Advanced Resource and Environmental Economics

University of Southern California
Los Angeles, California

Instructor: Pendleton, Linwood
Subject area: Economics
Department: Economics
Course number: 587
Year taught: Fall 1998
Prerequisites: ECON 487, ECON 500 or permission of the instructor.

Instructor's email
For additional information:
Course information PDF format file

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

Overview: The course covers the application of microeconomic theory to the management of natural resources, pollution, and environmental hazards.

The readings will come from 3 sources:

Class Presentations:
Each student will be required to make at least 1 or 2 class presentations (depending on class size) during the semester. Class presentations will be based on the journal articles listed in the syllabus. Class presentations are worth 40% of the final grade.

Students are required to write a research paper on any topic in natural resource economics. The paper is to be between 10 and 20 pages. The topic must be approved by Prof. Pendleton. The paper is worth 60% of the final grade.

The Professor evaluation for this course will be administered the last week of this semester.

The Syllabus 

I. Introduction to Resource and Environmental Economics
Class: (9/4/98)

Discussion: (9/11/98)
Willig, R. 1976. Consumer's surplus without apology. The American Economic Review. 66(4): pp. 589-597.

II. Dynamic Optimization of Welfare
Discussion (9/14/98)
Weitzman. 1994. On the Environmental Discount Rate. Journal of Environmental Economics and Management. 26: 200-209

Seminar (9/18/98)
Michael Hanemann (UC Berkeley): "Economic Explanations for the Divergence Between Willingness to Pay and Willingness to Accept"

III. Resource Rent and Property Rights
Discussion (9/21/98)
Schlager, E. and E. Ostrom. 1992. Property Rights Regimes and Natural Resources: A Conceptual Analysis. Land Economics 68(3):249-62.

Seminar (9/23/98)
Linwood Pendleton (in Development Seminar) "Modeling Environmental Quality as a Latent Variable"

III. General Resource Scarcity
Discussion (9/28/98)
Hall, D. and Hall, J. 1984. Concepts and Measures of Natural Resource Scarcity with a Summary of Recent Trends. JEEM. 11:363-379

Seminar (10/2/98)
Charles Kolstad (UC Santa Barbara)

Discussion (10/5/98)
Devarajan, S. and Fisher, A. 1982. Exploration and Scarcity. JPE

Seminar (10/9/98)
CVSK Sarma, tentative title "A CGE for India"

Discussion (10/12/98)
9) Slade, M. 1982. Trends in Natural Resource Commodity Prices: An Analysis of the Time Domain. JEEM

Seminar (10/16/98)
Michael Ward (UC Berkeley)

IV. Exhaustible Resources
Discussion (10/19/98)
10) Arrow, K. and Chang, S. 1982. Optimal Pricing, Use and Exploration of Uncertain Natural Resource Stocks

Seminar (10/23/98)
German Fermo

V. Renewable Resources
A. Timber:
Discussion (10/26/98) Forest Mining
Berck, P. 1979. The economics of timber: a renewable resource in the long-run. Bell Journal of Economics

Seminar (10/30/98)
Andres Lerner (UCLA) "A Model of Intra-industry Competition for Regulatory Capture: Effluent Standard-setting in the Pulp & Paper Industry"

Lecture (11/2/98)
Tietenberg Chap 11
Howe, C.W. Natural Resource Economics. 1979. Wiley & Sons.
Chap 11 - The Economics of Forest Management
Biological Timber Management
Economic Timber Management
The Faustmann Formula
Non-timber Forest Benefits

Seminar (11/6/98)
David Layton (UC Davis), "Heterogeneous Preferences Regarding Global Climate Change"

B. Water:
Discussion (11/9/98)
Provenchar, B. 1995, Issues in the Conjunctive Use of Surface Water and Groundwater, in the Handbook of Environmental Economics, Bromley

Seminar (11/13/98)
Robert Mendelsohn (Yale University), "Global Impact Model: Estimating Country-Specific Damages From Climate Change"

C. Open Access Resources:
Discussion (11/16/98)
Haveman, R. 1973. Common Property, Congestion, and Environmental Pollution. QJE 87:278-287

Seminar (11/20/98)
Anna Alberini (CU Boulder), "Incentives Posed By Strict Liability For Toxic Spills"

D. Fisheries:
Lectures (11/23/98)
The Schaefer Model
Economic Versus Biological Management
Management Alternatives:
Assigning Property Rights
ITQ's Shellfish Leasing

Discussion (11/30/98)
Bell, F. 1972. Technological Externalities and Common Property Resources:
An Empirical Study of the U.S. Northern Lobster Fishery. JPE 80:148-153

Seminar (12/04)98 Robert Friedheim, USC

VI. Environmental Economics
Discussion (12/07/98)
Wietzman, M. 1975. Prices vs. Quantities. Review of Economic Studies. pp. 477-491.


Grouped more or less by week: PDF format file

Lectures 1-4 Lecture 5-6 Lecture 7-10 Water
Open Access Fisheries Tropical Deforestation Sustainability
Non-market Valuation


Logging vs. Fisheries and Tourism exercise PDF format file

 Problem Sets

  1. Problem Set 1 PDF format file
  2. Problem Set 2a PDF format file
  3. Problem Set 2b PDF format file
  4. Problem Set 3
  5. Problem Set 4
  6. Problem Set 5 PDF format file
  7. Problem Set 6 PDF format file

Answers to Problem Sets

  1. Problem Set 1, Problem Set 1 spreadsheet PDF format file
  2. Problem Set 2 PDF format file
  3. Problem Set2b PDF format file
  4. Problem Set 3 PDF format file
  5. Problem Set 4 PDF format file
  6. Problem Set 5 (no answers yet)
  7. Problem Set 6 PDF format file

Practice Questions for the Mid-Term

Core Forumulae for the Mid-Term

Practice Questions for the Final Exam

  1. Last Year's Final
  2. Practice Questions
  3. More Practice Questions

Answers to the Mid-term PDF format file