88268 - ENVIRONMENTAL AND RESOURCE ECONOMICS

Learning outcomes

The purpose of the course is to provide students with a background in Science to the methods and policy tools used in environmental and resource economics in order to achieve efficient management of environmental resources. More specifically, the first part of the course will introduce the concept of environmental externalities as the main source of environmental degradation, and the policy instruments used to correct these externalities.

The second part of the course is meant to allow students to appreciate the impact of market power (or, the intensity of competition) on natural resources (both renewable and non-renewable), introducing explicitly market behaviour in the model describing the evolution of a natural resource or species over time, and describing the interplay between resource extraction, the adoption of replacement technologies, and the related policy measures.

Course contents

The course will begin with the introduction of environmental externalities as a source of failure of competitive markets to attain Pareto efficient market solutions. This type of market failure induces environmental regulation, which will be covered next. In this part, environmental policy instruments in theory and practice will be presented. More specifically, it will include: Command and control regulation (limits and standards); Market based instruments (emission taxes, subsidies, tradable emission permits, input taxes, deposit-refund systems); and Voluntary agreements. This part will also cover bargaining solutions as a means of correcting environmental externalities (Coasian bargaining).

The second part of the course will start with an introduction to non-renewable and renewable resource management, introducing the Lotka-Volterra model describing the evolution of an undisturbed renewable resource over time. Then, the focus will be upon the so-called tragedy of commons, which grasps the inefficiency of free access to a common resource pool vs sole access or cartel behaviour. The implications of free vs sole access on resource preservation or depletion will be then discussed together with policy measures.

Readings/Bibliography

The precise list of contents supporting the course will be specified in class. The general reading list is as follows:

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

L. Karp, 2017, Natural Resources as Capital, The MIT Press.

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

J.D. Murray, 2001, Mathematical Biology, Volumes I and II, Springer (this book contains excellent modelling of biological resources, which can be used to develop scientifically-sound economic models of biological resource management).

Teaching methods

Lectures accompanied by slide presentations.

Assessment methods

There will be a final exam consisting of two questions for each part, both of which must be answered. The final exam comprises 100% of the final grade.

Teaching tools

slides available online

Office hours

See the website of Luca Lambertini

See the website of Anastasios Xepapadeas