ECON 322: Syllabus

Fall 2020

Instructor: Rob Hicks
E-mail: rlhick@email.wm.edu [note, this differs from the email address posted on my website]
Class Time: MWF: MWF 10:00-10:50am [Only relevant for exam times]
  TR: TR 12:30-1:50pm

Covid19 Considerations

Due to family health issues, I am unable to offer this class in person. This class is being taught as "Remote Asynchronous". This means, I will be recording lectures per lecture day where you can watch them on your schedule. Office hours (and a first day "live" zoom session) will occur over video conference at appointed times.

Course Summary

This course covers economic approaches to environmental and natural resource problems. In this course we will investigate the interaction between economic decisions made by firms or consumers and the environment. The main topic areas are as follows:

  • Environmental Value and Market Failure

    The term environmental value has been used broadly by different groups in the popular and scientific literature. We will define what economists mean by value for the environment, and will contrast that definition with philosophical notions of environmental value. We will discuss common causes of market failure for environmental goods including problems of public goods and externalities.

  • Regulatory approaches for environmental problems.

    We analyze various regulatory approaches to address environmental problems (e.g. standards, market-based incentives) and discuss the relative economic efficiency of those approaches. We will also briefly discuss current U.S. environmental regulatory approaches. After tackling environmental air pollution problems, we will turn to natural resource regulation (fisheries).

  • Measuring Environmental Value and Cost Benefit Analysis

    We will discuss approaches for measuring economic value for the environment, cost-benefit analysis, discounting, and fairness across generations.

  • Topics in environmental Economics.

    In this section we will use our environmental economics tool-kit and apply it to numerous issues. As time permits, we will investigate:

    1. Climate Change
    2. Eco-Labeling
    3. Biodiversity
    4. Water Policy
    5. More??

Key Dates

Item Date
First day of classes August 19
Last day to add/drop Friday August 28
Mid-Term 1 September 10 (12:30pm - 12:00am window, with 2 hours to complete)
Last day to withdraw Monday October 12
Mid-Term 2 October 15 (12:30pm - 12:00am window, with 2 hours to complete)
Last day of classes November 13
Final Exam (TR section) November 20 (9:00 - 12:00 noon)
Final Exam (MWF section) November 23 (2:00 - 5:00 pm)
   

For the final exam you may take the exam with either section.

Logistics

  • Turning in your work: No hardcopies of any assignments will be accepted this semester. Items slipped under my door or placed in my mailbox will not be retrieved or graded and will not count towards successful and timely completion of course assignments.
    • Both Midterms and Final: The exam assignments must be submitted via the appropriate assignment in blackboard by the time stipulated in the blackboard assignment item. To turn in either problem sets or mid-terms, please print out the assignment sheet and complete the assignment by hand in the spaces provided (legible handwriting please!). If you need to add additional pages for your answer, include them at the end. Once you are ok with your responses scan into a pdf and submit via blackboard.
    • Problem Sets: These can be completed on paper of your choosing. You may either use the spaces provided in a printed version of the pdf, or use your own paper, while carefully labeling work to match to problems. Only scanned pdf's of your work are accepted.2
  • Office Hours: Online Zoom meets on Wednesdays 10:00am - 11:00am, Thursdays 12:30pm - 1:30pm, or by appointment.
  • Email Policy: I will respond to emails but only if they contain the tag #econ322# in the subject line. If they do not, the google will likely delete your email. Please don't expect an email response from me for questions that can't be answered in 3 sentences or less.
  • Grades Your grade will be based on two Mid-terms (30% each), a Final (30%), and problem sets (10%). Additionally, the final exam will be cumulative. Problem sets will be graded on a simple 3 level scale: completed (most items correctly answered), attempted (either sloppy work, partially attempted, or lots of incorrect answers), or not attempted. Most students making an attempt on the Problem Sets will receive full credit. Grades will be awarded based on standard grading scales (after a curve is applied if a curve is deemed necessary). Usually any curve that is applied in this class is quite small, so plan on your raw score being very close to the curved score. I will usually announce curves on a per assignment basis after grading, so you'll know where you stand.

    Letter grade Percentage of points after curve
    A 93–100%
    A− 90–92%
    B+ 87–89%
    B 83–86%
    B− 80–82%
    C+ 77–79%
    C 73–76%
    C- 70–72%
    D+ 67–69%
    D 63–66%
    D- 60–62%
    F 0–59%
  • Policy on Missed Assignments
    • Mid-terms: If for whatever reason you are unable to take a mid-term exam, all weight for the missed exam will be distributed to the remaining mid-terms and/or the final. This policy applies to one missed mid-term only, so your second missed mid-term will receive a grade of 0. If you sit for a mid-term you must complete it. I find that students who miss mid-terms usually fare worse in the course so please use the missed mid-term policy judiciously. If you find the mid-term times inconvenient, please drop this class
    • Final Exam: The final exam must be completed at the scheduled time. University policy prohibits me changing a final exam time unless approved by the Dean of Students.
    • Problem sets must be turned in by the assigned due date. Late work not accepted.

Course Materials and Readings List

  • We will be using the textbook Environmental and Natural Resource Economics, 11th edition. Instead, you may wish to pick up an older edition to save money. If you go this route, note that you are responsible for ensuring that your readings follow what is intended for the class. This shouldn't be too difficult for you as the models we are studying this semester are well-established and this book doesn't change often. Of course, if you go with an older edition, the real-world examples will be more dated.
  • Additional readings, presentations, and other info is available at the course google drive site and are grouped by topic. The recommended way to access materials is through the lecture table above.

To access the readings listed below, click on the relevant "Topic" in the video list table above.

  • Unit I: Market Failure
    • Micro Review, externalities and public goods. Discuss basic market failures when environmental goods are not traded in markets. Focus on defining externalities and public goods with plenty of examples relating to Environment.

      Readings: Tietenberg Chapter 2; Problems of social cost (Coase); Tietenberg Chapter 4; "Revealing the Economic Value of Protecting the Great Lakes", National Oceanic and Atmospheric Association [hereafter Great Lakes] Chapter 3

  • Unit II: Environmental Regulation
    • A brief primer on U.S. environmental policy. Discuss major air, water, pollution, and solid waste policies in Us.

      Readings:Portney, Public Policies for Environmental Protection.

      Note: The second edition of this book is available at the Law School. This isn't required reading but is an extremely valuable resource for critiquing and analyzing US Environmental Policy from a Public Policy perspective.

    • Regulations and Incentives. Compare and contrast different regulatory approaches including market-based incentives in microeconomic setting. The costs of U.S. Environmental Regulation.

      Readings: Tietenberg Chapters 15 and 16, Economic Instruments for Environmental Regulation (Tietenberg); It's immoral to buy the right to Pollute (Sandel); Environmental Regulation and the Competitiveness of U.S. manufacturing (Jaffe et al.);Do Environmental Regulations Create or Destroy Jobs? (Morgenstern et al.).

    • Natural resource extraction and market failure: the case of fisheries.

      Readings: Tietenberg Chapter 13; The tragedy of the commons (Hardin); Incentive-based Fisheries Managment (Grafton et al.)

  • Unit III: Valuing Environmental Amenities and Benefit Cost Analysis
    • Economic value and non-market goods, types of value for the environment: use value [direct, indirect]; non-use value [existence, bequest], economic impacts versus values. Discuss approaches for measuring the economic value of environmental goods. We will cover methods such as hedonics, travel cost, and contingent Valuation.

      Readings: Great Lakes Chapter 6; Barcott (from Outside Magazine)

    • Benefit Cost Analysis, Discounting, and Equity

      Readings: Great Lakes Chapter 4;

  • Unit IV: Topics in Environmental Economics
    • Climate change and trans-boundary pollutants.

      Readings: Reflections on the economics of climate change (Nordhaus), Executive summary of the Stern Report.

    • Watershed Management, pollution permits and taxes.
    • Eco-labeling. Can eco-labeled products lead to socially desirable levels of associated "bads"? How important is the veracity of the label. Examples of eco-labeling.

      Readings: Ecolabeling and the Price Premium (Sedjo and Swallow); The Dolphin-safe Tuna Label (Teisl et al.)

    • Biodiversity and Development. The economics of biodiversity: what are we protecting. Species versus habitat protection. Ecosystem valuation.

      Readings: Conflicts and choices in biodiversity (Weitzman); Willingness to Pay for Charismatic Megafauna (Kontoleon); Preemptive Habitat Destruction (Lueck)

Footnotes:

1

Correction: this video incorrectly describes "Valuing Environmental Amenities and Benefit Cost Analysis" as occurring before "Environmental Regulation". The correct order is reversed as shown in the most recent version of the syllabus.

2

I have changed the syllabus since this video was made to allow you to turn in your problem sets (not midterms or final) on any scanned paper you wish (you don't need to print out the problem set pdf and answer questions there). However you choose to complete the problem sets, you must submit your work as scanned pdf's. Both midterms and the final must be completed on the pdf provided with the assignment and scanned to pdf.