Environmental Economics

Tufts University
Medford, Massachusetts

Instructor: Zabel, Jeffrey
Subject area: Economics
Department: Economics
Course number: EC30
Year taught: 1998
Level: undergraduate

Please note that the copyright for this syllabus is retained by the instructor.

Overview: In this course, we will analyze the environment from an economic perspective. We will consider the (implicit or explicit) market for goods and services as a mechanism for determining the efficient allocation of scarce environmental resources. We will first focus on the analytical tools that will allow us to apply an economic approach to the environment. The concepts of public goods and externalities will be introduced as a means for analyzing natural resource and environmental problems. Benefit/Cost analysis will be used as a tool for environmental decision making. A number of current topics such as global warming, the new amendments to the Clean Air Act, and recycling will be discussed. Students are assumed to be familiar with the material in Economics 2 (Introductory microeconomics) or the equivalent.

Course Requirements:
Midterm Exam --30% --Thursday, March 6
Paper Topic--Due Thursday March 12
Paper --20%--Due Monday, April 27, 5:00 PM
Final Exam--35%--Thursday, May 7, 12:00 PM
Participation --5%

Participation: Each person will be asked to comment on a specific article that he/she has signed up for in advance. The articles will either be handed out in class or put on reserve. General class participation will also count towards the participation grade.

Term Paper: A research paper that analyzes the costs and benefits of an environmental policy or problem. A brief description of your topic is due in class on Thursday, March 12. The paper must be no longer than 12 double spaced pages. Further details will be provided at a later date.

Late Paper, Homework Policy: 10% of the total points will be deduced per day for late homework and the term paper.

Required Texts:

TT - Tietenberg, Tom, Environmental Economics and Policy, Second Edition, Harper Collins Publishers, 1998.

Additional Readings: RR - Readings on reserve in Tisch Library.
HO - There will also be occasional handouts in class.

Course Outline and Reading List:
I. Introduction
-TT Chapter 1: Visions of the Future

II. Economic Methods
-TT Chapter 2: The Economics Perspective
Chapter 3: Rights, Rents, and Remedies
Chapter 4: Valuing the Environment
Chapter 12: Environmental Economics: An Overview
-RR Blinder, Alan S., Hard Heads, Soft Hearts, Chapter 5
-RR Carson, Richard T., "The Value of Diamonds and Water," unpublished mimeo.
-RR Grandstaff, S. and John A. Dixon, "Evaluation of Lumpinee Park in Bangkok, Thailand," in John A. Dixon and M. Hufschmidt eds., Economic Valuation Techniques for the Environment, 1986.
-RR Hahn, Robert W., "Economic Prescriptions for Environmental Problems: How the Patient Followed the Doctor's Orders,"Journal of Economic Perspectives, Spring 1989.
-RR Hardin, Garrett, "The Tragedy of the Commons," in Managing the Commons, Garrett Hardin, John Baden eds., 1977.
-RR Hubbard, Harold M., "The Real Cost of Energy," Scientific American, April 1991.
-RR Lesser, Jonathan A., Daniel E. Dodds, and Richard O. Zerbe, Jr, "Measuring the Value of Life and Health," Chapter 12 in Environmental Economics and Policy , 1997.
-RR Lesser, Jonathan A., Daniel E. Dodds, and Richard O. Zerbe, Jr, "Discounting Environmental Benefits And Costs Over Time," Chapter 13 in Environmental Economics and Policy, 1997.
-RR Kelman, Steven, "Cost-Benefit Analysis - An Ethical Critique," Regulation, Jan/Feb 1981.
-RR Morgenstern, Richard D., "Environmental Taxes: Is There a Double Dividend?" Environment, April 1996.
-RR Portney, Paul R., "The Contingent Valuation Debate: Why Economists Should Care," Journal of Economic Perspectives, Fall 1994.
-RR Stavins, Robert N. And Bradley W. Whitehead, "Crafting the Next Generation of Market-Based Environmental Tools," Environment, May 1997.
-RR Viscusi, W. Kip et al., "Environmental Regulation," pages 661-672, 678-683, Chapter 21 in Economics of Regulation and Antitrust, 1992.
-HO Permits Game

III. Air Pollution and Global Warming

-TT Chapter 13: Stationary-Source Local Air Pollution
Chapter 14: Acid Rain and Atmospheric Modification
Chapter 15: Transportation
-RR Cline, William R., "The Scientific Basis for the Greenhouse Effect," in The Economics of Global Warming, 1992.
-RR Kennedy, David M., "Controlling Acid Rain," in Cases in Microeconomics, Jose A. Gomez-Ibanez and Joseph P. Kalt eds., 1990.
-RR Krupnick, Alan J. and Paul R. Portney, "Controlling Urban Air Pollution: A Benefit-Cost Assessment," in Economics of the Environment, 3rd edition, Dorfman and Dorfman eds., 1993.
-RR Nordhaus, William D., "Economic Approaches to greenhouse Warming," in Global Warming: Economic Policy Responses, Dornbush and Poterba eds., 1991.
-RR Portney, Paul, "Economics and the Clear Air Act,"Journal of Economic Perspectives, Fall 1990.
-RR Poterba, James M., "Global Warming Policy: A Public Finance Perspective," Journal of Economic Perspectives, Fall 1993.
-RR Schneider, Stephen H., " The Greenhouse Effect: Science and Policy," Science, Feb. 1989.
-RR Wiener, Jonathan B., "Global Trade in Greenhouse Gas Control: Market Merits and Critics' Concerns," Resources, Fall 1997.
-RR "How Climate Changes," The Economist, April 7, 1990.
-RR "Turning Up the Heat," Consumer Reports, September 1996.

IV. Solid Waste Management
-TT Chapter 17: Solid Waste and Recycling
Chapter 18: Toxic Substances and Hazardous Wastes
-RR Ackerman, Frank, "A Truck is a Terrible Thing to Waste," Chapter 4 in Why Do We Recycle?, Island Press, 1997.
-RR Boerner, Christopher and Kenneth Chilton, "The Folly of Demand-Side Recycling," Environment, Jan/Feb 1994.
-RR Sawicki, David S., "The Tragedy of the Common: A First Case Assignment for Students of Policy Analysis.
-RR Young, John E., "The Sudden New Strength of Recycling," World Watch, July/August 1995.
-RR Young, John E. and Aaron Sachs, "Creating a Sustainable Materials Economy," State of the World 1995.
-RR "Solid and Hazardous Waste Management," Chapter 3 in Project 88 -- Round II, a Public Policy Study sponsored by Senators Timothy Wirth and John Heinz.
-RR "Landfills are #1, "Burn It," Garbage Magazine.

V. Perspectives on the Environment

-TT Chapter 20: The Quest for Sustainable Development
-RR Daly, Herman, "The Economic Growth Debate: What Some Economists have Learned but Many Have Not, Journal of Environmental Economics and Management, December 1987.
-RR Repetto, Robert et al., "Wasting Assets: Natural Resources in the National Income Accounts," in Markandya and Richardson, eds., Environmental Economics: A Reader, 1992.
-RR Solow, Robert M., "Sustainability: An Economist's Perspective," in Economics of the Environment, 3rd edition, Dorfman and Dorfman eds., 1993.
-RR Weiss, Edith Brown, "In Fairness to Future Generations," Environment, April 1990.
-RR "Dimensions of Sustainable Development," in World Resources 1992-93.

Possible Articles for Class Discussion

RR Gore, Albert, "Eco-nomics: Truth or Consequences," Chapter 10 in Earth in the Balance, 1992.
HO Christensen, Salley T., "Is a Tree Worth a Life?", Newsweek, Aug 1991.
HO Krauthhammer, C., "Saving Nature, But Only for Man", Time, June 1991.
RR EPA's Proposed Air Quality Standards, The Brookings Review, Summer 1997.
HO "A Logger's Lament," and "Facts, Not Species, Are Periled."
HO Thurow, L., "On Environmentalists," Boston Globe, Jan. 15, 1985. and Worster, D., "On Economists,"
Boston Globe, Jan. 22, 1985.
HO Jacoby, Jeff, "Earth's 'peril' an exaggeration," Boston Globe

Dates for Class Discussion

Thursday 1/22, 1/29, 2/5, 2/12, 2/19, 2/26, 3/26, 4/2