Environmental Economics and Policy I & II
Hiroshima University, 2021 and 2022
2022
Course Description
In today's society, we see news articles and TV programs about environmental and resource problems almost every day, and the extent of these problems seems only getting worse and worse. This course provides the methods economists use to address environmental issues. These methods include Pigovian taxes and subsidies, tradable permits, private provision of public goods, and optimal stock control of natural resources (such as fishery and forestry). During the course, I occasionally ask students to discuss various topics on environmental sustainability within small groups. Course requirements include two written assignments (problem sets) as well as midterm and final exams.
Prerequisites and Grading
I assume students in this class have successfully completed at least one introductory economics course. If you have not and still want to take this course, I recommend you to enroll introductory microeconomics course during this semester.
Don't forget that class participation is a key to your grade. Your final grade will be decided based on the following weight.
EEP I
- written assignments: 20%
- class participation: 30%
- final exam: 50%
EEP II
- class participation: 20%
- final project: 80%
Textbook
Keohane, N. and S. Olmstead (2016) Markets and the Environment (Foundations of Contemporary Environmental Studies), 2nd edition, Island Press.
EEP I (May 14 and 15, 2022)
#A1. Introduction
I will explain the basic idea of this course including how to contact myself.
In-class writing: We will watch the short TED video below in the class. You are required to submit a short essay during the class.#A2. Economic efficiency and environmental protection
Reading assignment: Keohane and Olmstead (2016) Chapter 2 (P11 -34)
We will also learn the definition of discount rate in a formal way.
#A3. The benefit and cost of environmental protection 1
Reading assignment: First half of Keohane and Olmstead (2016) Chapter 3 (p35 -55)
Optional Material (not required): Resource Radio Episode 71: The Value of a Statistical Life and Coronavirus, with Alan Krupnick
#A4. The benefit and cost of environmental protection 2
Reading assignment: The rest of Keohane and Olmstead (2016) Chapter 3 (p55 -68)
Optional Material (not required): Resource Radio Episode 103 The Future of Cost-Benefit Analysis, with Michael Livermore and Richard Revesz
#A5. The Efficiency of Markets
Reading assignment: Keohane and Olmstead (2016) Chapter 4 (p69-79).
We will have small group discussion on importance of market efficiency.
Optional Material (not required): NPR Planet Money: Waste land
#A6. Market failures in the environmental realm 1
Reading assignment: First half of Keohane and Olmstead (2016) Chapter 5 (p80-91)
Optional Material (not required): Resource Radio Episode 67: Managing Flood Risk under Climate Change, with Carolyn Kousky
#A7. Market failures in the environmental realm 2
Reading assignment: The rest of Keohane and Olmstead (2016) Chapter 5 (p91-98)
Optional Material (not required): Resource for the Future `Carbon Pricing 101'
#A8. Final Exam
Your are NOT allowed to consult anything during the exam.
EEP II (July 16 and 17, 2022)
#B1. Principle of market-based environmental policy 1
Reading assignment: The first half of Keohane and Olmstead (2016) Chapter 8
Optional Material (not required): Resource Radio Episode 134: Do Carbon Taxes Hurt the Economy?, with Gilbert Metcalf
#B2. Principle of market-based environmental policy 2
Reading assignment: The rest of Keohane and Olmstead (2016) Chapter 8 (p160-167)
Optional Material (not required): Resource Radio Episode 41: A Tribute to Marty Weitzman, with Gernot Wagner
#B3. Principle of market-based environmental policy 3
Reading assignment: The rest of Keohane and Olmstead (2016) Chapter 8 (p160-167)
Optional Material (not required): Resource Radio Episode 41: A Tribute to Marty Weitzman, with Gernot Wagner
#B4. Final Project 1
I will divide all the students into several small groups to work on a project.
#B5. Final Project 2
Group work for a project
#B6.Final Project 3
Group work for a project
#B7.Final Project 4
Group work for a project
#B8. Final Presentation
Each group presents the project they are working on.
2021
Course Description
In today's society, we see news articles and TV programs about environmental and resource problems almost every day, and the extent of these problems seems only getting worse and worse. This course provides the methods economists use to address environmental issues. These methods include Pigovian taxes and subsidies, tradable permits, private provision of public goods, and optimal stock control of natural resources (such as fishery and forestry). During the course, I occasionally ask students to discuss various topics on environmental sustainability within small groups. Course requirements include two written assignments (problem sets) as well as midterm and final exams.
Prerequisites and Grading
I assume students in this class have successfully completed at least one introductory economics course. If you have not and still want to take this course, I recommend you to enroll introductory microeconomics course during this semester.
Don't forget that class participation is a key to your grade. Your final grade will be decided based on the following weight.
EEP I
- written assignments: 10%
- class participation: 30%
- midterm exam: 30%
- final exam: 30%
EEP II
- written assignments: 20%
- class participation: 30%
- final exam: 50%
Textbook
Keohane, N. and S. Olmstead (2016) Markets and the Environment (Foundations of Contemporary Environmental Studies), 2nd edition, Island Press.
Schedule for EEP I
#A1. Introduction (October 4)
I will explain the basic idea of this course including how to contact myself.
In-class writing: We will watch the short TED video below in the class. You are required to submit a short essay during the class.#A2. Economic efficiency and environmental protection (October 11)
Reading assignment: Keohane and Olmstead (2016) Chapter 2 (P11 -34)
We will also learn the definition of discount rate in a formal way.
#A3. The benefit and cost of environmental protection 1 (October 18)
Reading assignment: First half of Keohane and Olmstead (2016) Chapter 3 (p35 -55)
Optional Material (not required): Resource Radio Episode 71: The Value of a Statistical Life and Coronavirus, with Alan Krupnick
#A4. The benefit and cost of environmental protection 2 (October 25)
Reading assignment: The rest of Keohane and Olmstead (2016) Chapter 3 (p55 -68)
Optional Material (not required): Resource Radio Episode 103 The Future of Cost-Benefit Analysis, with Michael Livermore and Richard Revesz
No class (November 1)
Reserved for making up Wednesday classes
During this week, you are supposed to work on midterm exam (very short essay). The detail will be announced soon.
#A5. The Efficiency of Markets (November 8)
Reading assignment: Keohane and Olmstead (2016) Chapter 4 (p69-79).
We will have small group discussion on importance of market efficiency.
Optional Material (not required): NPR Planet Money: Waste land
#A6. Market failures in the environmental realm 1 (November 15)
Reading assignment: First half of Keohane and Olmstead (2016) Chapter 5 (p80-91)
Optional Material (not required): Resource Radio Episode 67: Managing Flood Risk under Climate Change, with Carolyn Kousky
#A7. Market failures in the environmental realm 2 (November 22)
Reading assignment: The rest of Keohane and Olmstead (2016) Chapter 5 (p91-98)
Optional Material (not required): Resource for the Future `Carbon Pricing 101'
#A8. Final Exam (November 29)
Your are NOT allowed to consult anything during the exam.
Articles taken for term report (as of Dec. 7)
- Policy Brief: Regulating Offshore Oil and Gas Exploration: Insights from the Deepwater Horizon Experience in the Gulf of Mexico
- Policy Brief: What’s in a Name? A Search for Alternatives to "VSL"
- The Distributional Impacts of Energy Taxes
- The Impacts of Environmental Regulations on Competitiveness
- Expanding Water Markets in the Western United States: Barriers and Lessons from Other Natural Resource Markets
- Marine Plastic Pollution: Sources, Impacts, and Policy Issues"
- Policy Brief: Recommendations for Improving the Treatment of Risk and Uncertainty in Economic Estimates of Climate Impacts in the Sixth Intergovernmental Panel on Climate Change Assessment Report
- Cooperation in the Climate Commons
- The Economic Impacts of Natural Disasters: A Review of Models and Empirical Studies
- Climate Damage Functions for Estimating the Economic Impacts of Climate Change in the United States
- Who Bears the Economic Burdens of Environmental Regulations?
- Expanding Water Markets in the Western United States: Barriers and Lessons from Other Natural Resource Markets
Schedule for EEP II
(edited December 5, 2021)
#B1. Principle of market-based environmental policy 1 (December 6)
Reading assignment: The first half of Keohane and Olmstead (2016) Chapter 8 (p139-159)
Optional Material (not required): Resource Radio Episode 134: Do Carbon Taxes Hurt the Economy?, with Gilbert Metcalf
#B2. Principle of market-based environmental policy 2 (December 13)
Reading assignment: The rest of Keohane and Olmstead (2016) Chapter 8 (p160-167)
Optional Material (not required): Resource Radio Episode 41: A Tribute to Marty Weitzman, with Gernot Wagner
#B3. Principle of market-based environmental policy 3 (December 20)
Reading assignment: The rest of Keohane and Olmstead (2016) Chapter 8 (p160-167)
Optional Material (not required): Resource Radio Episode 41: A Tribute to Marty Weitzman, with Gernot Wagner
#B4. In-class group assignment (January 13)
I will divide all the students into several small groups and ask to solve a problem set together.
#B5. Managing stocks: natural resources as capital assets (January 17)
Reading assignment: Keohane and Olmstead (2016) Chapter 6 (p99-113)
#B6. Stocks that grows: the economics of renewable resource management 1 (January 24)
Reading assignment: Forest part of Keohane and Olmstead (2016) Chapter 7 (p114-128)
Optional Material (not required): Resource Radio Episode 143: How Much is a Tree Worth?, with Hannah Druckenmiller
#B7.On-demand excercise
Reading assignment: Please check the Bb9.
#B8. Final Exam (January 31)
Your are NOT allowed to consult anything during the exam.