Environmental and Resource Economics and Policy

Harvard University - JFK School of Government
Cambridge, Massachusetts

Instructor: Stavins, Robert
Subject area: Economics
Department: Economics
Course number: 201

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


Nature and Purpose of the Course:

This course provides a survey, from the perspective of economics, of public policy issues regarding the use of natural resources and the management of environmental quality. The course covers both conceptual and methodological topics and recent and current applications. The first part of the course is an introduction to the principles of environmental and resource economics, induding private and social benefit-cost models. We develop basic theory and methods, and examine actual practice and politics. In the second part of the course, the focus is on natural resources, both nonrenewable resources (minerals and energy) and renewable resources (water, forests, land, fisheries, and wildlife). In the third part of the course, we examine environmental policy, beginning with air pollution problems, including: local problems (both stationary and mobile sources); regional air pollution (acid rain); and global problems (the greenhouse effect and stratospheric ozone depletion). Next we explore water pollution issues, followed by an investigation of solid and hazardous waste management problems. In the fourth and final pan of the course, we focus on political and macroeconomic aspects of environmental policy.

Robert N. Stavins
Office: Room 265, KSG
Phone: 495-1820
Office Hours: Monday, 4-5 pm, and by appointment
Assistant: Lesly Adkins-Shellie, Room 263, 495-8833
(leslya@ksg l .harvard.edu)

Course Assistants:
Steve Kafka (Head Teaching Assistant)
Phone: (h) 891-4589; (w) 495-9836 [office: T-169]
E-Mail: kafka@fas.harvard.edu
Offfice Hours: Times to be arranged

Richard Newell
Phone: 496-9330
E-Mail: rgnewell@fas.harvard.edu
Offfice Hours: Times to be arranged

Margaret Madajewicz
Phone: 628-2485
E-Mail: madajew@husc3.harvard.edu
Office Hours: Times to be arranged

Prerequisites: One course in microeconomic theory, or permission of the instructor; an introductory course (such as Social Analysis 10, P-125, API-141, or M-221) is adequate preparation. Students should be familiar with basic economic concepts, such as: supply & demand functions, consumers' surplus, opportunity cost. marginal analysis, and time discounting. It may be helpful to review a microeconomics textbook.



A. Introduction to Environmental & Natural Resource Economics - Feb I

B. Principles of Environmental & Natural Resource Policy: Uses and Limits of Conventional


(Problem Set #l is Due)


A. Nonrenewable Resources
1. Optimal Extraction & Use of Nonrenewable Natural Resources - Feb 27
2. Markets, Market Failure, & Nonrenewable Natural Resources - March I
3. Energy Economics and Policy - March 6 (Prof. Adarn Jaffe)

B. Renewable Resources
1. Common-Property Problerns, Water Resources - March 8 (Problem Set #2 is Due)
2. Forestry and Forested Wetlands - March 13

(Midterm Examination: March 15)


A. Overview of the Economics of Pollution Control
B. Air Pollution
C. Water Pollution: Overview of Water-Quality Problems and Policy, and Non-point Source Water

A Sustainable Development - May 1
B. Politics and Policy - May 3 (Problem Set #5 is Due)

Reading Material

There are two required texts for the course:

Tietenberg, Tom. Environmental and Natural Resource Econornics, Third Edition. New York, - New York: Harper Collins, Inc., 1992.

Ponney, Paul R., ed. Public Policies for Environrnental Protection. Washington, D.C.:
These books are available at the Harvard Coop, and both are on reserve at the Kennedy School Library, on the ground floor of the Littauer Building. Extensive use will be made of other materials, as indicated on the course reading list (Handout #2). All required readings are available in the Course Materials Distribution Office (Belfer G-6) and are on reserve in the Kennedy School Library; optional readings are only on reserve. If you are unable to find any of the assigned materials, please let the course assistants know as soon as possible. All reading material, svith the exception of the starred items, is required. Most of the reading is quite straightforward, but a few of the readings rnay be more challenging for some students because of the economics and/or mathematics background assumed.

Course Requirements and Grading:

We will meet for a total of 24 class sessions. There will be: three quantitative problem sets (due at the beginning of class on February 221 March 8, and April 5); two problem sets consisting of short essays on policy issues (due at the beginning of class on April 19 and May 3); an in-class midterm exam (March 15); and an in-class (closed book) final exam during exam period. Late problem sets will be penalized by a grade adjustment.

Optional review sessions on specific subjects of interest or difficulty will be conducted periodically throughout the semester by the course assistants. These review sessions will be announced in advance and take place on Fridays. from 1:00 PM to 2:30 PM in Room 280, and on Thursdays at a time and place to be announced.

Course grading will be on the following basis:

Problem Sets 25%
Midterm Exam 30%
Final Exam 45%

There will be no makeup for the midterm exam; instead, the weight assigned to the final exam will be adjusted accordingly. For a detailed picture of the class sessions, see the course reading list (Handout #2).