COURSE MATERIALS FOR ECON 76: ENVIRONMENTAL ECONOMICS, SPRING 2000 & 2002


REQUIRED TEXTS

COURSE ORGANIZATION

DETERMINATION OF COURSE GRADE

ASSIGNMENTS

INSTRUCTOR'S POLICIES

FIRST PAPER ASSIGNMENT - Spring 2000

FIRST PAPER ASSIGNMENT - Spring 2002

SECOND PAPER ASSIGNMENT - Spring 2000, 2002

MIDTERM EXAM - Spring 2000

MIDTERM EXAM - Spring 2002

FINAL EXAM - Spring 2000

FINAL EXAM - Spring 2002


REQUIRED TEXTS
Txt -- T. Tietenberg, Environmental and Natural Resource Economics, 5th ed., 2000.

Rdg -- R.N. Stavins, Economics of the Environment: Selected Readings, 4th ed., 2000.

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COURSE ORGANIZATION

This course surveys the field of environmental economics & policy and examines some of the key issues within it in considerable depth. The textbook (Txt) provides the basis for the survey. The issues are covered using the reader (Rdg), which contains recent, notable contributions to the literature. Both the textbook and the readings are accessible to students having only an Introductory Economics background; but the course is also designed to be challenging and informative for students having an extensive background in economics. Class meetings will consist of a mix of lecture and discussion, with the aim being to insure a full understanding of the principle concepts and ample opportunity to discuss the issues. As may be inferred from the determination of one's course grade, students are expected to be well prepared for participation in class discussion.

Textbook assignments include contemplation of the Discussion Questions and completion of the Problems that appear at the end of many chapters. In turn, students having the math background necessary for comprehension of the Appendices that appear at the end of some chapters are expected to assimilate their content.

In place of a single long paper, there will be two short papers (each of 1,500 words, maximum). The purpose of the first paper is to enable greater survey coverage in the course and also to give individual students experience in distilling the essence of a lengthy discussion of disparate issues. For this paper, students in the class will be divided into two teams (A & B), dealing respectively with depletable resources and environmental pollution, using selected chapters of the textbook. Each team member will independently write an analytically focused overview the assigned chapters. After the papers have been handed in, members of each respective team will collaborate in planning and conducting the week of classes that deals with "their" chapters; the other students in the class will be responsible only for "skimming" these chapters. All papers will be made available to all students. In the second short paper each student will independently write an evaluative synthesis of environmental issues as seen from the economist's perspective. These papers will serve as the springboard for discussion during the final week. Additional details about the short paper assignments will be forthcoming closer to the time that work should commence on them.

In addition to the two short papers, there will also be a one hour mid-term and a three hour final.

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DETERMINATION OF COURSE GRADE

Short paper assignments, each counts 15 %
Mid-term Exam 20 %
Final Exam 30 %
Class Participation 20 %

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ASSIGNMENTS

Wk 1

The BIG Issues -- Txt, ch.s 1,6; Rdg, ch. 2 (pages: 40; 14)

Wk 2

Static & dynamic allocation, Sustainability -- Txt, ch.s 2,5; Rdg, ch. 5 (pages: 32; 10)

Wk 3

Sources of environmental problems -- Txt, ch. 4, pp. 532-6; Rdg, ch. 3 (pages: 29; 27)

Wk 4

Valuation methods & issues -- Txt, ch. 3; Rdg, ch.s 10,11,12 (pages: 27; 66)

Wk 5

Depletable resources, overview -- Txt, ch.s 7,14 (pages: 48; 0)

Wk 6

Environmental pollution, overview -- Txt, ch.s 15; Rdg, ch.s 18,19 (pages: 29; 27)

Wk 7

Review, Midterm -- Rdg, ch.s 1,25 (pages: 0; 19)

Spring Break

Wk 8

Forests (non-market values), Fisheries, (absent property rights), Biodiversity
Txt, ch.s 12,13; Rdg, ch. 26 (pages: 56; 17)

Wk 9

Global climate change, Carbon tax -- Rdg, ch.s 22,23,24, 17 (pages: 0; 66)

Wk 10

Depletable resources, cases -- Txt, ch.s 8,9,10,11 (pages: 105; 0)

Wk 11

Environmental pollution, cases -- Txt, ch.s 16,17,18,19,20 (pages: 134; 0)

Wk 12

Benefit-cost analysis -- Txt, ch. 21; Rdg, ch.s 13,14,15 (pages: 23; 54)

Wk 13

Costs of environmental protection -- Rdg, ch.s 6,7,8 (pages: 0; 88)

Wk 14

What to conclude? -- Txt, ch.s 22 (pp. 520-536 only), 23,24 (pages: 56; 0)

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INSTRUCTOR'S POLICIES

Examinations: Students must take exams at the duly appointed times; a make-up exam will be given only in the case of a certified (by a Dean or Worth Health Center) medical excuse for having missed an exam.

Late assignments: Assignments are due at the beginning of class or at the time stated, as the case may be. Assignments turned in after the deadline will be marked down one "notch" (e.g., from A- to B+) per hour that they are late; an exception will be made only in the case of a certified (by a Dean or Worth Health Center) medical excuse.

On cheating and plagiarism: See the Student Handbook's statement regarding Academic Honesty. Cases of suspected plagiarism and cheating on exams will be reported to the Dean's Office for judicial action. In addition, the instructor has the automatic policy that any student whom he considers, on the basis of evidence available to him, to have engaged in plagiarism or cheating in any individually assigned work (i.e., in this course, exams and written report) will automatically receive No Credit for the course.

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FIRST PAPER ASSIGNMENT - Spring 2000

Team A: Resources -- text, ch.s 8, 9, 10, 11; Papers due, Tuesday, Week 9; Conduct classes, Week 10.

Team B: Pollution -- text, ch.s 16, 17, 18, 19, 20; Papers due, Tuesday, Week 10; Conduct classes, Week 11. Note: for paper assignment, unit 1 omits ch. 17; unit 2 omits ch. 20.

Assignment

As a member of a designated team, you are responsible -- along with your teammates -- for conducting class sessions on the chapters indicated during the designated week. The paper assignment is meant as a means of helping you to prepare for conducting the class sessions. You are to write a paper of no more than 1,500 words in length that provides an analytically focused overview of the chapters for which your team is responsible. Each of the chapters deals with a distinct kind of resource / pollution. Your paper should, at a minimum: discuss the peculiarities of each kind, with particular attention to distinctive implications, if any, for efficient allocation; indicate the nature of the market and/or government failures characterizing each of the kinds; consider any policy measures that are required to rectify prevalent failures so as to achieve efficiency. A successful paper will provide a clear and coherent structure within which commonalities and differences in all salient respects among the kinds can be readily understood. It will not be concerned with derivations or highly detailed matters for which there is no space within the 1,500 limit.

Your papers will be duplicated for distribution, on the Thursday following the due date, among team members. Team members will then meet, at a mutually agreeable time, to map out the approach the team will use in conducting class sessions the following week. (Assume that class members not on your team will have skimmed, i.e. read lightly, the chapters for which you are responsible.) They will meet with the instructor on Monday afternoon of "their" week to review their approach; graded papers will be handed back at that time. Assessments of individual performances in conducting class sessions will form part of the basis for the class participation component of the course grade.

Your paper is due at the beginning of class on the stipulated Tuesday. It is preferred, if possible, that you use Times New Roman, 11 point font. You must include a word count, indicating the length of your paper measured in the number of words it contains, in the top right corner of the first page, where it can easily be seen. Specific citations -- of the form (Text, nn); nn = page number -- are required whenever reference is being made to information, statements, or arguments from specific parts of the textbook. You are free to consult other published sources if you wish, but only if you list them as references and cite them as appropriate where relying on them.

You are NOT to discuss this assignment with anyone else, either in or not in the class. Your paper is to be the product of your own reading and thinking without discussion with others. There is but one exception to this: you may seek WA (only) assistance with respect to matters of presentation, style, and the like. Any violation of these terms will be considered cheating.

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FIRST PAPER ASSIGNMENT - Spring 2002

Everyone is to read Lomborg, The Skeptical Environmentalist. Their are two distinct writing assignments:

Review option: Two or three individuals -- who know they can work well together -- divide the labor of reading all of the reviews (see listing from Lomborg's web cite) and then, after mutually discussing them, write coordinated, discursive summaries reporting on their contents. Their papers are circulated to the class prior to oral Q&A discussion in class, to last roughly 30 minutes.

Angry, Ecstatic reaction: Everyone else, after reading the book, determines which focused (on some issue) part of the book makes them either the angriest (if they are generally unsympathetic to Lomborg's position) or the most ecstatic (if they are generally sympathetic to Lomborg's position). Based on some (amount left to individual student, notionally no less than 20 hours) search and reading of the relevant literature, each student then writes a paper arguing in some detail, and with some factual basis, against Lomborg's position. The paper is additionally to provide a defense of the anger, ecstasy reaction and of the choice of issue most consequential in their view (to consume no more than 500 of the allowed words). Based on the mix of anger vs ecstasy and the issues considered most consequential among all students engaged in this assignment, some form of class time oral discussion of the papers will be organized; at a minimum, each student's paper will be read and critiqued by another student.

Additional instructions: Maximum word length for papers is 2,500 words; an indication of word count is to appear in the upper left corner of the first page of the paper. Papers are due at the beginning of class on the day indicated.

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SECOND PAPER ASSIGNMENT - Spring 2000, 2002

The purpose of this assignment is to give you an opportunity to formulate an evaluative synthesis of environmental issues as seen from the economist's perspective. The papers written for this assignment will serve as a springboard for discussion during the final week of class sessions.

Over the course of the semester we have seen that there are many environmental problems that impose social costs and require some form of government intervention (or policy) if they are to be resolved to society's benefit. We have also observed that the American government has implemented various policies with the intention of ameliorating numerous environmental ills. But it has not dealt with all problems needing attention; and where it has intervened, its policies have typically not achieved the most that might be expected from government intervention. In short, it would seem that a great deal yet remains to be done to fashion and implement appropriate environmental policies. The world being as it is, it would be foolish to expect that all environmental policy deficiencies (including absent policies) could be rectified within a short period of time. Thus it is necessary to formulate priorities among deficiencies: which should be rectified most quickly; which can be set aside as being of relatively negligible adverse consequence (over a period of, say, ten to twenty years)?

Your assignment in this paper is to answer the following three questions: First, on what principles, or on what bases, should a priority ranking of environmental policy deficiencies be established? Second, what then are two otherwise dissimilar areas of policy deficiency to which you would attach the highest priority? Third, what is one area deserving of lowest priority? In answering the first question: focus on matters of economics, including administrative and enforcement costs. In answering the second and third questions: justify your choices in terms of the principles identified in your answer to the first question; consider "area" to be synonymous with "generic environmental problem" of the kind typically dealt with in a single policy or closely related set of policies (or, in mechanical terms, discussed in a single "section" of the text); and, briefly indicate what is needed to rectify the policy failing (overt or covert), again with reference to your answer to the first question.

Your answers are to be in the form of a coherent, well structured and written, paper of no more than 1,500 words in length. Your paper will be graded on the basis of the soundness of your economic reasoning, the subtlety of your arguments (i.e., avoid "easy" answers unless you can well justify them), the practicality and relevance of your answers, and the clarity of your exposition. In short, approach this question as if you were one of a panel of advisors charged with making recommendations to the next President, recommendations that would be followed!

Your paper is due at the beginning of class on Tuesday, April 25. Use double line spacing when printing it. Please, if possible, use Times New Roman, 11 point font. You must include a word count, indicating the length of your paper measured in the number of words it contains, in the top right corner of the first page, where it can easily be seen. Specific citations -- of the form (xxx, nn); xxx = text or reader, nn = page number -- are required whenever reference is being made to information, statements, or arguments from specific parts of the course materials. You are free to consult other published sources if you wish, but only if you list them as references and cite them as appropriate where relying on them.

You are NOT to discuss this assignment (i.e., possible answers to the three questions to be addressed) with anyone else, either in or not in the class. Your paper is to be the product of your own thinking and reflection without discussion with others. There is but one exception to this: you may seek WA (only) assistance with respect to matters of presentation, style, and the like. Any violation of these terms will be considered cheating.

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MIDTERM EXAM - Spring 2000

You have 75 minutes for the exam. Answer the questions as indicated below.

Part I -- Short-answer questions. Answer in a separate bluebook, labeled Part I.

Briefly answer six of the seven questions appearing below. BE SURE that your answer in each case includes a clear definition of the capitalized term(s) appearing in the question and an indication of its (their) significance in the context of environmental economics. Each question is worth 10 points; allocate roughly 7 minutes to each (totals: 60 points; 40 minutes).

1. What is the relationship between the Microeconomic Theory of Fertility and the Demographic Transition?

2. Why is it important to distinguish between Efficiency and Sustainability?

3. What is the significance of Liability Rules in the context of the Coase Theorem?

4. How do the properties of Exclusion and Rivalry (or Divisibility) relate to demonstrating the need for environmental policies?

5. Discuss how EITHER Value of a Statistical Life OR Travel Cost Method is used in benefit-cost analysis of environmental policies; include measurement (or quantification) in your discussion.

6. Summarize the principal arguments for and against using Contingent Valuation.

7. What are the uses of Cost Effectiveness and Impact Analysis in the formulation of environmental policies?

Part II -- Essay question. Answer in a separate bluebook, labeled Part II.

Answer one of the two questions appearing below. Worth 40 points; allocate 30 minutes.

1. Depletable resources: What is required for their efficient allocation over time? Do markets allocate them efficiently? Have they, or will they soon, become problematically scarce; how do we know?

2. Fund-type environmental pollution: What is required for efficient allocation of the environment's absorptive capacity? What roles can different policies play in achieving efficiency? What roles have these policies actually played?

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MIDTERM EXAM - Spring 2002

Part I -- Short-answer questions.

Briefly answer four of the five questions appearing below. BE SURE that your answer in each case includes clear definitions of the principal terms involved in answering the question. Each question is worth 12 points; allocate roughly 7 minutes to each (totals: 48 points; 28 minutes).

1. On what do the "big picture" optimists (e.g., Simon) and pessimists (e.g., Malthus + Ricardo) fundamentally disagree? How, if at all, can the debate between them be resolved?

2. Would (or does) Solow consider the Hartwick Rule a sufficient guide to achieving sustainability?

3. What is overfishing; what causes it; can it be avoided, always?

4. Can hedonic regressions be used to determine existence values in some, if not all, cases; which, if any?

5. Consider a) willingness to accept payment for some damage then to be done -versus- b) willingness to make payment to undo the damage once done. Why are the two payment amounts generally unequal? Is there any principled (i.e., consistent across damages, with appeal to some rationale) way to pick between them?

Part II -- Essay question.

Answer question 1 (yes, you must!) and either question 2 or 3 appearing below. Each question is worth 26 points; allocate roughly 16 minutes to each (totals: 52 points; 32 minutes).

1. According to the economics perspective, what constitutes an "environmental problem?" Do all environmental problems have the same underlying, fundamental cause?

2. Contingent valuation: What is it; how should it be done; why is it controversial; in sum, does it offer the answer to the dilemma it addresses?

3. Resource scarcity: How should it be evaluated (or determined); are resources becoming more scarce - some, all - which and why?

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FINAL EXAM - Spring 2000

You have two and a half hours (or, 150 minutes) for the exam. Answer questions as indicated below.

Part I -- Short-answer questions. (15 points per answer; spend ~ 11 minutes on each) Succinctly answer any six of the following questions. If answers are given to more than six questions, only the first six answers in order will be graded.

1. Discuss: pollution fees versus tradeable permits.

2. What role should benefit-cost analysis play in formulating environmental regulations?

3. How costly have US environmental regulations proven to be; is there any reason to think that the costs will become more or less significant in the future?

4. What difference does it make whether revenues from pollution taxes are used to reduce other taxes?

5. Evaluate the current state of US environmental policies with respect to either air or water pollution; how, if at all, should they be changed?

6. Evaluate the current state of US policies with respect to toxic substances; how, if at all, should they be changed?

7. What role should contingent valuation play in assessing the merits of environmental policies?

8. Discuss: "Over-population is the source of all of humanities' environmental problems."

Part II -- Essay, longer-answer questions.

1. (20 points per answer; spend ~ 15 minutes on each) For any three of the following environmental problems, write a short essay that answers the following questions: 1) what's the problem; 2) what should be done about it; 3) what is being done about it?

Bio-diversity

Global warming

Deforestation

Ocean overfishing

2. (50 points; spend ~ 39 minutes) The environment is importantly both the source of natural resources and the sink for pollutants. Consider the underlying causes of the basic environmental issues that are confronted in these two broad areas: how are they alike and how do they differ? Answer this question with respect to a market economy in which there are no government policy interventions that directly affect the use of the environment. Additionally, consider the two broad areas with respect to the need for and basic nature of appropriate government policies to bring the economy closer to efficiency: how are the two areas alike and how do they differ in these respects?

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FINAL EXAM - Spring 2002

You have two and one half hours (150 minutes) to complete the exam. Answer questions as indicated below. If you chose to bring into the exam a 5x8 card with your notes, be sure to turn in the card when you turn in your blue books. In answering the questions, please take care to note the point values (out of 200 points in total) and notional time allotments for each (sub-)part.

Part I: 80 points; 60 minutes. About terms and concepts.

1. (32 points in all) For any four of the six terms below (taken from the text's Glossary): provide a definition and a give a brief statement of its significance within the field (of environmental economics, of course).

Terms: ambient permit system; dynamic efficient sustained yield; joint and several liability riparian rights; sustainability criterion; user cost.

2. (48 points in all) For each of the four terms that you have determined to be improperly excluded from the text's Glossary: indicate the term; provide a definition and give a statement of its significance - a statement which should make clear why the particular term should have appeared in the text's Glossary.

Part II: 80 points; 60 minutes. First essay question.

Economists advocate allocating environmental goods (source or sink) and resolving environmental bads (existing or potential; distinct from goods) on the basis of expected net benefit maximization, inclusive of achieving expected marginal benefit equal to expected marginal cost. Additionally, as a corollary, they advocate that market means (i.e., voluntary exchange based on secure property rights) should be used wherever possible. But it seems clear that market means are not equally applicable (or feasible) in all cases. Sketch a typology (or suggest a classification) of environmental goods and bads that covers the spectrum from those most amenable to market means of allocation and resolution to those least amenable. For each type:

a) identify the relevant externalities, if any;
b) consider whether and how they are or could be resolved by market means;
c1) where market means are tenable: indicate, if relevant, any deficiencies (with respect to expected net benefit maximization and, if relevant, otherwise) of these means;
c2) where market means are untenable: state why this is so; indicate the appropriate alternative means and note its deficiencies (as in c1).

Generalize from the typology - what kinds of goods / bads are most amenable to being allocated / resolved by market means; what kinds are least amenable?

Part III: 40 points; 30 minutes. Second essay question.

Environmental economics - inclusive of natural resource economics - deals with issues of efficiency as well as sustainability. What considerations are entailed in the notion of sustainability that are not also implicated in the concept of efficiency? With these considerations in mind: Sketch (or propose) a hierarchy of environmental goods and bads (both as in Part II), starting with that which involves the most serious problem(s) of sustainability and ending with those which involve the least serious problem(s). State your criteria for "serious." For each element in the hierarchy, indicate the remedial means most consistent with economic principles. Does your hierarchy suggest any generalizations about the fundamental causes of sustainability concerns?

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