Resource and Environmental Economics

University of Southern California
Los Angeles, California


Instructor(: Pendleton, Linwood
Subject area: Economics
Department: Economics
Course number: 487
Year taught: 1998
Comments: Lecture notes, problem sets, and sample exam questions may be found on the professor's
website.


For additional information: http://www-rcf.usc.edu/~linwoodp/econ487.html
Please note that the copyright for this syllabus is retained by the instructor.



Overview: This course examines economic issues in the consumption, allocation, and management of natural resources. Students will learn the economic principles behind the management of renewable and non-renewable resources. Readings and problem sets will give students practice in applying economic tools to natural resource problems. The course concludes with a critical discussion of the more controversial issues in natural resource economics: sustainability and environmental valuation.

Course Description:
This course examines economic issues in the consumption, allocation, and management of natural resources. Students will learn the economic principles behind the management of renewable and non-renewable resources. Readings and problem sets will give students practice in applying economic tools to natural resource problems. The course concludes with a critical discussion of the more controversial issues in natural resource economics: sustainability and environmental valuation.

Course Requirements:

Readings:
The readings for this course are light. Every student is expected to read, consider, and possibly reread the assigned material before each class. Classes will build upon the assigned readings but will not review this material.
The readings will come from 3 sources (required):
1) Environmental and Natural Resources Economics. Tom Tietenberg. 4th edition. (Referred to as TT)
2) Economics of the Environment. Dorfman and Dorfman. Referred to as D&D
3) Reserve Readings and Handouts: These readings are noted throughout the syllabus.

Class Participation:
Class participation will not be graded. Nevertheless, class participation is mandatory and required to pass the course (I'm serious). Students must come to class prepared to participate.

Quizzes:
There will be weekly scheduled quizzes, lasting approximately 10 minutes each. The quizzes will be used primarily to determine areas that are giving students the most trouble. The quizzes are worth 10% of the final grade.

Problem Sets:
There will be 5 problem sets for the semester. Students will have one week to complete each problem set. Students may work in groups but each student must present their results independently; all group members must be noted on each problem set. Problem sets are worth 10% of the final grade.

Group Project:
There will be one group project at the end of the semester (20% of final grade)

Exams:
There will be two 1 1/2 hour exams - a mid-term (30% of final grade) and a final (30%).


I. Introduction to Resource and Environmental Economics

TT Chap 2 (Lectures 1 and 2)
D&D Chap 5
Normative vs. Positive Economics
Economic Efficiency
A Marginal Approach To Measuring Cost and Benefits
Time: Discounting

II. The Allocation of Scarce Resources: Resource Scarcity, Rent, and Time

TT Chaps 3 and 13 (Lectures 3 and 4)
Property Rights and Environmental Problems
Resource Scarcity
Scarcity Rent, Marginal User Cost
One Period, Two Period, and N- Period Resource Extraction
Hotelling's Rule

IV. Non-renewable (depletable) resources

TT Chaps 6 and 7 (Lecture 5)
Reserves
Extraction and Technology
Backstops

V. Land Allocation

(Lecture 6)
David Ricardo
Capitalization of Rent
Competing activities
Development vs. Economic Wilderness
Factors affecting the limits of development

VI. Renewable Resources

A. Timber: (Lecture 7,8,9, and 10)
TT Chap 11.
Mining and Plantations
Biological Timber Management
Economic Timber Management
The Faustmann Formula
Non-timber Forest Benefits

B. Multiple Use Management (Lecture 11)

C. Water (Lecture 12 and 13)
TT Chap 9
Surface Water
Ground Water
Current Allocation Systems

D. Open Access Resources: Fisheries and Tropical Forests (Lecture 14)
D&D Chap 1
TT Chap 12
(Optional: The Property Interface, J.H. Dales. Chapter 3 in M and R, on reserve)
Defining Common Property/Open Access Resources

Fisheries: (Lecture 14 and 15)
D&D Chap 6
The Schaefer Model
Economic Versus Biological Management
Management Alternatives:
Rushing
Regulation
Assigning Property Rights
ITQ's Shellfish Leasing

Tropical Forests: (Lecture 16)
Public Policies and the Misuse of Forest Resources. Chapter 1. Overview (on reserve)
The state of tropical timbering
What drives tropical deforestation
Methods to stem deforestation

VII. Sustainability
(Lecture 17 and 18)
Growth, Sustainability Indicators and Green Accounting
D&D Chaps. 11 and 12
TT Chap 21
Defining sustainability
The Brundtland Commission
Sustainable Growth Paths
The Discount Rate and Sustainability
International Issues in Sustainability: Imperialism or Empiricism
Green Accounting

VIII. Measuring Non-market Resources (Lecture 19-26)

A. Use Values and Non-Use Values

B. Valuation Techniques: Contingent Valuation and the Revealed Preference
Methods
D&D Chap 20

IX. A Case Study: Logging vs. Fisheries in Palawan.
This will be a case study in which students play the roles of policy makers and
consultants in the Philippines. Get handouts and assignments from the
professor.