Course:FRE526

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Environmental Economics and Policy: Theory
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FRE 526
Section:
Instructor: Dr. Sumeet Gulati
Email: sumeet.gulati@ubc.ca
Office: MCML 341
Office Hours: TBA
Class Schedule: Tuesday, Thursday 12:30 -1:50 PM
Classroom: TBA
Important Course Pages
Syllabus
Lecture Notes
Assignments
Course Discussion

Course Description

In this course, we will build an analytical framework from simple economic principles. We will use it to define society’s optimal pollution and preservation/exploitation of natural resources. We will then ask: can markets function effectively to protect our environment or is government policy necessary? When it comes to the environment, the market often fails. What can we do to improve it? Based on the type of resource, we will study policies to correct market failure. We will understand the realities of government intervention and how governments can do better in steering our environment. Based on the economic framework developed, we will study in detail the economics of climate change, and marine resources.

Course Goals

  • To understand the critical role of property rights, institutions, and incentives in environmental problems
  • To analyze the impacts of the various sources of market failure in real-world environmental situations.
  • To determine the relative merits of different environmental policies—market-based or other regulatory solutions—in different contexts.

Course Format

12 lectures of 1.5 hours, twice a week for 6 weeks.

Course Requirements (Subject to changes)

Activity Date Percent of Grade
2 Quizzes To be announced. 30% (15% each)
2 Assignments Assigned every two weeks 30% (15% each)
Final exam February 7th, 2017 35%
Class Participation Contributions to class discussions. 5%
Total: 100%

Quizzes

The quizzes will consist on a one question test, half of an hour long conducted at the beginning of the class using Connect. The questions will cover important reading plus key class materials.

Assignments

The assignments will consist of problem sets and short essays addressing a specific question. These assignments will challenge the students to understand the economic impacts of various market failures in real-world environmental situations, the relative merits of different environmental policies - market-based or other regulatory solutions - in different contexts as well as the critical role of property rights, institutions, and incentives in addressing environmental problems

Exam

The final exam will be comprehensive (it shall cover all material taught in class), and will last two (or more) hours. You must take exams at the scheduled times unless you have another exam at the same time, serious illness, or an emergency. You must validate with documentation the reason(s) why you will be unable to take any exam.

Class Participation

Your participation grade depends on your contribution to class discussions. All contribution is appreciated, even questions asking me to clarify previously taught material. The sole aim of assigning a participation grade is to encourage active learning for everyone. I will ascertain and assign this part.

The class twitter discussion: Almost every day, I shall tweet links or commentary to news and blog posts via my twitter page: https://twitter.com/sgulati. All material I consider relevant to this course will be marked with the hashtag: #mfre. You can contribute in two ways: 1) by providing your thoughts, or links to information relevant to this course, or 2) by commenting on what I, or your classmates, tweet.

Academic Dishonesty

Please review the UBC Calendar “Academic regulations” for the university policy on cheating, plagiarism, and other forms of academic dishonesty. Academic dishonesty will be dealt with very seriously in this course.

Online Course Material

Available at Connect: http://www.connect.ubc.ca. You are required to regularly login to your course page for FRE 526. Your syllabus, course-lecture slides, additional material, announcements, assignments, and grades are available.

Course Outline and Readings

How to use this course outline: This outline is a collection of papers, and topics commonly taught in agriculture and resource policy analysis. Wherever possible a stable link to the paper is provided. While some of these links will work anywhere, many of them are digitally protected requiring a subscription. You can access this material by logging in through your account at the UBC library, or on any computer connected via Ethernet on the UBC network. For some articles no link is provided, in that case, please search for the article (if you search via the UBC library you will find access to its electronic version).

How to use this course outline: This outline is a collection of papers, and topics commonly taught in the economics of the environment. Wherever possible I provide a stable link to the paper. While some of these links will work anywhere, many of them are digitally protected requiring a subscription. You can access this material by logging in through your account at the UBC library, or on any computer connected via Ethernet on the UBC network. For some articles I do not provide a link, in that case, please search for the article (if you search via the UBC library you will find access to its electronic version).

This outline is subject to change. I might add/replace material as the course proceeds.

1. Introduction to Environmental Economics:

  • Fullerton, D. and R. Stavins (1998), “How do Economists Really Think About the Environment?” Discussion paper 98-29, Resources for the Future, http://www.rff.org/documents/RFF-DP-98-29.pdf.
  • There is course material on Connect for this section, please review your course slides up to and including the set of slides titled: Mineral Economics. Students can supplement the material on Connect by reading an undergraduate level environmental textbook of their choice. One suggestion is: Keohane and Olmstead, “Markets and the Environment,” Island Press, http://www.islandpress.com/ip/books/book/islandpress/M/bo5092233.html
    • Economic Efficiency.
    • Externalities and Market Failure.
    • Benefit-cost analysis and its relationship with efficiency.
    • Dynamic/Intertemporal Efficiency.
    • Mineral Economics/The Extraction of Depletable Resources.
  • The economics of pollution control / Instrument choice in environmental policy.
    • Material in Connect: course slides titled “The Economics of Pollution Control” and “Ambient Standards.”
    • Lawrence H. Goulder and Ian W. H. Parry (2008),“Instrument Choice in Environmental Policy,” Rev Environ Econ Policy 2(2): 152-174 doi:10.1093/reep/ren005. Available online at http://reep.oxfordjournals.org/content/2/2/152.abstract

2. Marine Resources/Open Access Resources:

  • Course Material on Connect.
  • Brown G. (2000) “Renewable natural resource management and use without markets”, Journal of Economic Literature, 38, 875-914.

Economics of Fisheries

  • Conrad, J.M. (1995), “Bioeconomic models of the fishery”, Handbook of Environmental Economics, (D. Bromley, ed.) Oxford, Blackwell, 405-432

Policy Problems

  • Turner M.A., (1997), “Quota-induced discarding in heterogeneous fisheries” Journal of Environmental Economics and Management, 33, 186-195

3. The Economics of Climate Change:

  • Some basic issues: Class material on Connect.
  • Symposium: The Economics of Climate Change: The Stern Review and Its Critics. This is a symposium of four papers online at: http://reep.oxfordjournals.org/content/2/1.toc. Individual papers are:
    • Robert Mendelsohn (2008), “Is the Stern Review an Economic Analysis?” Rev Environ Econ Policy 2(1): 45-60 doi:10.1093/reep/rem023
    • Thomas Sterner and U. Martin Persson (2008), “An Even Sterner Review: Introducing Relative Prices into the Discounting Debate,” Rev Environ Econ Policy, 2(1): 61-76 doi:10.1093/reep/rem024.
    • John P. Weyant (2008), “A Critique of the Stern Review's Mitigation Cost Analyses and Integrated Assessment,” Rev Environ Econ Policy 2(1): 77-93 doi:10.1093/reep/rem022.
    • Simon Dietz and Nicholas Stern (2008), “Why Economic Analysis Supports Strong Action on Climate Change: A Response to the Stern Review's Critics,” Rev Environ Econ Policy 2(1): 94-113 doi:10.1093/reep/ren001.

Tentative Lecture Schedule (to be finalized)

Date Topic Assignment
Tue, January 3rd, 2017 Introduction Assignment 1 given
Thurs, January 5th, 2017 Introduction
Tues, January 10th, 2017 Introduction Assignment 1 due
Thurs January 12th, 2017 Economics of Pollution Control Assignment 2 given
Tues, January 17th, 2017 Economics of Pollution Control Assignment 2 due
Thurs, January 19th, 2017 Midterm
Tues, January 24th, 2017 Marine Resources
Thur January 26th, 2017 Marine Resources Assignment 3 given
Tues, January 31st, 2017 Climate Change
Thurs, February 2nd, 2017 Climate Change Assignment 3 due
Tues, February 7th, 2017 Climate Change
Thurs, February 9th, 2017 Summary and Recap.
Tues, February 14th, 2017 Climate Change
Thurs, February 16th, 2017 Final.