Instructor: J.R. DeShazo, Assistant Professor, Policy Studies
Office: 6325 Public Policy Building
Phone: 206-6717
Email: deshazo@ucla .edu
Office hours: Monday 4:00 to 5:00 or by appointment

Class meetings: Monday and Wednesday 2:00 to 3:30 AM
Class location: 4357B Public Policy Building

About the course

We provide a survey of the ways in which economics is used to define, analyze and resolve problems of environmental management. We explore answers to four broad questions. First, how should we evaluate the social costs and benefits of rival environmental policies? Second, how may we value the social benefits provided by the environment? Third, how should we determine the optimal level of pollution and choose policies that efficiently achieve it? Fourth, how should we manage renewable resources (forests, fisheries & water) and non-renewable resources (oil & minerals)? Throughout the course, we contrast the normative recommendations of economic principles and models with the political outcomes observed through the use of policy case studies. See the attached outline for a more detailed presentation of the content of the course.

Course Requirements

The course is suitable for graduate students and advanced undergraduate students who want an overview of the analytical questions addressed by environmental economists that bear on public policies.

Prerequisites. Prerequisites for the course are a thorough understanding of intermediate microeconomics, basic calculus and simple regression analysis. Therefore students should have had Econ 11 and Econ 143 or PS 204 and PS 208 or UP 207 and UP 220B prior to enrolling.

Grading. Grades for the course will be based on a midterm exam, final exam, and two problem sets as follows.

Undergraduates Graduates

Problem Sets 24%

Midterm 36% Problem Sets 24%

Final 40% Midterm 36%

Final 40%

The problem sets will require reasoning and problem-solving skills using the economic principles taught in class. Late problem sets will be penalized by 3 points.

Readings. The course reader is available at Westwood Copies as of January 8^th.

A. Principles of Economics in Environmental Management

What is an "environmental problem" in economics?

B. Social Cost-Benefit Analysis & Cost Effectiveness Analysis

C. Market Failure and Externalities

What are the types and causes of externalities that affect the environment?

D. Public Choices

What are the types of remedies available to policy makers?

A. Measuring the Costs of Provision

How do we measure the costs of improving environmental amenities?

B. Total Economic Value

How do we measure the benefits of improving an environmental amenity?

C. Methods: productivity loss, defensive, mitigating, travel cost, hedonic

and contingent valuation.

When are these methods appropriate to use? And what are the strengths and weaknesses of each?

D. Valuation and Policy Relevance

Section Case Study: Exxon Valdez Oil Spill

III. POLLUTION AND REGULATING POLLUTERS

A. The optimal level of pollution

What is the economically efficient level of pollution?

B. Minimizing the cost of pollution abatement:

technology standards, emission standards, taxes and permits

Which policy instruments are most efficient and why?

C. The political economy of instrument choice

Which policy instruments are preferred by the polluters and why?

Section Case Study: Air Pollution Policy in California

IV. NON-RENEWABLE AND RENEWABLE RESOURCES

A. The Mine: Energy and Minerals

What is the optimal extraction schedule and what does it depend upon?

B. Fisheries, Water and Forests

What is the optimal harvesting schedule and what does it depend upon?

C. Markets and Policy Failures

Why are our renewable resource management efforts less successful than our non- renewable management efforts?

Section Case Study: Salmon Fisheries in the Northwest

 

 

 

 

Instructor: J.R. DeShazo, Assistant Professor, Policy Studies

Office: 6325 Public Policy Building

Phone: 206-6717

Email: deshazo@ucla .edu

1. Introduction

Fullerton, D. and R. Stavins 1998. How do Economists Really Think About the Environment?

Discussion paper 98-29. Resources for the Future.

Tietenberg, Tom. Environmental and Natural Resource Economics. 3rd Edition. New York, New York: Harper Collins, Inc., 1992. Chapter 2 - Economics of the Environment:

An Overview.

2. Why Environmental Economics ? Externalities & Market Failures

Tietenberg, Chapter 3 - Property Rights, Externalities, and Environmental Problems.

Tietenberg, Chapter 4 - Regulating the Market: Information and Uncertainty.

3. Social Cost-Benefit Analysis and Cost Effectiveness Analysis

Callan and Thomas, Chapter 8 - Assessing Benefits and Costs for Environmental Decision- Making, pp. 220-265.

Callan and Thomas, Chapter 9 - Benefit-Cost Analysis in Environmental Decision-Making, pp. 266-292.

Boardman, Anthony, David Greenberg, Aidan Vining and David Weimer. Cost-Benefit Analysis: Concepts and Practice. Upper Saddle River, NJ: Prentice Hall, Inc. (1996). Chapter 10 - Estimating and Valuing Impacts from Observed Behavior, pp. 292-344.

Boardman, Anthony, David Greenberg, Aidan Vining and David Weimer. Cost-Benefit Analysis: Concepts and Practice. Upper Saddle River, NJ: Prentice Hall, Inc. (1996). Chapter 11 - Contingent Valuation: Using Surveys to Elicit Information about Costs and Benefits, pp. 345

Chapman, D.J., Hanemann, M.W., and Ruud ,1998, The American Trader Oil Spill" A View from the Beaches. In AERE News Letter v18, n2, November.

7. Determining the Optimal Level of Pollution

Tietenberg, Chapter 14 - Economics of Pollution Control: An Overview.

Callan and Thomas, Chapter 4 - Conventional Solutions to Environmental Problems, pp. 107-127.

Robert Stavins. 1998 "Market–Based Environmental Policies" in Public Polices for Environmental Protection.

Callan and Thomas, Chapter 5 - Economic Solutions to Environmental Problems: A Market Approach, pp. 128-162.

Practical Standard Setting and Distributional Considerations

Tietenberg, Chapter 20 - Pollution Control Policy: Distributional Effects, pp. 542-565.

Callan and Thomas, Chapter 10 - Defining Air Quality: The Standard-Setting Process, pp. 293-332

Trading SO2 Credits Case

Callan and Thomas, Chapter 11 - Achieving Air Quality: Controlling Mobile and Stationary

Robert Stavins, 1998. "What Can We learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading" Prepared for the Journal of Economic Perspectives

Sources, pp. 333-378; Chapter 13 - Defining Water Quality: The US Clean Water Act, pp. 421-465;

Robert Stavins. 1997. "Policy Instruments for Climate Change: How Can National Government Address and Global Problem" The University of Chicago Legal Form, volume 1997.

Chapter 6, James Khan 1998 The Economic Approach to Environmental and Natural Resources. Harcourt Brace College Publishers.

14. An Introduction to Renewable & Non-renewable Resources

Tietenberg, Chapter 7 - Depletable, Nonrecyclable Energy Resources: Oil, Gas, Coal, and Uranium.

15. The Mine: The Economics of Energy and Mineral Markets

Hartwick, John M. and Nancy D. Olewiler. The Economics of Natural Resource Use. New York: Harper and Row, 1986. Chapter 8 Nonrenewable Resources Use: The Theory

Of Depletion

Tietenberg, Chapter 9 - Replenishable but Depletable Resources: Water.

Hartwick, John M. and Nancy D. Olewiler. The Economics of Natural Resource Use. New York: Harper and Row, 1986. Chapter 3 Valuation and use of Land and Water

Pricing Water: A Case Study

Fisheries: Sustainable Harvesting and Extinction

Hartwick, John M. and Nancy D. Olewiler. The Economics of Natural Resource Use. New York: Harper and Row, 1986. Chapter 4 - The Economics of the Fishery: An Introduction, pp. 243-291.

Hartwick, John M. and Nancy D. Olewiler. The Economics of Natural Resource Use. New York: Harper and Row, 1986. Chapter 5 and 8