Course Description: This course is designed to further the understanding of the underlying theories and constructs that shape environmental and natural resource policy. We will build on the fundamentals of microeconomic theory and market failure raised in the introductory economics classes. Through readings, quantitative assessment and research we will develop an understanding of various concepts associated with renewable and non-renewable natural resources, pollution, environmental protection and regulation and investigate useful economic tools employed to formulate effective policy instruments in the United States. The fundamental objective of the course is to provide students with the ability to analyze the interaction of the human population with their surrounding ecosystems and how economic principles can help to govern those influences through market based policy or government intervention.

Prerequisite: Economics 11 or 12 or 120

Required Textbook: Kahn, James R., The Economic Approach to Environmental and Natural Resources, Second Edition, The Dryden Press, 1998.

Required Supplemental Readings and Problems: A packet of supplemental materials to be provided by instructor.

Course Requirements: Two examinations will be administered throughout the course of the semester. One mid-term examination worth 20% of the final grade, and one cumulative final examination worth 30% of the final grade. Two quantitative problem sets, each worth 5% of the final grade. One discussion/presentation assignment worth 10% of the final grade is expected of each student. Additionally, a research paper worth 20% of the grade is discussed further below. The final 10% of the grade will be comprised of attendance, participation and discussion of the readings and materials presented. No make-up examinations will be given, unless negotiated with me at a prior date. I adhere strictly to University policy in determining legitimate excuses for missing an examination.

Research Paper: Self-chosen environmental issue and associated U.S. policy. If you took the environmental course (EC120) last spring and your topic relates nationally, you are welcome to pursue an extension of that work. The additional or complementary work must add at least 10 pages of material to the original text and must include some quantitative presentation and analysis. Otherwise, students may discover an initial idea from discussion in class, discussions with me personally or other faculty members, or in the suggested paper topics at the end of each chapter in Kahn’s text. Each student is expected to work independently. I expect papers to be well written and of sufficient length (10-15 pages for first timers, 15-20 for extenders). Each paper must be well documented and must cite at least 10 (12 for extenders) sources in the text. At least half of these should come from articles published in the past 25 years in professional journals, such as Land Economics, Journal of Environmental Economics and Management, American Economic Review, Ecological Economics, etc. All paper topics must be approved by myself.

Theory and Tools
Economic Efficiency and Government Intervention (Kahn, Chapters 2 & 3) Week 2
---  market failure and environmental policy design
Supplementary Readings: "The Tragedy of the Commons", Garrett Hardin; "The Problem of Social Cost", Ronald Coase; "It’s Immoral to Buy the Right to Pollute", Sandel
Non-market valuation (Kahn, Chapter 4) Week 3
---  how do we compare environmental units?
Supplementary Readings: "Nonmarket Valuation of Environmental Resources: An Interpretive Appraisal", V. Kerry Smith; "Is there a Role for Benefit-Cost Analysis in Environmental, Health and Safety Regulation?", Kenneth Arrow, et al; "When is a Life too Costly to Save? The Evidence from Environmental Regulations", Van Houtven and Cropper
Problem set #1 due Week 3
Midterm exam Week 4

Pollution and Environmental Quality
Acid Deposition (Kahn, Chapter 7) Week 5
---  transboundary pollution
---  causes and impacts of
Supplemental Reading: "What Can We Learn from the Grand Policy Experiment? Lessons from SO₂ Allowance  Trading"; Robert N. Stavins
Energy (Kahn, Chapter 8) Week 6
---  U.S. overusage and policy
---  innovative technology
---  alternative and transitional fuels
Supplemental Readings: "Twenty Years After the Energy Crisis: What Lessons Were Learned?", Bohi and Darmstadter; "The Cost of Combating Global Warming: Facing the Tradeoffs", Thomas Schelling; "Shifting Gears: New Directions for Cars and Clean Air", Harrington and Walls
Non-renewables (Kahn, Chapter 9) Week 7
---  minerals and materials policy
---  solid waste disposal
---  recycling
Supplementary Reading: "Unpopular Neighbors: Are Dumps and Lanfills Sited Equitably?", Been
Spring recess Week 8

Environmental Resources
Fisheries (Kahn, Chapter 10) Week 9
---  optimal harvest rates
---  fishery management
Problem set #2 due Week 9
Temperate forests (Kahn, Chapter 11) Week 10
---  forest v. multiple use management
---  optimal rotation
---  old growth forests
Supplementary Readings: "Ecosystem Management: An Uncharted Path for Public Forests", Roger Sedjo; "The Global Environmental Effects of Local Logging Cutbacks", Sedjo; "Valuing the Preservation of Australia’s Kakadu Conservation Zone", Carson, Wilks and Imber
Water Week 11
---  potability
---  oceanic pollution
---  fisheries depletion
Supplementary Reading: "Environmental Values and Water Use", Frederick

Additional Topics
Toxins (Kahn, Chapter 15) Week 12
---  source of
---  disposal of
---  how much should we pay for cleanup?
Supplemental Readings: "Cleaning Up Superfund", Portney and Probst
EPA, Environmental Protection Agency Week 13
---  its role
---  successes and failures of past and present
---  present and future concerns
Supplemental Reading: "Taxing Pollution: An Idea Whose Time Has Come?", Wallace Oates
Prospects for the future Week 14
---  scarcity
---  sustainability
Supplemental Reading: "An Almost Practical Step Towards Sustainability", Robert Solow
Paper and paper presentation due Week 15
Final Examination