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Environmental and Natural Resource Economics Economics 4600

Environmental and Natural Resource Economics Economics 4600. Instructor: David A. Penn. Environmental and natural resource economics. This course focuses on five primary questions…. Question #1: Why do environmental problems occur?.

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Environmental and Natural Resource Economics Economics 4600

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  1. Environmental and Natural Resource EconomicsEconomics 4600 Instructor: David A. Penn

  2. Environmental and natural resource economics • This course focuses on five primary questions…

  3. Question #1: Why do environmental problems occur? • Examples: Why is the Gulf and South Atlantic red snapper in danger? • Why does pollution occur? • Why is fresh water so scarce?

  4. Question #2: How much pollution is too much? • How clean should we make the Stones River? • Should we tighten CAFÉ standards? • Should we save the gray bat? • Can air pollution be eliminated? • China air pollution: https://twitter.com/beijingair • http://www.bing.com/images/search?q=china+air+quality&qpvt=china+air+quality&FORM=IGRE Gray Bat (Myotis grisescens)

  5. Question #3: Are we running out of natural resources? • What does it mean to talk about “running out” of a natural resource like petroleum or copper? • Have we been running out? Will we run out? • How much will be left for future generations?

  6. Question #4: How do we deal with climate change? • Why has the U.S. drastically cut SO2 emissions, but done little about CO2 emissions? • Why have nations been slow to respond?

  7. Question #5: What can we do about pollution and excessive resource use? • If market failure is the problem, can market incentives be a solution? • What can be done about intergenerational resource usage? • Do we have examples of successful use of market incentives to reduce pollution?

  8. Recent Related Stories in the NY Times • As California’s Drought Deepens, a Sense of Dread Grows (Jan 17 2014) • If You Think China’s Air Is Bad ... (Nov 17 2014) • U.N. Says Lag in Confronting Climate Woes Will Be Costly (Jan 16 2014) • Japan’s Delicate Search for a Way to Breed Tuna on an Industrial Scale (Nov 11 2014) • Officials Back Deep Cuts in Atlantic Cod Harvest to Save Industry (Jan 30 2013)

  9. Readings • Text: Stephen Smith, Environmental Economics: A Very Short Introduction. • Articles and readings: posted on D2L. • Class notes: posted on D2L. Don’t use Microsoft Explorer; use Chrome or Firefox instead. $11.95 at Amazon

  10. Grading • Two exams • Monday February 24 • Monday April 7 • Attendance • Assignments, some using Excel • Final Exam (non comprehensive) • Monday May 5 3:30-5:30 • Last day of class – Wednesday April 30

  11. Topics Today • Course introduction • Assignment for Monday • D2L: class notes on externalities • Be prepared to discuss

  12. Introduction • The objective for this course is not to pick sides in environmental disputes. • The objective here is to provide you with a rigorous framework with which to evaluate environmental issues.

  13. How Do Economists Think About the Environment? • Economists do not believe that the free market solves all problems. • Examples: • The market fails to allocate pollution efficiently. • The market fails to conserve wildlife efficiently. • Environmental economics is interested in understanding the conditions of ‘market failure’.

  14. How Do Economists Think About the Environment? • Some environmental problems (though not all) can be addressed by the creation of new markets. • Examples: • Alter market prices to correct market failure. • Trading pollution permits. • Many environmental problems are not adequately addressed with market solutions.

  15. How Do Economists Think About the Environment? • Economic value encompasses more than just goods traded in a marketplace. • Examples: • An endangered species may have economic value even if nobody uses it. • The Amazon rainforest may have economic value to people who never visit. • Economics is concerned with valuing these ‘non-market’ goods.

  16. How Do Economists Think About the Environment? • Using the environment in a certain way often precludes using it in some other way. • Examples: • Preserving habitat precludes using land for other uses, such as for homes. • Constructing a dam for power may eliminate fish migrations. • Economists are most concerned with identifying and evaluating tradeoffs.

  17. The Focus of this Course • The use of real-world case studies is meant to develop your economic intuition. • I want you to be able to understand and recognize economic issues related to natural resources and the environment.

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