A Pigovian Tax is a financial charge imposed on activities that generate negative externalities, which are costs not reflected in the market price. This tax aims to encourage individuals and businesses to reduce harmful behaviors, such as pollution, by making them pay for the societal costs they create. The concept is named after the economist Arthur Pigou, who advocated for using taxes to correct market failures. By increasing the cost of undesirable activities, a Pigovian Tax incentivizes more environmentally friendly practices and can lead to improved public welfare. The revenue generated from this tax can be used to fund initiatives that further mitigate the negative impacts, such as investing in renewable energy or public transportation.