ECON20160

Learning Outcomes:

On completing this module, students should be able to:
(a) Understand the economics and basic science behind key environmental issues,
(b) Apply the principles and concepts of economics to analyse environmental issues and design environmental policies,
(c) Appraise and question policies for environmental management,
(d) Present and analyse existing environmental policies using environmental economics concepts and models.

Indicative Module Content:

Indicative list of the main topics covered in this module (exact content and order may change):

INTRODUCTION TO ENVIRONMENTAL ECONOMICS
Relationship between the economy and the environment
Planetary boundaries and environmental challenges
Introduction to markets: demand and supply, consumer surplus, producer surplus
Welfare and economic efficiency

MARKET FAILURE: CAUSES AND SOME SOLUTIONS
Market failures
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 (static and dynamic efficiency)
How to implement BCA
Pros & Cons of BCA
Discount rates
Cost-effectiveness analysis and other tools

VALUATION OF THE ENVIRONMENT
Why do we value the environment?
Methods for environmental valuation
Challenges and criticisms (Should we do it? Can we do it?)

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
taxes
congestion charges
labels

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:

Approaches to Teaching and Learning:

Learning is achieved in lectures, smaller group tutorials, and autonomous learning. 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.
Autonomous learning is based on (i) reading assigned material (mostly textbook chapters); (ii) reflecting on discussion questions based on the course material; (iii) practicing math-based problem sets and short essay-style questions through ungraded homework and assessed quizzes; (iv) working on a group project. The group project is a key component of the module and provides an opportunity for students to apply theoretical concepts in a real case study, deepen their knowledge of specific economic and policy instruments, practice writing and presentation skills, develop group team and time management skills.

The use of AI is not permitted in the assessed quizzes and final exam; use of AI to generate answers in these cases will be considered academic misconduct.
AI may be used in this module's group project in the following ways:
To generate ideas and organise the structure of the report.
To start a literature review and find relevant papers.
To understand main concepts/theories and find definitions.
To correct grammar and improve the writing style of your own work.
To assist with reference formatting.
Students remain responsible for fact-checking the resulting text and correcting it. Students are required to explicitly state whether AI was used in the assignment and in what ways, provide a reference for the software used, and what prompts where used. Plagiarism risk is high when using AI and it is not acceptable to submit AI-generated content as it is, nor to present AI co-created work all as your own without proper references. Please note that if academic misconduct is suspected, you may be asked to discuss or explain components of your assignment to determine the authenticity of the work, without prior warning.

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

 

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 on the group project during the trimester and are asked to peer review each other's group projects and self-reflect on how they could improve their work. Students can ask questions or request further feedback in the lectures or by scheduling a meeting during office hours.

Main textbook:
Tietenberg, T., & Lewis, L. (2018) "Environmental and Natural Resource Economics". 11th edition. Routledge.

Note: other readings may be introduced and assigned throughout the module. It is the responsibility of the student to keep updated with the material as announced during lectures and uploaded in Brightspace.

Below is a list of further resources that may be referred to during the module or that may be helpful for self-study and projects:

Introductory chapters on microeconomics to review main concepts:
- Beveridge, T. A Primer in Microeconomics, Chapter 2: “Demand and supply”. [available as ebook]
- Pindyck, R., & Rubinfeld, D. Microeconomics, Chapter 2: “The basics of supply and demand” and Chapter 9: “The analysis of competitive markets”.
Other environmental economics textbooks:
- Barbier, E., & Burgess, J. (2025). Economics for a Sustainable World: An Introduction to Natural Resource and Environmental Economics. (1st ed.). Cambridge University Press.
- Callan, S. J., & Thomas, J. M. (2013). Environmental Economics and Management: Environmental Economics and Management: Theory, Policy, and Applications. (6th ed.). Cengage.
- Hanley, N., Shogren, J. F., White, B., & White, B. (2019). Introduction to Environmental Economics. (3rd ed.). Oxford University Press.
- Keohane, N. O., & Olmstead, S. M. (2016). Markets and the Environment. (2nd ed.). Island Press.
- Perman, R., Maddison, D., Mcgilvray, J., Common, M. & Ma, Y. (2011). Natural Resource and Environmental Economics. (4th ed.). Pearson International.
Further readings:
- Bongardt, D., L. Stiller, A. Swart, A. Wagner (2019) Sustainable Urban Transport: Avoid-Shift-Improve (A-S-I) https://www.transformative-mobility.org/wp-content/uploads/2023/03/ASI_TUMI_SUTP_iNUA_No-9_April-2019-Mykme0.pdf
- Brink, C., & Vollebergh, H. R. (2020). What Can We Learn from EU ETS? ifo DICE Report, 18(01), 23-29. https://www.econstor.eu/bitstream/10419/225219/1/ifodice-2020-01-p23-29.pdf
- Brouwer, R., & Van Ek, R. (2004). Integrated ecological, economic and social impact assessment of alternative flood control policies in the Netherlands. Ecological economics, 50(1-2), 1-21.
- Carson, R. T., Mitchell, R. C., Hanemann, M., Kopp, R. J., Presser, S., & Ruud, P. A. (2003). Contingent valuation and lost passive use: damages from the Exxon Valdez oil spill. Environmental and Resource Economics, 25(3), 257-286.
- Carson, R. T. (2012). Contingent valuation: A practical alternative when prices aren't available. Journal of Economic Perspectives, 26(4), 27-42.
- Hausman, J. (2012). Contingent valuation: from dubious to hopeless. Journal of Economic Perspectives, 26(4), 43-56.
- IPCC (2023) 6th Assessment Report (https://www.ipcc.ch/assessment-report/ar6/ synthesis report: https://www.ipcc.ch/report/ar6/syr/
presentation: https://report.ipcc.ch/ar6syr/pdf/IPCC_AR6_SYR_SlideDeck.pdf )
- Olmstead, S. M. (2010). The Economics of Water Quality. Review of Environmental Economics and Policy, 4(1), 44-62.
- Richardson, K., Steffen, W., Lucht, W., Bendtsen, J., Cornell, S. E., Donges, J. F., ... & Rockström, J. (2023). Earth beyond six of nine planetary boundaries. Science Advances, 9(37).
- Schmalensee, R., & Stavins, R. N. (2013). The SO2 allowance trading system: The ironic history of a grand policy experiment. Journal of Economic Perspectives, 27(1), 103-122.
- Sigman, H., & Stafford, S. (2011). Management of hazardous waste and contaminated land. Annu. Rev. Resour. Econ., 3(1), 255-275.
- Stern, N. (2006). Stern Review: The Economics of Climate Change. https://www.lse.ac.uk/granthaminstitute/publication/the-economics-of-climate-change-the-stern-review/
- Stern, N. (2008). The Economics of Climate Change, American Economic Review: Papers & Proceedings, 98(2), 1-37.

Timetabling information is displayed only for guidance purposes, relates to the current Academic Year only and is subject to change.