BSc International Business, Finance and Economics with Industrial/Professional Experience

Year of entry: 2020

Course unit details:
Environmental Economics IIA

Unit code ECON20101
Credit rating 10
Unit level Level 2
Teaching period(s) Semester 1
Offered by Economics
Available as a free choice unit? Yes

Overview

The aims of this course are to explore the use of economic analysis to investigate the causes, consequences and possible solutions to problems associated with degradation of environmental resources and the potential unsustainability of certain types of economic activities.

At the end of the course unit, students will be able to understand and explain:

1.     how neoclassical economics conceptualises environmental problems in terms of market failure;

2.     the theory and practice of valuing, in monetary terms, changes in the stock and flow of environmental resources and use of such values in cost-benefit analysis;

3.     the economics of alternative approaches to regulating local and global pollution such as direct controls, green taxes, subsidies, marketable pollution permits and voluntary agreements;

4.         key concepts of climate-economy models and its use on informing policy designs


 

Pre/co-requisites

Unit title Unit code Requirement type Description
Microeconomics 1 ECON10331 Pre-Requisite Compulsory
Microeconomics 1 ECON10221 Pre-Requisite Compulsory
Introductory Mathematics ECON10061 Pre-Requisite Compulsory
Advanced Mathematics ECON10071 Pre-Requisite Compulsory
Microeconomic Analysis 1 ECON10171 Pre-Requisite Compulsory
(ECON10331 OR ECON10221 OR ECON10171) AND (ECON10061 OR ECON10071)

(ECON10331 or ECON10221 or ECON10171) and (ECON10061 or ECON10071)

Aims

The aim of this module is to explore the use of economic analysis to investigate the causes, consequences and possible solutions to problems associated with degradation of environmental resources and the potential unsustainability of certain types of economic activities.

Learning outcomes

At the end of the course unit, students will be able to understand and explain:

  1. how neoclassical economics conceptualises environmental problems in terms of market failure;
  2. the theory and practice of valuing, in monetary terms, changes in the stock and flow of environmental resources and use of such values in cost-benefit analysis;
  3. the economics of alternative approaches to regulating local and global pollution such as direct controls, green taxes, subsidies, marketable pollution permits and voluntary agreements;
  4. key concepts of climate-economy models and its use on informing policy designs
     

Syllabus

Topic 1:               Economics of Environmental Problems

Topic 2:               Environmental Valuation and Cost-Benefit Analysis

Topic 3:               Environmental Regulation and Pollution Control

Topic 4:               Energy and Climate Change
 

Teaching and learning methods

Lectures and tutorial classes.

Intellectual skills

(i) problem-solving skills; (ii) ability to analyse and interpret empirical data; (iii) the evaluation and critical analysis of arguments, theories and policies; (iv) synthesise and evaluate data.

Practical skills

(i) ability to analyse and interpret empirical data; (ii) basic working knowledge of statistical software.

Transferable skills and personal qualities

(i) select and deploy relevant information; (ii) communicate ideas and arguments in writing and verbally; (iii) apply skills of analysis and interpretation; (iv) manage time and work to deadlines; (v) use ICT to locate, analyse, organise and communicate information (e.g. internet, on-line databases, search engines, library catalogues, spreadsheets, specialist programs, word processing and presentation software) (vi) ability to work in a small group.

Employability skills

Analytical skills
Problem solving

Assessment methods

  • Essay - 60%.
  • Two Computer-Based MC Assignments - 40%.
     

Feedback methods

  • Tutorial feedback.
  • Office hours.
  • Revision sessions.

Recommended reading

 

List of books:

Hanley, Nick, Jason Shogren and Ben White. (2013) Introduction to Environmental Economics, Second Edition, Oxford University Press. [HSW]

Keohane, Nathaniel O. and Sheila M. Olmstead. (2016) Markets and the Environment, Second Edition, Island Press. [KO]

Perman, Roger, Yue Ma, Michael Common, David Maddison and James McGilvray. (2011) Natural Resource and Environmental Economics, Fourth Edition, Addison Wesley. Or earlier editions [P]

Tietenberg, Tom and Lynne Lewis. (2014) Environmental Economics and Policy, Sixth Edition, Pearson. [TL]

Edwards-Jones, G, Davies, B and S.Hussain (2000) Ecological Economics: An Introduction. Blackwell Science. [EJDH]

 

Reading by topic - * denotes required readings.

Topic 1: Economics of Environmental Problems

Accessible Introductions:

*HSW    Ch1 [sections 1.1 -1.2], Ch2

*KO       Ch.2, 4, 5

Technical Core:

*Perman

Ch. 4 ‘Welfare economics and the environment’, or equivalent in earlier editions of      the book, eg Ch 5 in 3rd Edition:

Part I Efficiency and optimality

4.1 Economic efficiency

4.2 An efficient allocation of resources is not unique

4.3 The social welfare function and optimality

Part II Allocation in a market economy

4.5 Efficiency given ideal conditions

4.6 Partial equilibrium analysis of market efficiency

4.7 Market allocations are not necessarily equitable

Part III Market failure, public policy and the environment:

4.8 The existence of markets for environmental services

4.9 Public goods      

Topic 2: Environmental Valuation and Cost-Benefit Analysis

Valuation:

*HSW    Ch.3, Ch.4

*P           Ch12  ‘Valuing the Environment’ (or equivalent in earlier editions of the book)

EJDH     Ch. 6.

KO         Ch.3

Hanley, N and E. Barbier (2009) Pricing Nature. Cost–Benefit Analysis and Environmental Policy. Edward Elgar. Chapters 3-6 (they cover different types of valuation approach, so read accordingly)

Bateman, I et al (2002) “Economic Valuation with Stated Preference Techniques: A Manual” UK Dept for Transport/ Edward Elgar. An accessible “how to” guide which also explains the methods very clearly.

Cost-Benefit Analysis:

*EJDH   Ch. 8.

*P           Ch11  ‘Cost-benefit analysis’ (or equivalent in earlier editions of the book)

Hanley, N and E. Barbier (2009) Pricing Nature. Cost–Benefit Analysis and Environmental Policy. Edward Elgar. Chapters 2, 7, 13

KO         Ch.3

Topic 3: Environmental Regulation and Pollution Control

*KO       Ch.8-10

HSW      Ch.2.3

TL          Ch.14-15

P             Ch.5-6

Ellerman, A. Denny, Claudio Marcantonini and Aleksandar Zaklan. (2016). “The European Union Emissions Trading System: Ten Years and Counting." Review of Environmental Economics and Policy, 10(1): 89-107.

Goulder, Lawrence H. (2013). “Markets for Pollution Allowances: What Are the (New) Lessons?” Journal of Economic Perspectives, 27(1), pp.87-102.

Muller, Nicholas Z. and Robert Mendelsohn. (2009). "Efficient Pollution Regulation: Getting the

Study hours

Independent study hours
Independent study 0

Teaching staff

Staff member Role
Daniel Rigby Unit coordinator
Hei Sing Chan Unit coordinator

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