that     among others. Indicative estimates suggest that
     occurs as the scale of the firm’s output increases.  conventionally measured GDP may exceed GDP
     The opposite situation is known as diseconomies      adjusted for natural resources depletion and
     of scale.                                            environmental degradation by a range between
                                                          1.5 per cent and 10 per cent.
        economies of scope
     The long-run reduction in average/unit cost that
                                                             environmentAl AuDit
     occurs as the scope (diversification) of the firm’s  Assessment of the environmental impact of a
     activities increase.                                 firm/public body through its activities. This is
                                                          done with an objective to reduce or eliminate the
        eDgeworth box                                     pollution aspect.
     A concept for the purpose of analysing the
     possible relationships between two individuals or       environmentAl tAxes
     countries. It is done using indifference curve.      As against the Command and Control approach
          The concept was developed by Francis Ysidro     to managing environment, the Economic or
     Edgeworth (1845–1926) who is also credited for       Market Based Instruments (MBIs) approach
     analytical tools of indifference curves and contract sends economic signals to the polluters to modify
     curves.                                              their behaviour. The MBIs used for environmental
                                                          taxes include pollution charges (emission/affluent
        effective revenue Deficit                         & tax/pollution tax), marketable permits, deposit
                                                          refund system, input taxes/product charges,
     [See Chapter 18, Public Finance in India]
                                                          differential tax rates, user administrative changes
                                                          and subsidies for pollution abatement, which may
        engel’s lAw
                                                          be based on both price and quality. India has been
     The law which says that people generally spend       already collecting taxes on water and air via the
     a smaller part of their budget on food as their      Water Act and the Air Act. Due to its experience
     income rises. The idea was suggested by Ernst        India is among the chief participant in devising
     Engel, a Russian statistician in 1857.               the MBIs in the world.