363-0537-00L  Resource and Environmental Economics

SemesterAutumn Semester 2023
LecturersL. Bretschger, M. L. Newham
Periodicityyearly recurring course
Language of instructionEnglish


363-0537-00 GResource and Environmental Economics
The lecture takes place in presence and will be recorded.
2 hrs
Wed10:15-12:00HG G 3 »
L. Bretschger, M. L. Newham

Catalogue data

AbstractRelationship between economy and environment, market failures, external effects and public goods, contingent valuation, internalisation of externalities, economics of non-renewable resources, economics of renewable resources, environmental cost-benefit analysis, sustainability economics, and international resource and environmental problems.
ObjectiveA successful completion of the course will enable a thorough understanding of the basic questions and methods of resource and environmental economics and the ability to solve typical problems using appropriate tools consisting of concise verbal explanations, diagrams or mathematical expressions. Concrete goals are first of all the acquisition of knowledge about the main questions of resource and environmental economics and about the foundation of the theory with different normative concepts in terms of efficiency and fairness. Secondly, students should be able to deal with environmental externalities and internalisation through appropriate policies or private negotiations, including knowledge of the available policy instruments and their relative strengths and weaknesses. Thirdly, the course will allow for in-depth economic analysis of renewable and non-renewable resources, including the role of stock constraints, regeneration functions, market power, property rights and the impact of technology. A fourth objective is to successfully use the well-known tool of cost-benefit analysis for environmental policy problems, which requires knowledge of the benefits of an improved natural environment. The last two objectives of the course are the acquisition of sufficient knowledge about the economics of sustainability and the application of environmental economic theory and policy at international level, e.g. to the problem of climate change.
ContentThe course covers all the interactions between the economy and the natural environment. It introduces and explains basic welfare concepts and market failure; external effects, public goods, and environmental policy; the measurement of externalities and contingent valuation; the economics of non-renewable resources, renewable resources, cost-benefit-analysis, sustainability concepts; international aspects of resource and environmental problems; selected examples and case studies. After a general introduction to resource and environmental economics, highlighting its importace and the main issues, the course explains the normative basis, utilitarianism, and fairness according to different principles. Pollution externalities are a deep core topic of the lecture. We explain the governmental internalisation of externalities as well as the private internalisation of externalities (Coase theorem). Furthermore, the issues of free rider problems and public goods, efficient levels of pollution, tax vs. permits, and command and control instruments add to a thorough analysis of environmental policy. Turning to resource supply, the lecture first looks at empirical data on non-renewable natural resources and then develops the optimal price development (Hotelling-rule). It deals with the effects of explorations, new technologies, and market power. When treating the renewable resources, we look at biological growth functions, optimal harvesting of renewable resources, and the overuse of open-access resources. A next topic is cost-benefit analysis with the environment, requiring measuring environmental benefits and measuring costs. In the chapter on sustainability, the course covers concepts of sustainability, conflicts with optimality, and indicators of sustainability. In a final chapter, we consider international environmental problems and in particular climate change and climate policy.
LiteraturePerman, R., Ma, Y., McGilvray, J, Common, M.: "Natural Resource & Environmental Economics", 4th edition, 2011, Harlow, UK: Pearson Education
Subject-specific CompetenciesConcepts and Theoriesassessed
Techniques and Technologiesassessed
Method-specific CompetenciesAnalytical Competenciesassessed

Performance assessment

Performance assessment information (valid until the course unit is held again)
Performance assessment as a semester course
ECTS credits3 credits
ExaminersL. Bretschger, M. L. Newham
Typeend-of-semester examination
Language of examinationEnglish
RepetitionThe performance assessment is only offered at the end after the course unit. Repetition only possible after re-enrolling.
Mode of examinationwritten 90 minutes
Additional information on mode of examinationDistance exam will only be offered for (incoming) exchange students who cannot be present during the exam time
Written aidskeine Hilfsmittel / no aids allowed
Online examinationThe examination may take place on the computer.
Distance examinationIt is not possible to take a distance examination.

Learning materials

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