ENVIRONMENTAL ECONOMICS

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					                                      ENVIRONMENTAL ECONOMICS
                                         ECON/ENVS 231 – SPRING 2007
                                              MW(F) 2:30-3:50 PM
                                          AJLC 120 (Hallock auditorium)

Prof. Gaudin                                                            Office: 775-8915; Econ Dept: 775-8483
Rice Hall 027 (basement)                                                     Cell (use sparingly!): 440-319-0809
sylvestre.gaudin@oberlin.edu                                        Web: http://www.oberlin.edu/faculty/sgaudin

OFFICE HOURS: Tuesdays 2:30-4:30pm and Wednesdays 10-11-00 am. I have a SIGN-UP SHEET by my door and
will be there if I see your name on the sheet before I go home the previous day. You can show up during office hours
without signing up “at your own risk”. The sign-up sheet also includes additional slots in case you cannot make my
office hours. Sign up in empty slots 24 hours ahead; send me a confirmation email if it is outside of office hours. If I
am not there at the time you signed up, please go up to the econ department (Rice 233) to track me down. I do NOT
make or reschedule appointments by any other means, including email. I am usually available to talk after class.

CLASS MEETINGS: The class meets normally on Mondays and Wednesdays. Friday class times will be used along
the semester for special classes, exams, class make-ups if necessary and project presentations at the end of the semester.
Keep Fridays open.

DESCRIPTION: The course is an introduction to the theory and practice of environmental economics. The emphasis
is on understanding how the basic tools of economic analysis are used to identify sources of environmental problems,
value environmental resources, and design environmental policy within the framework of a market based economic
system. Illustration topics (air/water pollution, ozone depletion/global warming, solid waste management, etc.) are used
throughout the course. Other topics include benefit cost analysis, voluntary action by firms, and the economics of
sustainable development.

PREREQUISITES: ECON 101. I will not take time inside or outside the classroom to explain basic concepts that are
covered in respectable economics principles textbooks. If you realize you have forgotten some of the material, use my
refresher notes (online) and Principles of Economics textbooks.

OBJECTIVE: After taking this course, you should be able to explain the microeconomic foundations of environmental
problems, conflicts, and policy and be able to carry out economic analysis of real-world environmental issues using the
tools developed in class.

TEXTBOOKS:
[S] Robert Stavins, ed. “Economics of the Environment, Selected Readings” Fifth Edition. Norton 2005. A significant
number of articles from the book will be required reading.

[CT] Scott J. Callan and Janet M. Thomas “Environmental Economics and Management: Theory, Policy, and
Applications” Fourth Edition. Thomson/South-Western Pubs. (2007).

Previous editions of these books could be used as most of the content has not significantly changed. Make sure you
check with someone who has the current edition as readings are assigned, especially for CT.

2/ On reserve
• [TG] Theodore Goldfarb ed. “Taking Sides: Clashing Views on Controversial Environmental Issues” Ninth
    Edition McGraw Hill Higher Education, 2000. Background for debates, although not sufficient for debaters!
• Barry and Martha Field “Environmental Economics, an Introduction” Third Edition. McGraw Hill-Irwin 2002. –
    A less technical coverage of many issues we will cover in class
• Barry Field “Natural Resource Economics: An Introduction” McGraw Hill-Irwin 2000 Check it out if you want to
    find out about topics to be covered in a Natural Resource econ class – reserve under ECON/ENVS 331

WEB SITE AND BLACKBOARD: Using my Website will be an integral part of the course. I have developed its
main structure at http://www.oberlin.edu/faculty/sgaudin and will update it regularly as the semester unfolds. All
reading assignments, supplement handouts, supplementary notes, and grades will be posted on the Web. You are
responsible for accessing the course web-page on a regular basis. Not being aware of material on the Web or having
technical problems accessing the material is no excuse to not do the work. Computer labs on campus are equipped
with the right software to access the material. Blackboard will be used for a few features such as a quiz, communication,
and feedback. Discussion groups will facilitate the sharing of ideas for debates and projects.
ECON/ENVS 231 – Syllabus                                                                                        p. 2 of 4

GRADING AND COURSE REQUIREMENTS:

                              Class Participation (see below)                    10%
                              Class Debates/Projects (see below)                 15%
                              Homework (4 problem sets)                          15%
                              1 Midterm Exam                                     25% (15%)
                              1 Final Exam                                       35% (45%)

Participation: Self-evaluated. You need to keep a JOURNAL with entries documenting briefly your participation for
each class meeting. I am not expecting a description of the material covered each day, I want your input/reactions about
the assigned readings and the material covered in class and a critical self evaluation of your engagement. Opportunities
given to openly participate on a particular day will vary. Thoughts that you did not express in class because I or other
talked too much or your thought was not yet well formulated should be included in the entry. Get used to writing it as
soon as possible after the class. I will give more info about this as I figure out if we can use a new feature of
Blackboard. On the last day of classes, turn in your journal and a one-page assessment of your participation with
an overall grade (0-10 – see below) and a one or two paragraph argument justifying the grade you are giving
yourself.

Basis for self-evaluation is “active” attendance (by active I mean intellectually involved), note taking, participation in
discussions, and attempt to answer/ask questions. The grade scale is from 0 to 10 with 10 being the highest possible
participation grade. Coming to class prepared (having done ALL the relevant readings) whenever appropriate is a
prerequisite to give yourself an 8 or above, regardless of how vocal or engaged you are in class. I reserve the right to
lower or increase the grade if I believe that you grossly understated or overstated your performance relative to other
students in the class. The written comments and my own appreciation to your contribution in class will be used to
determine this. If no report/journal is turned in, I will assign a maximum of 5 for perfect attendance. If the journal has
missing entries then I will assume that you did not attend that day (see attendance policy below).

Debates/Projects: You are given a choice to prepare and participate in a debate or to conduct an independent project.
Both debates and projects are done in groups. A sign up sheet will be posted for the debates and some class time will be
set aside so teams and topics can be identified early in the semester.

  Debates: In class, topics are included in final exam coverage. All students are required to read the basic material
  about each issue in [TG] and [S]. [TG} reading will be posted on Blackboard. Debate participants research the topic
  in greater depth. 2 students argue as a team on each side of the issue. The 2 teams must decide jointly on the debate
  format and discuss it with me prior to the event. Time must be allotted to involve the audience. A student moderator
  may be designated to ask the questions and enforce the rules that YOU set up for yourselves. A written description of
  the debate format and questions you chose to raise must be handed to me 2 days before the debate date. You will also
  need to submit a detailed list of well-documented sources you used within a week after the debate. Grades will be
  determined by forms filled out by the audience (50%) and my own assessment (50%). I will give you the forms ahead
  of time so you understand evaluation criteria

  Projects: Students who did not sign up for a debate will work on a policy project focusing on the use of economic
  incentives in resolving local environmental issues. Projects should be done in groups of 3-4. A report must be
  turned in by the last day of classes. The report should 1/Identify/describe the issue and the parties involved. Argue its
  relevance to the course and the community. 2/ Identify the economic source of the problem (most probably some kind
  of market failure) and explain it in economic terms. If there are policies in place, describe them and explain why the
  problem persists. 3/ Identify and explain different policy instruments that could be used for this specific problem with
  pros and cons. 4/ Sketch a policy proposal to resolve or mitigate the issue. Grades will take into account the
  relevance/originality of the topic, amount of original research involved, clarity and organization of the report, use of
  tools/concepts developed in class, and quality of economic reasoning. Topics proposed needs to be approved before
  the deadline. We will have in class discussions where each of you can present your idea to the rest of the class.

Homework Assignments. They will mostly consist of analytical exercises that will help you understand the course
material and prepare for exams. The weight on these assignments is not proportional to the time you will spend on them
since what matters is not that you do it but that you learn from doing it, which will be assessed in exams. I encourage
group work on these assignments but recommend groups of 2 with a maximum of 3. If you work in a group, submit
ONE assignment per group. Indicate the name of the “writer” first. I should have at least one assignment for each
student as a main “writer”. All students in the group share the same grade. I will not grade separate copies of an
assignment prepared in a group. NO LATE ASSIGNMENT WILL BE GRADED.
ECON/ENVS 231 – Syllabus                                                                                       p. 3 of 4

Midterm Exam. Mandatory. No make-ups. Any rescheduling must be approved and arranged prior to the exam. The
first midterm will be mostly on theory and will be made of short answer analytical exercises and definitions.

Final exam. Comprehensive and mandatory. Please verify date and time with the registrar’s office online. If you do
better on the final than the midterm, I will give an extra 10% weight on the final so the midterm becomes worth 15%
and the final 45%. This is done automatically.

HONOR CODE AND OBERLIN RULES AND REGULATIONS: All provisions of the honor code and specific
college wide regulations will be enforced. When working in groups, all students must contribute. Writing a name on a
problem set without being able to reproduce and explain the reasoning behind all results is an honor code violation as is
copying and turning in any part of someone else’s answers. Writing your name on a group-homework implies you are
aware of this provision. I will not grade 2 assignments that look alike or from students who indicate they worked
together. I will announce in advance when specific material can be used for examinations.

ATTENDANCE POLICY: Attendance is expected. Arrive on time and stay till the end, as late arrival and early
departures are disruptive to me and therefore to the whole class. Any class that you choose to miss will lower your
attendance grade by 20%. The honor code also applies to journal entries. If you have an official excuse, please let me
know ahead of time or as soon as possible and document it carefully in your participation journal.

DISCLAIMER:
I reserve the right to make changes to the syllabus during the semester. However, if such changes are made they will be
discussed in class first and will be announced both in class and on the Web page at least one week ahead.

GENERAL OUTLINE
I – Introduction: The role of economic analysis in understanding and mitigating environmental problems
II – Economics and the Environment – Causes: Modeling market failures leading to environmental damage
III – Economics and the Environment – Solutions: Property rights and bargaining/command and control/Incentive-based
instruments/voluntary action
IV – Valuing the environment and making policy decisions –
          Methods for valuing non-marketed benefits; Cost Benefit analysis: In theory and practice
V –Issues of Sustainable Development
Applications will be embedded in the outline throughout the semester.

LIST OF DEBATES [basic reading on topic will also be available on BLACKBOARD]
#1 Will Voluntary Action by Industry Reduce the Need for Future Environmental Regulation? [TG #17]
#2 Is recycling an environmentally and economically sound waste management strategy? [TG #14]
#3 Should we put a price on the goods and services provided by the ecosystem? [TG #1]
#4 Is limiting population a key factor in protecting the global environment? [TG # 7]

IDEA FOR PROJECT TOPICS:
Waste disposal and recycling in Oberlin - The disposal of household hazardous materials
Water: How do we keep our rivers/lakes clean? The Black river watershed – Lake Erie.
Air: Oberlin Climate Neutral? Pick an area where the college could improve energy efficiency through better incentives.
Transportation: What happened to the town of a 1000 bicycles?
Residence life – Lots of manageable topics there! Easy to conduct surveys.

FIRST ASSIGNMENT: “Smiley Face”: For 20 homework points. Go to the Web page at
http://www.oberlin.edu/faculty/sgaudin. Click on appropriate links to get to the ECON 231 page. Look in the different
links for a smiley face ☺ (the searching is part of the process. (I want you to explore my web-page a bit). The Acrobat
Reader is necessary to open this file. PRINT the file yourself, (I want to make sure you can view and print my pdf
files). Double sided preferred. Fill in the form – some of it requires the use of the internet. Return the completed hard
copy to me.
ECON/ENVS 231 – Syllabus                                                                                   p. 4 of 4
                                      DETAILED TENTATIVE SCHEDULE
                                  Any deviation will be announced on the Web-page

DAY DATE           TOPIC                                                                 DEADLINES*
    M      Feb 5 1. Introductory topics:
                  1A. Environmental Economics - Material Balance model
    W          7 1B. Reconciling economic goals with environmental objectives                Review Economic Tools
                  1C. Discussion of alternative visions of growth in a finite world.
    M        12 1D. "How Do Economists Really Think About the Environment"                     Paragraph reflection on
                 Wrap up introductory topics                                                     Fullerton and Stavins
    W        14 2. Market failure with environmental consequences:                       Last day to take the syllabus
                  2A. Pollution Externalities – Review of basics                         Quiz on BB and return ☺
                                                                                         Start on PS1!
    M         19    2B. Public Goods
    W         21    2C. Common Property resources and the issue of property rights              Sign up for Debates
                  3 - Economic Solutions to Market failures                            sheet posted 8:30 am. First-
                    3A. Introduction: Criteria for evaluating policy                   come first-serve.
    F             No class but…                                                                 PS1 due by 2:30 pm
   M         26 Brainstorming session (1/2 class): Debates and Projects                     Bring individual project
                   3B. Bargaining solutions versus government regulation: The problem                            idea.
                   of Social Cost illustrated in a bargaining framework
   W         28 3B. continue on bargaining versus government regulation                                Start on PS2!
   M       Mar 2 3C. Command and Control: Setting environmental standards
   W           7 3D. Incentive (market- based) approaches to pollution abatement        Proposed projects and teams
                  with a price target: taxes/ subsidies/others                                  PS2 due by 2:30 pm
   M         12 3E. Incentive (market- based) approaches to pollution abatement
                  with a quantity target: Tradable permits: Theory and practice
   W         14 3F. Comparing instruments when regulators have full knowledge of              Final project topic and
                  overall costs and benefits                                                              action plan
                  Preparation of class experiment.                                                     Start on PS3!
    F        16 Tradable permits Class Experiment (replaces class of M Apr 9)                     FRIDAY CLASS!
   M         19 Class experiment discussion                                                       PS3 DUE 2:30 pm
   W         21 Catch-up/Review with Q&A on problem set 3
    F        23 MIDTERM EXAM 2:30 pm (comprehensive)                                           FRIDAY MIDTERM
March 24 to April 1 – FALL BREAK
   M       Apr 2 3D. Comparing quantity and price targets in a world of uncertainty
   W           4 4. Voluntary action by firms: Will Voluntary Action by Industry                DEBATE TEAM #1
                  Reduce the Need for Future Environmental Regulation?
   M           9 No class (class held Friday March 16)                                                  NO CLASS!
   W         11 6. Municipal Waste: Is recycling an environmentally and                        DEBATE TEAM #2
                  economically sound waste management strategy?
    F        13 Visit to BFI RRC and landfill? Optional. Please sign up.                         To be confirmed…
   M         16 5. Valuing the environment:
                   5A. Conceptual issues – different values and measures of value
                   5B. Overview of different valuation methods and their applications
   W         18 Should we put a price on the goods and services of the ecosystem?               DEBATE TEAM #3
   M         23 6. Cost Benefit Analysis
                    6A. CBA Conceptual Tools
   W         25 6B. CBA in practice, discussion
   M         30 7. Economics of “sustainable development”                                                  PS4 DUE
                    7A. Overview of issues
   W      May 2 7B. Is limiting population a key factor in protecting the global env.?         DEBATE TEAM # 4
   M           7 7C. Income growth and the environment: The EKC
   W           9 8. Capstone class: A political economy in an ecological web
    F        11 Projects overview – short informal presentations on projects                             Friday class
        EXAM WEEK - COMPREHENSIVE FINAL - Check date and time on REGITRAR’S WEB PAGE
*Reading Assignments will be announced on the webpage.

				
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