75577 - Economics of Climate Change

Learning outcomes

After a short review of the mathematics of climate analysis, past climate and the dynamics of the atmosphere and greenhouse gas (GHG) emissions, the economics of the global commons and the economics of GHG emissions control will be discussed. A special session will concern economic growth, technology and GHG emissions, and the international climate negotiations. Methods for decisions under uncertainty will be employed to assess the benefits of greenhouse gas mitigation, global effort and burden shares at the international level. Finally, a case study, i.e. climate change and the Arctic region, will be analysed.

Course contents

The purpose of the course is to present the economics of climate change in a way that integrates the climate, the economy and the policy issues that emerge in the attempts of nations to address global warming. The course will start with a short review of mathematical methods which are used in climate change economics. The main focus of the course will be the presentation of a unified framework of the climate and the economy along with their interactions, which will be used to show how climate change policies are derived. Emphasis will also be given to introducing the students to the new macroeconomics of climate change.

The course will cover the following topics:

The climate model: Historic trends of global average temperature, emissions and concentration of greenhouse gasses (GHGs); Climate modelling issues; The temperature anomaly and polar amplification; Sinks and Sources; Carbon Budgeting.

Coupling the economy and the climate: Modelling issues; Introduction to Integrated Assessment Models (IAMs); The macroeconomics of climate change; Damages from climate change; The choice of the discount rate; Uncertainty; Regional issues and spatial climate models.

Climate Policy: Mitigation: Carbon taxes, Cap-and-Trade, The EU-ETS, Carbon Capture and Storage (CCS), Reducing emissions from deforestation and degradation (REDD); Adaptation to Climate Change; International Cooperation in Theory and Practice: International agreements; COP21-The Paris Agreement; Solar Radiation Management (SRM).

Readings/Bibliography

Reading Material

• Lectures in the form of slide presentations will be provided during the course
• Supplementary lecture notes will be also provided as course proceeds

Additional Readings

John Hassler, Per Krusell and Jonas Nycander, 2016, Climate Policy, Economic Policy, CEPR, CESifo, Sciences Po, pp. 503-558.

W. Nordhaus, Revisiting the social cost of carbon, PNAS, www.pnas.org/cgi/doi/10.1073/pnas.1609244114

W. Nordhaus and P. Sztorc, 2013, DICE2013 Introduction and User’s Manual, dicemodel.net

N, Stern, 2006. The Economics of Climate Change: The Stern Review. Cambridge University Press, Cambridge

Teaching methods

Lectures with slide presentations

Assessment methods

Exams

Office hours

See the website of Anastasios Xepapadeas