Abatement Cost

Written By
Paul Tracy
Updated June 28, 2021

What is an Abatement Cost?

An abatement cost refers to the cost associated with the voluntary or compulsory removal of an undesirable result of a production process.

How Does an Abatement Cost Work?

In many instances, companies produce goods or services that directly or indirectly result in a byproduct that may be medically or environmentally dangerous. This can be an indirect result of a cost-cutting measure to increase productive efficiency. Should governmental or regulatory authorities determine that a production process has hazardous side effects for the community at large, these authorities may require a company to eliminate or, at least reduce the incidence thereof. The cost to a company associated with reengineering the production process (whatever that may entail) for this purpose would be the abatement cost. For instance, if a company must begin using a more expensive raw material in order to reduce the amount of mercury released into the local environment, the additional cost would be the abatement cost.

Why Does an Abatement Cost Matter?

Abatement costs are often an indirect outcome of government-imposed regulations intended to benefit the greater community and environment. To this end, they represent, albeit by necessity, a source of economic inefficiency similar to a tax.

Activate your free account to unlock our most valuable savings and money-making tips
  • 100% FREE
  • Exclusive money-making tips before we post them to the live site
  • Weekly insights and analysis from our financial experts
  • Free Report - 25 Ways to Save Hundreds on Your Monthly Expenses
  • Free Report - Eliminate Credit Card Debt with these 10 Simple Tricks
Ask an Expert
All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Abatement Cost.
Be the first to ask a question

If you have a question about Abatement Cost, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

If you have a question about Abatement Cost, then please ask Paul.

Ask a question Read more from Paul
Paul Tracy - profile
Ask an Expert about Abatement Cost

By submitting this form you agree with our Privacy Policy

Don't Know a Financial Term?
Search our library of 4,000+ terms