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Description of the course
The sustainable management of natural resources and the environment is among the greatest challenges society is currently confronted with. In this course we address the issue of sustainability and sustainable development from an economic perspective by integrating natural resource use and environmental pollution into economic analysis. Important economic concepts are external effects, common property management and cost-benefit analyses. The students are also trained in the use of game theory, dynamic analysis and econometric valuation methods.
The lectures offer a treatment of modern economic theories and methods to study the relationship between natural resources, environmental quality, economic structure and environmental policy. The student is expected to develop a thorough understanding of key economic, environmental and ethical aspects of environmental problems, and of the link between theory, methods and empirical analysis.
Objectives
After having completed this course, you are able
- to identify the general (underlying) causes of environmental problems, including (renewable) resource depletion and climate change;
- to list the criteria on the basis of which the various environmental policy instruments (taxes, quotas, voluntary agreements) can be evaluated, and are able to identify the key considerations that determine optimality – including how environmental services and environmental damages can be measured;
- to identify why the practice of environmental regulation may differ from the theoretically preferred design;
- to analyze the relationship between the causes and consequences of climate change.
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The course covers four main topics. The first topic is the valuation of nature and natural resources – pollution reduces welfare, but by how much? How can we decide how severe specific environmental problems are, and hence the urgency with which specific problems need to be addressed? We do not only provide the theory behind environmental valuation and environmental cost-benefit analysis, but also the empirical application. The second topic is optimal environmental policies -- what environmental quality should be targeted, as well as which policy instruments (environmental taxes, tradable permits) should be used to achieve this objective. The third topic is the sustainable management of natural resources, including renewable as well as renewable resources. For renewable resources, like fish, the focus is on the difference between optimal management and open access to the resource. For non-renewable resources, like oil, the focus is on the optimal extraction path and the conditions for growth, in case the resource is essential for production. The fourth topic is what is possibly the most important environmental problem we currently face – climate change. The lectures are a mixture of theory, examples and empirical illustrations. The assignments consist of a number of exercises and some econometric applications.
Type of instruction
2 x 2 hours interactive lectures and tutorials
Type of exams
Written exam and four assignments. Each student has to hand in four assignments that will be marked and included in the final mark. To pass, the mark for the Final Exam must be a 5.0 or better. Then the Final Grade consists of the average grade for the four assignment (with equal weight for each) and the grade for the Final Exam, both with a 50% weight.
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