Module Code and Title:       AEC201          Environmental Economics

Programme:                          BA in Development Economics

Credit Value:                         12

Module Tutor:                       Sonam Yeshey

General objective: This module focuses on economic causes of environmental problems. It examines the role of various economic institutions, economic incentives, other instruments and policies on environment. It aims to develop necessary skills for as the valuation of environmental quality, quantification of environmental damages and evaluation of environmental projects. Selected topics on international environmental problems are also discussed.

Learning outcomes – On completion of this module, learners should be able to:

1. Explain the nature of relationship between environment and economics.
2. Describe and analyse the market for environment.
3. Explain the factors leading to market failure.
4. Evaluate the environmental decisions made by economic agents.
5. Apply basic tools of environment accounting.
6. Describe and evaluate the regulatory framework for environmental issues.
7. Trace the policy response to various environmental issues.
8. Analyse the impact of risk and uncertainty on environmental decisions.
9. Identify the channels of impact on trade and environment.

Learning and Teaching Approach: This module will be taught by means of lectures, tutorials, group work, case studies and self-directed study. Lectures will aim at explanation of various concepts and theories. Focus will be placed on applying theories to the Bhutanese context and using relevant data. Lectures will be complemented by tutorials and guest lectures. Group work will involve students discussing and analysing particular issues and solving problems. Tutorials will also be used to facilitate problem solving. 

Assessment Approach:

A. Individual Assignment: Portion of Final Marks: 10%

Students will complete an essay based on library research covering topics related to environment markets. Each assignment should have a maximum limit of 750 words.

• 1%       Adequacy of references used
• 1%       Defining the concepts
• 2%       Use of appropriate analytical tools
• 4%       Analysis and findings
• 2%       Conclusion

B. Group Work: Portion of Final Mark: 15%

In groups of 4 students will analyse data on locally relevant environment issues. The analysis will be presented as a 20 min presentation, with 5 min Q&A.

• 1%       Situation analysis
• 2%       Methodology of group work
• 6%       Discussion on findings in the joint report
• 4%       Peer review of individual reports
• 2%       Presentation (individually marked)

C. Critical Essay: Portion of Final Mark: 20%

Students will complete individual essays on recent issues pertaining to market for environment services and products and assessment of environment programmes. Word limit: 750 words.

• 2%       Logical flow of thoughts
• 8%       Ability to comprehend relevant issues in the debate
• 4%       Evidence based arguments
• 2%       Language skills
• 2%       Subtleness of conclusion
• 2%       Structure of the Essay

D. Midterm Examination: Portion of Final Mark: 20%

Students will take a written exam of 1.5 hr duration covering topics up to the mid-point of the semester.

Pre-requisites:

Subject matter:

1. Introduction
   • The Environment and Economics
   • Normative and Positive Economic Analysis, Basic Optimist Model
   • Changing perspectives on environment
   • Resource, environment and economic development
2. Market for Environment
   • Social Choice for Environmental Protection
   • Efficiency and Markets; Market Failure
   • Public Goods, Public Bads and Externalities
   • Resource Allocation over the time
   • Valuing the Environment
   • Making Decisions about Environmental Programs
   • Demand for Environmental Goods
   • Hedonic Price Methods
   • Household Production and constructed Markets
3. Ecological Economics and Environmental Accounting
   • Basic concepts of ecological economics
   • National income and Environment Accounting; Green accounting
4. Regulation
   • Regulating Pollution; Prices
   • Property rights
   • Spatial and Temporal Issues
   • Regulating Polluters with Unknown Costs
   • Audits, Enforcement and Moral Hazard
   • Voluntary Actions and Agreements
5. Policy response
   • Global framework on sustainable development
   • Greening the economy
   • Climate change policy
   • Trade and environment
6. Advanced Topics
   • Risk and Uncertainty
   • International and Interregional Competition
   • Environment, Growth and Development

Reading List:

1. Essential Reading
   • Kolstad, C. (2010). Intermediate Environmental Economics. Oxford University Press.
   • Stavins, R. N., ed. (2005). Economics of the Environment: Selected Reading List. W.W. Norton.
2. Additional Reading
   • Callan, S. J. & Thomas, J. M. (2010). Environment Economics and Management: Theory, Policy and Applications. South-western Cengage Learning.
   • Harris, J. & Roach, B. (2014). Environmental and Natural Resource Economics: A Contemporary Approach
   • Perman, R., James, Y. M., McGilvray & Common, M. (2003). Natural Resource and Environmental Economics. Pearson Education/Addison Wesley.

Date: January 15, 2016