Course Description. The course introduces the fundamental insights of environmental economics in addressing contemporary environmental problems. It covers issues such as cost-benefit analysis and the economics of environmental policies (e.g., emission fees, cap-and-trade schemes) in different informational settings (i.e., complete and incomplete information), as well as various jurisdictional settings(i.e., regional, domestic, and international).
Intended Learning Outcomes. After completing this course effectively, the student will be able to adapt and apply the economic approach to various ongoing real-world environmental problems both at an intuitive level and a formal mathematical level (i.e., both graphically and algebraically). Thus, the student will be able to articulate rigorous justifications for environmental policies in an economy, focusing at least on the efficiency, incentive, and distributional consequences of various policies.
Assessment.
The final exam will count for 80% of the total score, and problem sets count for 20% of the total score. The assignment points are valid for the main exam and the two retakes during the current academic year (i.e., the ordinary retake and the August retake).
Students unable to submit one or more assignments will have the option to answer a substitute question, having 20% points, in the final exam.
Main Textbook: Kolstad, Charles D. (2011), Environmental Economics, 2nd Edition, Oxford University Press
Course Introduction,
Background Reading: Kolstad, Chapters 1-5
Determining Target for Environmental Programs
Readings:
Kolstad, Chapter 6.
Nordhaus, William. (2019). "Climate change: The ultimate challenge for economics." AER, 109, #6, pp 1991-2014
Stern, Nicholas. (2008)."The Economics of Climate Change." AER 98 (2): 1–37.
Nordhaus, William D. (1997). "Discounting in economics and climate change; an editorial comment." Climatic Change2: 315-328. [Read up to and including section 1.4, the summary of analytical points.]
Heal, Geoffrey. (1997). " Discounting in economics and climate change; an editorial comment." Climatic Change2: 335-343.
Weitzman, Martin L. (2001). "Gamma Discounting." AER, vol 91, #1, pp 260-271.
Weitzman, Martin L. (2007). "A Review of the Stern Review on the Economics of Climate Change." Journal of Economic Literature 3: 703-724. [Read up to and including section 3.]
Theories of Regulation
Readings: Kolstad, Chapter 11.
Basic Economic Policies for the Environment
Readings:
Kolstad, Chapters 12 and 13
Mideksa, Torben 2024. "Pricing for a cooler planet: An empirical analysis of the effect of taxing carbon." Journal of Environmental Economics and Management: 103034.
Policies for the Environment: Dynamics, Geography
Readings: Kolstad, Chapter 14
Policies for the Environment: Uncertainty, International Issues
Readings:
Kolstad, Chapters 15, 16, 17, 18, 19, 20; notes distributed in class.
William Nordhaus. (2019). "Climate change: The ultimate challenge for economics." AER, 109, #6, pp 1991-2014.
Barrett, Scott. (2005). "The theory of international environmental agreements." Handbook of environmental economics: 1457-1516.
Mideksa, Torben. (2022). "Pricing pollution in a non-cooperative world." Journal of Public Economics Plus: 100014.
Mideksa, Torben (2025). Does Leadership Promote a Cleaner Climate? The Scandinavian Journal of Economics
Harstad, Bård, and Torben Mideksa. "Conservation contracts and political regimes." The Review of Economic Studies (2017): 1708-1734.