75570 - RESOURCE VALUATION AND DECISION-MAKING METHODS

Scheda insegnamento

SDGs

L'insegnamento contribuisce al perseguimento degli Obiettivi di Sviluppo Sostenibile dell'Agenda 2030 dell'ONU.

Città e comunità sostenibili Consumo e produzione responsabili Lotta contro il cambiamento climatico

Anno Accademico 2019/2020

Conoscenze e abilità da conseguire

The purpose of this course is to enable students to rigorously apply appropriate resource evaluation and decision-making methodologies. In the first module, as regards evaluation methods where decisions have marginal impacts in a non-competitive market, theories and applications will be shown in case of tradable and non-tradable resources: in the sub-case of tradable resources, the concept of shadow exchange rate will be introduced; while in the sub-case of non-tradable resources, the concepts of willingness to pay and opportunity costs will be discussed. Evaluation methods where decisions have non-marginal impacts will also be presented. As regards evaluation methods where there is no market, both production approaches (e.g., response method, replacement cost, opportunity cost, preventive cost) and utility approaches (e.g., revealed preferences and stated preferences) will be discussed. The second module of this course aims at connecting the resource valuation methods presented in the first module, with cost-benefit analysis (CBA) methods which will be appropriate for the evaluation and decision making regarding projects related to environment and natural resources. More specifically module 2 will present the way that contemporary CBA tools are used in the resource context and will cover topics related to the discount rate, distributional issues and risk analysis. Next, ecosystems and the valuation of their services will be presented in order to connect total economic value with CBA. Special issues related to biodiversity, irreversibility, and quasi-option value will be presented. Resource use is intrinsically linked with sustainability. This course will cover concepts related to sustainability, comprehensive wealth, genuine savings and the greening national accounts. The course will conclude with discussion of contemporary environmental policy instruments.

Contenuti

The course is organized in two modules (Prof. Anna Montini and Prof. Anastasios Xepapadeas).

  1. Fundamentals of Cost-Benefit Analysis: Project Appraisal, Valuing Benefits and Costs, Discounting Future Benefits and Costs, Choice of Discount Rate.
  2. Valuation when primary markets are missing from observed behaviour and through Surveys: Total economic value; Valuation Methods: Revealed and stated preferences under existing, surrogate and hypothetical markets; Random Utility Model, Travel cost, Hedonic Pricing, The value of statistical life, Contingent valuation, Choice Experiments; Benefit Transfer.
  3. Data collection techniques and resource valuation case studies.
  4. Advanced topics in Cost-Benefit Analysis: The choice of the social discount rate – Ramsey rule and declining discount rates, Distributional weights, Risk analysis – sensitivity, Monte Carlo, qualitative - in CBA
  5. Cost-benefit analysis for the environment and total economic value; Ecosystem valuation: Valuation of ecosystems services, Ecosystems services and human well-being, Biodiversity valuation; Conservation vs development; Irreversibility and decision making in the face of risk, option price and option value; The TEEB (The Economics of Ecosystems & Biodiversity) approach.
  6. Sustainability: Strong and weak sustainability; Comprehensive wealth and genuine savings; Introduction to green accounting and the adjusted domestic product;
  7. Introduction to environmental policy: Environmental policy instruments, taxes tradable emission permits, voluntary agreements.
  8. An introduction to the economics of climate change: Historical trends of global average temperature, emissions and concentration of greenhouse gasses (GHGs); The temperature anomaly and polar amplification; A descriptive introduction to Integrated Assessment Models (IAMs); Climate policy which will cover carbon taxes, cap-and-trade and the EU-ETS, carbon capture and storage (CCS), and reducing emissions from deforestation and degradation (REDD); Adaptation to climate change; International agreements; COP21-The Paris Agreement and the more recent COPs.

Testi/Bibliografia

D. Pearce, G. Atkinson and S. Mourato, 2006, Cost-Benefit Analysis and the Environment: Recent Developments, OECD.

G. Atkinson and S. Mourato, 2015, Cost-Benefit Analysis and the Environment: Recent Developments, OECD WP 97

G Atkinson et al., 2018, Cost-Benefit Analysis and the Environment. Further Developments and Policy Use, OECD.

The World Bank, 2006, Where is the Wealth of Nations? Measuring Capital in the 21st Century, Washington DC.

D. Phaneuf and T. Requate, 2017, A Course in Environmental Economics: Theory, Policy and Practice, 2017, Cambridge University Press.

European Commission, 2014, Guide to Cost-benefit Analysis of Investment Projects 2014-2020, DG for Regional and Urban Planning.

R. Perman, Yue Ma, J. McGilvray, and M. Common, 2012, Natural Resource and Environmental Economics, 4th edition, Pearson Education.

A.E. Boardman, D.H. Greenberg, A.R. Vining, D.L. Weimer, Cost-Benefit Analysis - Concepts and Practice, Prentice Hall, 2010.

HM Treasury (2003), The Green Book – Appraisal and Evaluation in Central Government, HM Treasury, London.

Intergenerational wealth transfers and social discounting: Supplementary Green Book guidance (july 2008).

Further readings will be recommended by the two lecturers.

Metodi didattici

Lectures

Modalità di verifica dell'apprendimento

There will be a final written exam consisting of two questions for each module; all of them must be answered. The final exam comprises 100% of the final grade.

Strumenti a supporto della didattica

The teaching staff-students distribution list.

The IOL platform.

Orario di ricevimento

Consulta il sito web di Anna Montini

Consulta il sito web di Anastasios Xepapadeas