Environmental Economics

Short description: This course covers advanced topics in environmental economics. We begin with a discussion of prominent environmental policy instruments, such as command and control, emissions taxes, and tradable emissions permits. Then, we discuss the implications for product markets, imperfect competition, and the treatment of international environmental issues, particularly climate policy. The course also covers pre-existing distortions and long-term investment incentives. Finally, we introduce dynamic problems, particularly the accumulation of pollutants.

Participation requirements:

Participants are expected to have a strong grasp of microeconomics, particularly utility-, profit-, and welfare-maximization, using the Lagrangian method. They should also be able to solve comparative static problems using the implicit function theorem.

Lecture 1: Markets, Welfare, the Problem of Externalities, and a survey of most the important pollutants. (Based on Chapters 1 and 2 in Phaneuf & Requate)

• Time: Monday, February 9, 10 – 12

Lecture 2: The Workhorse Model of Environmental Economics and Environmental Policy Instruments (Based on Chapters 3 and 8 in Phaneuf & Requate)

• Time: Monday, February 9, 14 – 16
• Q&A session (optional): Monday, February 9, 16 – 17

Lecture 3: Environmental Policy under Imperfect information (Based on Chapter 4 in Phaneuf & Requate)

• Time: Tuesday, February 10, 10 – 12

Lecture 4: Repercussions on Output Markets and market power (Based on Chapter 5 and 6 in Phaneuf & Requate)

• Time: Tuesday, February 10, 14 – 16
• Q&A session (optional): Tuesday, February 10, 16 – 17

Lecture 5: Environmental Policy with pre-existing distortions (Based on Chapter 7 in Phaneuf & Requate)

• Time: Wednesday, February 11,  10 – 12

Lecture 6: Environmental Policy and Innovation (Based on Chapter 11 in Phaneuf & Requate)

• Time: Wednesday, February 11,  14 – 16
• Q&A session (optional): Wednesday, February 11, 16 – 17

Lecture 7: International Environmental Problems (Based on Chapter 12 in Phaneuf & Requate)

• Time: Thursday, February 12, 10 – 12

Lecture 8: Miscelaneous topics such as Environmental Policy under Pre-distortions (Based on Chapter 7), Ambient Pollution (Based on Chapter 9) Environmental Liability Rules (Based on Chapter 10 in Phaneuf & Requate)

• Time: Thursday, February 12, 14 – 16
• Q&A session (optional): Thursday, February 15, 16 – 17

Lecture 9: Dynamic problems, notably accumulating pollutants (Based on Chapter 13 in Phaneuf & Requate)

• Time: Friday, February 13, 10 – 12

 

Literature: 

• Phaneuf, D. and Requate, T.: A Course Environmental Economics: Theory, Policy and Practice, Cambridge University Press 2017
• Charles Kolstad Environmental Economics, Oxford University Press, 2010
• Roger Perlman, Yue Ma, James McGilvray, and Michael Common:  Natural Resource and Environmental Economics, Pearson Education, 3^rd Edition, 1996
• Champ, Patricia A., Boyle, Kevin J., Brown, Thomas C. (Eds.) : A Primer on Nonmarket Valuation, Springer, 2003
• Endress, Alfred: Environmental Economics - Theory and Policy, Cambridge and New York (Cambridge University Press), 2011