Environmental Economics at Manchester College

Environmental Economics

Manchester College
North Manchester, Indiana
Instructor: Peterson, Brian
Subject area: Economics
Department: Economics
Course number: ECON 303
Year taught: 1998
Level: Undergraduate

Instructor's E-mail: BJPeterson@manchester.edu

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

Overview: Environmental issues, such as pollution, acid rain, toxic waste dumping, and recycling, have received much attention from economists in the last 30 years. This course is designed to be a survey of economists' views on the subject, and will be broken into two main sections; natural resource economics and environmental economics. In the first section of the course we will study, among other things, sustainability of renewable and nonrenewable resources, and recycling. This section provides the tools necessary to undertake an analysis of environmental issues. In the second section we will study specific environmental issues, such as the amount of pollution regulation that should exist, and what form it should take; should we be concerned about the greenhouse effect, etc. All analysis will be conducted using a microeconomic cost/benefit analysis.

Required Reading

Tietenberg, Tom. Environmental Economics and Policy. 2nd Edition, Harper Collins Publishing. 1998.

Additional Readings in Environmental Economics. (Booklet of articles)

Handouts distributed in class.

Additional & Supplemental Reading Lists

Supplemental Reading
These reading materials are located in the library, either on reserve or in the stacks, or will be handed out in class.

Course Description
Environmental issues, such as pollution, acid rain, toxic waste dumping, and recycling, have received much attention from economists in the last 30 years. This course is designed to be a survey of economists' views on the subject, and will be broken into two main sections; natural resource economics and environmental economics. In the first section of the course we will study, among other things, sustainability of renewable and nonrenewable resources, and recycling. This section provides the tools necessary to undertake an analysis of environmental issues. In the second section we will study specific environmental issues, such as the amount of pollution regulation that should exist, and what form it should take; should we be concerned about the greenhouse effect, etc. All analysis will be conducted using a microeconomic cost/benefit analysis. By the end of this course, you should:

be familiar with how the fundamentals of economics relate to environmental issues;
be able to analyze existing and proposed legislation aimed at environmental issues; and
further develop communication and writing skills.

Attendance
Attendance is not mandatory, in the same sense that taking notes, studying, and passing the exams are not mandatory. You are all budding economists, and as such can be expected to compare the costs and benefits of not attending and make decisions accordingly. However, I expect you to attend every class and be prepared to discuss assigned material. Keep in mind that this is an intense session, so missing one class is the same as missing a consecutive week of classes in a regular semester.

Grades
Your grade will be based on assigned homework, a paper review, a class presentation, and one mid-semester exam. Your grade will be determined as follows:
Exam: 25 %
Homework: 30 %
Review: 20 %
Presentation: 25 %

The grading distribution used in class is as follows:
100-93 - A; 92-90 - A-; 89-87 - B+; 86-83 - B; 82-80 - B-; 79-77 - C+; 76-73 - C; 72-70 - C-; 69-67 - D+; 66-63 - D; 62-60 - D-; < 60 - F

Example Grade Calculation for student: Brian Peterson
1. Exam
Score: 78%; Points Toward Final Grade: 0.25*78 = 19.5
2. Homework
Score: 95%; Points Toward Final Grade: 0.30*95 = 28.5
3. Review
Score: 90%; Points Toward Final Grade: 0.20*90 = 18.0
4. Presentation
Score: 80%; Points Toward Final Grade: 0.25*80 = 20.0
5. Final Grade: 86.0 (B)

Homework
Throughout the session I will be assigning and collecting several homework sets, which will consist of short problems or writing assignments related to the material we are currently discussing. I will announce the due dates of the homework at least two classes in advance in order to give you ample time to complete the assignments. Homework is due at the beginning of the period on the day it is scheduled to be turned in. Late homework will be accepted only until it is discussed in class, with a per-day late penalty of 20%. Since homework will vary in size, I will simply use the percentage of points you earned out of the total points available as your homework average. Note: I encourage group efforts in completing the homework assignments; I believe that is an excellent way to learn the material. However, each student much turn in his or her own copy of the assignment.

Exam
The exam will come approximately at mid-term, and will consist of a combination of short-answer and problem-solving questions. This exam will test knowledge of, and ability to apply, the information on natural resource economics. More details will be given later. Note: If you are a handicapped student requiring special consideration in the administration of exams, please let me know this in writing by the end of the second day of classes Thursday, 8 January 1998.

Presentation
The second half of the course deals with environmental policy, and the text contains specific applications of the theory. Each of you will choose a topic and will present the application to the class. More information is contained at the end of the syllabus.

Review
The purpose of this assignment is to acquaint you with some of the current literature, and to improve your writing skills. The review will be a short, 3-page summary and a critique of one of the articles on either the supplemental or required list of articles, except for those specifically excluded at the end of the syllabus. This assignment can be turned in at any point in time during the session.

Extra Credit
You will have the opportunity to add 20 points to your homework score by reading any one of the supplemental articles listed, and writing a review of it. This is to be done after you turn in the required review, and can only be done on one of the articles listed in the supplemental list.

Cheating
Cheating, plagiarism, and any form of academic dishonesty will never be tolerated in this course. Please do not try this in my classroom.

A Note on Expectations
To do well in this course, you must keep up with the material at all times. I expect you to attend class, be prepared, and participate in discussions. If you are experiencing problems, or have any questions COME SEE ME. Continue to see me and ask questions until your concerns have been satisfied. Please do not wait until it is too late to do anything about it in the course. Above all, I expect you to do your best at all times. If this is done, you can expect me to teach you to the best of my ability, make the class interesting and enjoyable, and help you to think critically about economic issues. I will help you as much as you will let me, but you must meet me halfway.

Course Outline
Reading:
Tietenberg text - T
Additional Required Reading List - R
Supplemental Reading List - S

Date	Topic	Preparation
1/7	Introductory Concepts Why study environmental economics?	T1, R1, R2, R3
1/8	Microeconomics of the Environment Market structures -- WTP interpretation Efficiency vs. equity Intergenerational efficiency vs. equity; present value	T2
1/9	Property Rights -- Well-designed and otherwise Public vs. Private goods Market Failure Common Pool Resources Coase Theorem	T3, R4
1/12	Cost/Benefit Analysis How do we value the environment? -- CVM How do we assign costs and benefits?	T4, R5 S1, S2
1/13	Population and Agriculture Malthus and the Population Principle Was Malthus right?	T5, T9, R6
1/14-1/15	Non-renewable, Renewable and Recyclable Resources	T6, T7, T8, T17
1/16	Wildlife Commons Optimal harvest of fisheries, etc.	T11, R7
1/19	Exam
1/20	Pollution Control overview Market-based alternatives vs. CAC	T12, R8
1/21	Greenhouse effect and International Trade	R9, R10 S3, S4, S5, S6, S7
1/22-1/23	Class Presentations on policy
1/26	Poverty, the Environment, and Sustainable Development	T19, T20, R11 S8, S9, S10, T21
1/27	Environmental Justice	R12, R13, R14 S11, S12

Additional Required Reading List

R1. Carson, Rachel. "A Fable for Tomorrow." Silent Spring. Houghton Mifflin Company, Boston: 1962. 1-13.

R2. Carson, Rachel. "The Other Road." Silent Spring. Houghton Mifflin Company, Boston: 1962. 277-97.

R3. Pimentel, David. "Is Silent Spring Behind Us?" Silent Spring Revisited. Edited by Gino J. Marco, Robert M. Hollingworth, and William Durham. American Chemical Society, Washington, DC: 1987. 175-99.

R4. Hardin, Garrett. "The Tragedy of the Commons." Science. Vol. 162. Dec., 1968. 1243-48.

R5. Portney, Paul R. "The Contingent Valuation Debate: Why Economists Should Care." Journal of Economic Perspectives. Vol. 8, No. 4. Fall, 1994. 3-17.

R6. Caravan, Bernard. "Ricardo and Malthus." Economists for Beginners. Random House Books, New York: 1983. 37-72.

R7. Seabright, Paul. "Managing Local Commons: Theoretical Issues in Incentive Design." Journal of Economic Perspectives. 7 No. 4. Fall, 1993. 113-134.

R8. Fialka, John J. "Breathing Easy: Clear Skies Are Goal as Pollution is Turned into a Commodity." Wall Street Journal. 3 October, 1997.

R9. Schelling, Thomas C. "Some Economics of Global Warming." American Economic Review. Vol. 82, No. 1. March, 1992. 1-14.

R10. Allison, Juliann. "Trade Liberalization and the Natural Environment: Conflict or Opportunity?" in: Flashpoints in Environmental Policymaking: Controversies in Achieving Sustainability. Edited by Sheldon Kamieniecki, George A. Gonzalez, and Robert O. Vos. State University of New York Press, Albany: 1997. 229-56.

R11. Jaffe, Adam B., Steven R. Peterson, Paul R. Portney, and Robert Stavins. "Environmental Regulation and the Competitiveness of US Manufacturing." Journal of Economic Literature. 33 No. 1. March, 1995. 132-63.

R12. Bowman, Ann O'M. "Environmental (In)Equity: Race, Class, and the Distribution of Environmental Bads." in: Flashpoints in Environmental Policymaking: Controversies in Achieving Sustainability. Edited by Sheldon Kamieniecki, George A. Gonzalez, and Robert O. Vos. State University of New York Press, Albany: 1997. 155-75.

R13. Payne, Henry. "'Environmental Justice' Kills Jobs for the Poor." Wall Street Journal. 16 September, 1997.

R14. Chatterjee, Pratap. "Toxic Racism: Chippewas Resist Deadly Dumping." Dollars and Sense. May/June, 1997. 13-15.

Supplemental Reading List

S1. Hanemann, W. Michael. "Valuing the Environment Through Contingent Valuation." Journal of Economic Perspectives. Vol. 8, No. 4. Fall, 1994. 19-43.

S2. Diamond, Peter A. and Jerry A. Hausman. "Contingent Valuation: Is Some Number Better than No Number?" Journal of Economic Perspectives. Vol. 8, No. 4. Fall, 1994. 45-64.

S3. Nordhaus, William D. "Reflections on the Economics of Climate Change." Journal of Economic Perspectives. 7 No. 4. Fall, 1993. 11-26.

S4. Weyant, John P. "Costs of Reducing Global Carbon Emissions." Journal of Economic Perspectives. 7 No. 4. Fall, 1993. 27-46.

S5. Poterba, James M. "Global Warming Policy: A Public Finance Perspective." Journal of Economic Perspectives. 7 No. 4. Fall, 1993. 47-64.

S6. Chichilnisky, Graciela and Geoffrey Heal. "Global Environmental Risks." Journal of Economic Perspectives. 7 No. 4. Fall, 1993. 65-86.

S7. Goodman, David and Richard B. Howarth. "International Trade and Sustainable Development." in: Flashpoints in Environmental Policymaking: Controversies in Achieving Sustainability. Edited by Sheldon Kamieniecki, George A. Gonzalez, and Robert O. Vos. State University of New York Press, Albany: 1997. This article is on reserve in the library.

S8. Hawken, Paul. "Natural Capitalism." Mother Jones. March/April 1997. This article is on reserve in the library.

S9. Porter, Michael E. and Claas van der Linde. "Toward a New Conception of the Environment-Competitiveness Relationship." Journal of Economic Perspectives. 9 No. 4. Fall, 1995. 97-118.

S10. Palmer, Karen, Wallace E. Oates and Paul R. Portney. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?" Journal of Economic Perspectives. 9 No. 4. Fall, 1995. 119-32.

S11. Hartley, Troy W. "Environmental Justice: An Environmental Civil Rights Value Acceptable to All World Views." Environmental Ethics. 17. Fall, 1995, 277-289.

S12. Tietenberg, Tom. "Environmental Justice." in: Environmental and Natural Resource Economics. This article is on reserve in the library.

Class Presentations

Each of you will give a presentation on some application of environmental policy. The possible topics are listed below:

Stationary Source Air Pollution
Acid Rain
Toxic Waste
Water Pollution
Deforestation

You may work alone, or in groups of 2, and I will allow you to self-select into groups. Select a topic, and let me know by Wednesday, 14 January of your topic and your group (if applicable). This is a first-come, first-served basis for choice of topics, so let me know as soon as possible (in writing) what topic you want. If topics are depleted before each student has chosen, I will put individuals together into a group. If students do not inform me of a topic by 14 January, I will randomly assign them a topic or group.

For ease of finding information, there is a chapter in your textbook on each topic. Do not feel limited to using only this information in the text. If there is a particular point you wish to make, feel free to consult outside sources for more information. Your grade does not depend on using additional sources, but your presentation will only be improved by their usage.

You will have a 30 minute (or so) presentation to give on your topic, with an opportunity for the class to ask questions at the end. If you are working in a group, I will expect a little more work done, especially in the way of finding additional outside sources. Two people ought to do the work of two people, not one. Read the textbook material; assimilate the information; ask yourself questions about what you have read - did it cover the information thoroughly?, etc. - and present the material in a coherent manner. When you are preparing your presentation, focus on the following questions:

What is the problem? What is the environmental impact of the problem being discussed?
What is the current environmental policy concerning your form of pollution? Is it CAC, market-based, or a combination of the two? How has environmental policy helped to alleviate the problem?
Are there any proposals currently in place to improve upon the current policy? What are they, and how do they improve on the present situation? Are there any suggestions for what the "correct" course of action is?

Everyone will read the relevant chapter prior to hearing your presentation. For 30 minutes, you are the instructor. Feel free to discuss with me what you are planning on doing, or to find additional sources. When you make your presentation, do not feel bound to only using the blackboard (although you certainly can if you wish). Use whatever means you want to get your point across. Use clips from a movie, discussion, song, point/counterpoint, etc.; whatever you wish is fine with me. Just let me know in advance if you will need any "props"; that is, movie projector, TV, etc.

This assignment is meant to be enlightening and enjoyable. You will be graded on coherence, accuracy, completeness, and creativity.

Paper Review

The review should be about 3 pages, word-processed, with 1-inch margins, and a reasonable font size. If it is longer than 3 pages, I will not penalize you; that length is really a minimum requirement - just don't go too far beyond 5 pages or so- it is not a term paper, remember.

Choose an article, and read it twice. Read it once to get the information, and read it again for the details. As you read it, answer the following questions:

What are the important points?
What are the strengths of the paper, and what are its weaknesses?
Were there any points that the author(s) did not make clear, or make very forcefully?
What is your overall impression of the work?

Keep in mind a few things when you read these:
Keep an open mind; some papers are opinion pieces, intended to sway thinking. The Diamond/Hausman JEP piece is one such example. Just because you don't agree with them doesn't mean it's a bad paper.
me papers are intended to summarize the literature on a topic. The Hanemann JEP piece is an example of this. These papers use lots of citations to discuss as many perspectives and issues relating to a topic as possible.

If you feel so moved, seek out additional references. That's what they are there for. If you can't find it in the library, I can help. Think critically about the paper; use material gleaned from class, other students, discussions with me, etc., before you write.

Articles Excluded From Review
* These articles cannot be done for a review, either required or for extra credit. These articles are very short, and it would be difficult to create a 2-3 page review from a 2-page article.

R1. Carson, Rachel. "A Fable for Tomorrow." Silent Spring. Houghton Mifflin Company, Boston: 1962. 1-13.

R2. Carson, Rachel. "The Other Road." Silent Spring. Houghton Mifflin Company, Boston: 1962. 277-97.

R3. Pimentel, David. "Is Silent Spring Behind Us?" Silent Spring Revisited. Edited by Gino J Marco, Robert M. Hollingworth, and William Durham. American Chemical Society, Washington, DC: 1987. 175-99.

R8. Fialka, John J. "Breathing Easy: Clear Skies Are Goal as Pollution is Turned into a Commodity." Wall Street Journal. 3 October, 1997.

R13. Payne, Henry. "'Environmental Justice' Kills Jobs for the Poor." Wall Street Journal. 16 September, 1997.

R14. Chatterjee, Pratap. "Toxic Racism: Chippewas Resist Deadly Dumping." Dollars and Sense. May/June, 1997. 13-15.