Environmental and Natural Resource Economics

Objective

The good relationship between the natural environment and the economy is the greatest challenge for the well-being of humanity. The main purpose of the course is to understand the deep and two-way interdependence of the economy with the natural environment. This will reveal the causes of the degradation of nature and the public remedies for the proper management and protection of the environment which is the foundation for sustainable development.

Content

The environment provides essential natural services and resources for economic growth and prosperity. But the economy often destroys nature, i.e. the very foundations of its development. The search for a more harmonious relationship between economy and environment is now at the heart of understanding all contemporary issues. It concerns major global issues such as climate change, biodiversity loss, the energy crisis, food sufficiency, the use of genetically modified organisms. It also concerns national and local issues such as waste management, pollution of rivers and the local atmosphere, road congestion, forest protection, depletion of fish in our seas, energy saving in our buildings. Economic analysis is essential both for understanding the causes of environmental problems and for their treatment. Proper management of the environment and natural resources is also the key to sustainable economic development.

In the course you will hear gloomy descriptions of the evolution of the world but also very optimistic ones that consider that the economy deals admirably with the environment through technological innovation. You will hear about bets between economists and ecologists that we are running out of scarce natural resources. You will learn about innovative ideas that have already been implemented such as the European Emissions Trading System, or congestions pricing in the city of London. You will learn about the provocative notion of the 'statistical value of life' and it easily misunderstood and how it can help us save more lives.

This course offers a general overview of both the economic causes of environmental problems and the public policies needed to better manage natural resources and protect nature. The emphasis is on the underlying methodology in addressing these issues with some references to current applications, for example, climate change, energy, food and fishing.

The first part of the course provides an introduction to the principles of the environmental and natural resource economics including cost-benefit analysis. The second part provides a brief overview of the principles of using renewable and exhaustible resources. The third part of the course deals with environmental policy design and more specifically explores issues of air pollution, climate change, and water pollution. Finally, it takes a brief look at the broader issue of the relationship between development, environment and equity.