Part 1: Course Description

Course Description

This course involves the study of the role of natural resources in the economy and the role of government in dealing with environmental problems. This is because there is so much talk about the effects of the ever-increasing economic activity on the environment. It is a course in which microeconomic theory is applied to environmental issues as it provides a very useful way to examine them. It simply focuses on welfare economics in relation to the environment, environmental evaluation and the policies to be implemented to reduce damage caused by economic activity on the environment. The course examines various environmental policy instruments and the application of benefit-cost and cost-effectiveness analysis in policy decision making and also seeks to evaluate the current Zambian environmental policies. Students will have a clear understanding of the potential contribution and limitations of the main economic approaches for measuring net social impact of alternative environmental options.

They will learn how to distinguish between economic tools for valuation and non-economic decision making tools; and between economic valuation tools and policy instruments. They will also be able to describe, critically review, and engage in the appropriate selection of the major existing economic tools for environmental management. Further, they will be familiar with the essential features of the range of contemporary conceptual frameworks and sustainability assessment approaches with a significant economic component.

Prerequisites

Intermediate Microeconomics will be a plus but the course provides enough basic economics to help students with little economics background.

Part 2: Student Learning Outcomes

General Learning Outcomes:
- Write summaries (in own words) of concepts learnt in the course
- Design and make PowerPoint presentations of concepts learned
- Apply new knowledge to solving problems in groups
- Demonstrate use of online resources in problem solving
- Apply critical thinking skills

Specific Learning Outcomes:
- Critically and systematically integrate knowledge in contemporary topics in Environmental economics.
- Is acquainted with the basic principles, relevant methods and techniques in environmental economics and the economics of natural resources, and knows how to valueenvironmental goods and services.
- Make assessments in contemporary topics in Environmental economics informed by relevant disciplinary, social and ethical issues.

WEEK 1:

Topic 1: What is Environmental Economics?
- Economic Analysis
- The Importance of Incentives
- Incentives: A Household Example
- Incentives and Global Warming
- The Design of Environmental Policy
- Macroeconomic Questions: Environment and Growth
- Benefit-Cost Analysis
- Valuing the Environment
- Environment and Development
- International Issues
- Globalization and the Environment
- Economics and Politics

Problem sets for week 1:
1. Discuss what environment economics is.
2. Discuss the types of pollution and how they can be regulated
3. Discuss the following:
- Air and water pollution
- Solid waste
- Deforestation
- Soil degradation and sedimentation
- Consequences of ecological imbalances

WEEK 2:
Topic 2: The Economy and the Environment
- Natural Resource Economics
- The Fundamental Balance
- The Environment as an Economic
- Social Asset
- Emissions, Ambient Quality, and Damages
- Types of Pollutants

Problem sets for week 2:

1. Discuss what climate change is and its effects.
2. Discuss problems and potential effects of global warming and models of economic effects of climate change
3. Discuss the impact of Climate change specifically on agriculture
4. Highlight the main points of the Kyoto Protocol and further discuss some of the obstacles to the Kyoto Protocol as well as carbon trading

WEEK 3:

Topic 3: Benefits and Costs, Supply and Demand
- Willingness to Pay
- Demand
- Aggregate Demand/Willingness to Pay
- Benefits
- Cost
- Technology
- The Equimarginal Principle
- Marginal Cost and Supply

Problem sets for week 3:
1. Use the logic of willingness to pay to interpret the statement "I like clean air more than you do."
2. Below is the marginal willingness to pay of a consumer for organic apples.

a. What is this individual's total willingness to pay at a consumption level of 4 apples?
b. If the price of organic apples is $2.40, how many apples would this person consume?

3. Below are the marginal willingness-to-pay schedules for organic apples for two individuals.

Construct the aggregate marginal willingness-to-pay (the demand) curve for this group of two people.
4. What are the advantages and disadvantages of using willingness to pay as a measure of value? What are some alternatives?

5. Figure 3.10 illustrates the derivation of an industry supply curve under competitive conditions where each firm receives the same price for its output. What is the relationship of this procedure to the equimarginal principle discussed earlier in the chapter?

6. Consider the marginal cost curve associated with cleaning your dorm room. Label the vertical axis "time" and the horizontal axis "percent clean." What would this marginal cost curve look like?

7. Somebody invents a small machine that electrostatically is able to remove dust from rooms very quickly. What does this do to the marginal cost curve depicted in question 6?

WEEK 4:Markets, Externalities, and Public Goods

- Economic Efficiency
- Efficiency and Equity
- Markets
- Markets and Social Efficiency
- External Costs
- Open-Access Resources
- External Benefits
- Public Goods

Problem sets for week 4:

1. Suppose that the following discrete numbers show the integer values of MWTP and MC as depicted in Figure 4.1. Determine the socially efficient rate of output. Show that at any other output level, the net benefits to society will be lower than they are at the efficient level. (Remember, the marginal cost of increasing output from 4 to 5 units is $9, which is also the amount by which cost decreases in going from 5 to 4 units.)

2. Go back to question 2 in Chapter 3. Suppose the marginal cost of producing this item is constant at $5 per item. What is the socially efficient rate of output?

3. Following are portions of the demand curves of three individuals for the water quality in a small pond. The water quality is expressed in terms of the parts per million (ppm) of dissolved oxygen (DO). Water quality improves at higher DO levels. The demand curves show the marginal willingness to pay of each individual (A, B, C).
a. Complete the table. Find the aggregate marginal willingness-to-pay curve of these three people at each DO level.

b. If the actual marginal cost of increasing DO is $12, what is the socially efficient level of DO in the lake, assuming these three people are the only ones involved?

WEEK 5:

Topic 5: The Economics of Environmental Quality

- Pollution Control-A General Model
- Pollution Damages
- Abatement Costs
- The Socially Efficient Level of Emissions
- Enforcement Costs
- The Equimarginal Principle Applied to Emission Reductions

Problem sets for week 5:
1. Prove (graphically) that the point labeled e*in Figure 5.6 is indeed the point that minimizes total social costs, the sum of abatement and damage costs.
1. (Do this by showing that at any other point, this total cost will be higher.)
2. Suppose there is a river on which are located several micro breweries, each of which discharges pollutants into the water. Suppose somebody invents a new technology for treating this waste stream that, if adopted by the breweries, could substantially diminish emissions. What are the impacts of this invention on
(a) the actual level of emissions and
(b) the efficient level of emissions?
3. Suppose there is a suburban community where domestic septic tanks are responsible for contaminating a local lake. What is the effect on actual and efficient levels of water quality in the lake of an increase in the number of homes in the community?

WEEK 6: 1ST CONTINUOUS ASSESSMENT TEST (CAT 1)
Topic 6: Environmental Analysis
- Impact Analysis
- Cost-Effectiveness Analysis
- Damage Assessment
- Benefit-Cost Analysis
- Risk Analysis

Problem sets for week 7:
1. Air-pollution-control authorities in southern California propose to control mobile-source emissions by requiring that a certain percentage of all new cars sold in the region be electric. Contrast the different perspectives that would be involved in analyzing this proposal with (a) economic impact analysis, (b) cost-effectiveness analysis, and (c) benefit-cost analysis.

2. Suppose we are comparing two ways of protecting ourselves against mobile source air pollution: putting additional controls on the internal combustion engine or developing an entirely different type of engine that is cleaner. How would changes in the discount rate be likely to affect the comparison among these two options?

WEEK 8:

Topic 7: Benefit-Cost Analysis: Benefits
- The Damage Function: Physical Aspects
- Measuring Damage Costs Directly
- Willingness to Pay: Estimating Methods
- Willingness to Pay:
- Revealed Preference Methods
- Willingness to Pay: Stated Preference Methods
- Problems in Benefit Estimation

Problem sets for week 8:

1. The Chinese government has elected to close high polluting power plants and some factories. Compare and contrast how the Chinese government would evaluate the benefits versus how an individual Chinese worker would evaluate the benefits.
2. Suppose you want to determine the aggregate willingness to pay among students at your school for increasing recycling at the school. How might you do this?
3. What is the usual meaning that economists give to the expression "the value of a human life"? What are the different ways of estimating this value?
4. Design some contingent valuation-type questions for evaluating the value to people of improving the air quality in the Grand Canyon.

WEEK 9:
Topic 8: Benefit-Cost Analysis: Costs
- The Cost Perspective: General Issues
- The With/Without Principle
- A Word on Social Costs
- The Distribution of Costs
- Concepts of Cost
- Costs of Single Facilities
- Costs of a Local Regulation
- Costs of Regulating an Industry
- Costs at the National Level
- Future Costs and Technological Change

Problem sets for week 9:

1. Over the last two years, emission abatement costs in industry X have been about $1 million per year. A new regulation will lead to abatement costs of $1.8 million per year. Does this mean that the regulation will cause increased abatement costs of $800,000 per year? Explain.
2. In order to protect the quality of its nearby water resources, a community places a restriction on any housing development closer than 100 feet to a wetland. How might you estimate the social costs of this regulation?
3. "The costs of achieving emission reductions in the future will depend greatly on the types of policies used to reduce emissions today." Explain.
4. A tax on gasoline is proposed in order to raise money for the pollution-control activities of several public agencies. The tax will be 10¢ per gallon, and last year 10.3 million gallons of gasoline were used by motorists (this is strictly an illustrative number). Does this mean that we can anticipate $1,030,000 in revenues from this tax? Explain and use a graph to answer this question.

WEEK 10:
Topic 9: Environmental Policy Analysis
- Efficiency
- Cost-effectiveness
- Fairness
- Enforceability
- Flexibility
- Incentives for technological innovations
- Moral Considerations

Problem sets for week 10:

1. "Efficiency implies cost-effectiveness, but cost-effectiveness does not imply efficiency." Explain this statement.
2. Environmental policy is sometimes criticized for being a white, middle-class preoccupation. How might you interpret this position, using the concepts presented in this chapter?
3. Do you think that the impacts of the program to control automobile pollution are progressively or regressively distributed? How about the program to ensure the quality of public water supply systems?
4. Is there ever a justification for adopting an environmental regulation that cannot be, or will not be, enforced?
5. Catalytic converters are required on all new cars to reduce tailpipe emissions. Explain how this technology could have a beneficial impact in the short run but a less beneficial impact in the long run.

WEEK 11: 2ND CONTINUOUS ASSESSMENT TEST (CAT 1)

WEEK 12:
Topic 10: Decentralized Policies
- Liability Laws
- Property Rights
- Problems with Property Rights to Internalize Externalities
- Voluntary Action

Problem sets for week 12:
1. It would seem that neighbors could easily negotiate among themselves to settle problems of local externalities such as noise and unsightly land uses. Yet most communities control these problems with local laws and regulations. Why?
2. Suppose courts changed rules regarding burden of proof, requiring polluters to show that their emissions are harmless, rather than pollutes to show that they have been harmed. What impact might this have?
3. Suppose a community weighed each resident's solid-waste disposal when it was picked up and published the individual totals each year in the local newspaper. Do you think this would lead to a reduction in the total quantity of solid waste disposed of in the community? If they were published monthly?
4. For what types of pollution problems is voluntary action likely to be the most effective policy approach?

Topic 11: Command-and-Control Strategies: The Case of Standards
- Types of Standards
- The Economics of Standards
- Standards and Incentives
- The Economics of Enforcement

Problem sets for week 12:
1. Environmental protection programs are frequently designed to require all polluters to cut back emissions by a certain percentage. What are the perverse incentives built into this type of program?
2. If emission standards are ruled out because of, for example, the impossibility of measuring emissions (as in nonpoint-source emissions), what alternative types of standards might be used instead?
3. In Figure 11.2, show the social cost of setting a uniform national standard, applicable to both rural and urban areas (to do this, you can assume that the national standard is set at either eu or er).
4. Consider the example of Figure 11.3. Suppose we define as faira cutback in which the two sources have the same total costs. Would an equiproportionate reduction be fair in this sense? A reduction meeting the equimarginal principle? Is this a reasonable definition of fair?

WEEK 13:

Topic 11: International Environmental Agreements

- General Issues
- The Economics of International Agreements
- The Distribution of Costs
- A Multilateral Success Story: The Montreal
- Protocol

Problem sets for week 13:
1. Following are illustrative numbers indicating benefits and costs to Country A of taking specific actions on an international treaty to reduce CO2 emissions. The choice is either to adhere to the CO2 emissions cutbacks called for by the treaty or to disregard the treaty.

What is the incentive for Country A to free ride on the abatement efforts of other countries? If all countries become free riders, what is the result?
2. We talked about "side payments" given to countries to lower the costs to them of joining international environmental agreements. What types of side payments might be effective?
3. What is free-riding in the context of international agreements and what might be some ways of overcoming it?

WEEK 14:

Topic 12: International Environmental Agreements

- Environmental Degradation in Developing Economies
- Economic Growth and the Environment
- Environmental Policy Choices in Developing Countries
- The Role of the Developed Countries

Readings:
- Field, B. and Field, M. 2002. Environmental Economics: An Introduction. Boston, McGraw Hill.
- Jonathan M. and Brian Roach.2013.Environmental and Natural Resource Economics: A Contemporary Approach. London and New York

Problems set for week 14:

1. What is the relationship between economic growth, population growth, and environmental quality in developing countries?

2. Environmental pollution is, for the most part, reversible, in the sense that it can be decreased if the appropriate steps are taken. What are the pros and cons, therefore, of using sustainability as a criterion for evaluating environmental policies?

3. When a multinational business firm from the developed world opens operations in a developing nation, should it be held to the environmental standards of its country of origin or to those of the country in which it is operating?

4. Suppose we introduce a new criterion, "administrative feasibility," for evaluating environmental policies in developing countries. How might this affect choices among different types of policies?

5. Refer to Figure 21.1. How would a technology transfer from country A to country B alter the PPC?

Attachment:- Course.rar