This course provides an introduction to four main topics in the environmental economics literature: (1) externality theory (i.e., the standard market-based approaches to controlling externalities and some ramifications/complications with these approaches), (2) asymmetric information (i.e., adverse selection and moral hazard in regulation), (3) auditing and enforcement, and (4) stock externalities (i.e., dynamic optimization problems). Time permitting, we’ll also explore two additional topics: (1) the theoretical foundations of willingness to pay (WTP) and option value (i.e., WTP under uncertainty), and (2) empirical tests of the market-based approaches. The course is therefore predominantly theory based (ideally it would be the first of a two-course series, where the second course focuses on empirical estimation of WTP and other empirical issues). It’s a course devoted to learning from some of the classic theoretical papers written during the past 30+ years in environmental economics.