ECON20160 Economics of the Environment

Academic Year 2024/2025

This course is an introduction to the economics of the environment. Economists have an important role in helping design environmental policy to address key environmental challenges such as climate change, water conservation, or pollution regulation. This course provides an introduction to the use of economic principles in the analysis of ecosystem and environmental problems and in designing appropriate policy responses. The course will equip students with the tools to participate in discussions of environmental policy through an economic lens. This will be done using economic models and policy discussions. We will discuss the sources of environmental problems, ecosystem valuation, how to conduct a (socio-environmental) cost-benefit analysis and policy instruments to resolve environmental issues, especially pollution control. Key concepts include market failure and government intervention, externalities, public goods, property rights, cost benefit analysis and the design and assessment of policy. The application of these tools to present-day local and global environmental policies, such as local pollution, climate change, water and nature conservation, will be discussed in lectures and in smaller group tutorials.

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Curricular information is subject to change

Learning Outcomes:

On completing this module students should be able to
(a) Understand the economics mechanisms and basic science behind key environmental issues,
(b) Apply the principles and concepts of economic theory to resolving environmental issues and designing environmental policies,
(c) Appraise and question policies and programmes for environmental management,
(d) Explain and analyse examples of current applications of policy instruments to the environment using an economic framework.

Indicative Module Content:

The main topics covered in this module are the following:
INTRODUCTION TO ENVIRONMENTAL ECONOMICS
Relationship between the economy and environment
Planetary boundaries and environmental challenges
Introduction to markets: demand and supply, consumer surplus, producer surplus
Efficiency

MARKET FAILURE: CAUSES AND SOME SOLUTIONS
Market failures
Property rights
Externalities
Public good theory and the tragedy of the commons
Coase theorem

BENEFIT-COST ANALYSIS AND OTHER DECISION-MAKING TOOLS
Normative criteria and the principles of benefit-cost analysis
Benefit-cost analysis over time (dynamic efficiency)
How to implement BCA
Issues with BCA
Discount rates
Cost-effectiveness analysis

VALUATION OF THE ENVIRONMENT
Why do we value the environment
Methods to value the environment
Challenges and criticisms to valuing the environment

DESIGNING AND ASSESSING ENVIRONMENTAL POLICIES
Definitions and Taxonomy of pollution
Market allocation and policy response
Efficient and cost-effective policy measures
Other policy dimensions

STATIONARY SOURCES OF LOCAL AND REGIONAL AIR POLLUTION
Main pollutants and their health and environmental impacts
Command and control policies
Market-based approaches
Design and assessment of policy instruments in practice

AIR POLLUTION AND OTHER EXTERNALITIES FROM THE TRANSPORTATION SECTOR (MOBILE SOURCES)
Externalities linked to different means of transport
Challenges and differences of designing policy for mobile sources compared to stationary sources
Transport policy in practice:
fuel economy standards
fuel standards
taxes
congestion charging
labelling

CLIMATE CHANGE: GLOBAL POLLUTANTS
The science of climate change and global pollutants
International agreements and negotiations
Carbon pricing: price-based (carbon tax) vs quantity-based (emission trading) instruments

WATER POLLUTION & WATER MANAGEMENT
The key science of water pollution and water scarcity problems
Theory and practice of water pollution and water management policy
Efficiency and cost-effectiveness
Policy experiences from around the world

Student Effort Hours: 
Student Effort Type Hours
Lectures

24
Tutorial

6
Autonomous Student Learning

78
Total

108
Approaches to Teaching and Learning:
Learning is achieved in lectures and smaller group tutorials. In tutorials, students are encouraged to discuss the material and practice math-based problem sets that use economic models and economic tools to analyze specific environmental problems and design solutions. A key activity in this module is the group project. Students are allocated a group in their tutorial and assigned a topic on which they write a report and present (or record a presentation) as a group later in the semester. This provides an opportunity for students to deepen their knowledge and engage in autonomous learning. Development of presentation skills and group team skills are also encouraged. 
Requirements, Exclusions and Recommendations
Learning Recommendations:

It is recommended that students take "Introduction to Economics" or "Economics and Sustainability" or "Principles of Microeconomics" or a similar introductory module in economics (microeconomics) before taking this module.


Module Requisites and Incompatibles
Incompatibles:
ECON30370 - Environmental Economics


 
Assessment Strategy  
Description Timing Open Book Exam Component Scale Must Pass Component % of Final Grade
Exam (In-person): The module has an in-person written final exam. n/a Alternative linear conversion grade scale 40% No

30
Group Work Assignment: Students will work on a group project in which they will be asked to research the assigned topic, write a report on it and summarize their work in a presentation n/a Alternative linear conversion grade scale 40% No

30
Quizzes/Short Exercises: This module include continuous assessment in the form of quizzes throughout the term. n/a Alternative linear conversion grade scale 40% No

40

Carry forward of passed components
Yes
 
Resit In Terminal Exam
Summer Yes - 2 Hour
Please see Student Jargon Buster for more information about remediation types and timing. 
Feedback Strategy/Strategies

• Group/class feedback, post-assessment
• Online automated feedback
• Peer review activities
• Self-assessment activities

How will my Feedback be Delivered?

Students are given feedback on their quizzes and the group project during the semester. They peer review each other's group projects.

Tietenberg, T. and L. Lewis (2018) Environmental and Natural Resource Economics, 11th edition, Routledge.
Readings as provided on Brightspace
Name Role
Professor Lisa Ryan Lecturer / Co-Lecturer
Aditi Kharb Tutor