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ecn275/375 - Natural resource and environmental economics |
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| Schedule | Syllabus | Exercises | Exams | Notes | Links |
Lectures marked "Lec no.", exercises marked "Exerc./disc. no.". Contents of each lecture or exercise session may be modified (at the latest one week ahead). Exercises marked according to lecture. Exercise and discussion sessions will span several lectures. Attendance to lectures and exercise/discussion sessions is voluntary.
Detailed contents on each lecture and associated exercises to be updated (marked "Updated" when done, "Not updated" otherwise; updated status on this page also pertains to matching exercise. Videos from 2021 may differ somewhat from materials presented this year, but may still be useful to capture the essentials/recap materials you are uncertain about.
| Lecture/Exercise | Date | Theme | Readings |
|---|---|---|---|
| Part 1: Introduction, foundations | |||
| Lec. 1 Updated |
Wed 31.01 | Course introduction Read chapter 1 for overview Case discussion to illustrate the importance of economic reasoning |
Perman et al., Chapter 1 |
| Lec. 2 Updated |
Fri 02.02 | Sustainability and ethics Supplementary notes on production: (i) Single input production, (ii) Multi input production and isoquants Videos from 2021: - Single product, single input production (8:28 min) Basic model to give an intuitive feel - Single product, multi-input production (8:31 min) Book's model, condensed - Single product, multi-input production (4:22 min) Simplified presentation of book's model - Utility maximization (6:14 min) - Maximizing social welfare (3:30 min) |
Perman et al., Chapter 2-3 |
| Lec. 3 Updated |
Tue 06.02 | Welfare economics and the environment
Videos from 2021 on general equilibrium - Fig. 4.1: Consumption efficiency (3:38 min) (enlarge screen to get a better view) - Fig. 4.2: Production efficiency (3:12 min) (enlarge screen to get a better view) - Fig. 4.3: Product mix (3:51 min) (enlarge screen to get a better view) - Fig. 4.5: Social welfare maximization (3:23 min) (enlarge screen to get a better view) Partial equilibrium, externalities, Pigouvian taxes and the Coase theorem well covered in the note Videos: Risk preferences, their implications for welfare + quasi option value: - Risk preferences (6:28 min) (enlarge screen to get a better view) - Riskaversion and insurance (6:11 min) (enlarge screen to get a better view) - Welfare implications from distribution (6:12 min) (enlarge screen to get a better view) - Quasi-option value - Fig 5 risk note (3:45 min) (enlarge screen to get a better view) |
Perman et al., Chapter 4, Chapter 13 Romstad (2021):Risk and uncertainty |
| Part 2: Environmental regulation and policy instruments, risk implications | |||
| Lec. 4 Updated |
Wed 07.02 2 lectures |
Pollution control, physical targets Supplement: Total and marginal damages Video from 2021: Entire lecture (25:27 min) |
Perman et al., Chapter 5 |
| Lec. 5 Updated |
Wed 07.02 2 lectures |
Asymmetric information, principal agent models, and resource allocation mechanisms (PDF of presentation held in class) Pollution control, (economic) policy instruments Videos from 2021: - Basic pollution model, emission taxes and tradable emission permits (7:16 min) - Polluters with high and low abatement costs (4:02 min) - Society's savings from cost effective distribution of abatement among polluters (4:55 min) - Bathtub diagrams - another way of finding cost effective emission levels (4:44 min) - Principle agent models (7:52 min) - Resource allocation mechanisms (13:09 min) |
Romstad (2005), section 1-4 Perman et al., Chapter 6, section 6.1-6.4 |
| Lec. 6 Updated |
Fi 09.02 | Pollution control, (economic) policy instruments (2)
Dynamic efficiency for stock pollutants (PDF of presentation) In class exercise: How permit market prices emerge. Two cases for market size: 5 players and 7 players Videos from 2021: - Intro to session (5:56 min) - Dynamic efficiency for stock pollutants (22:56 min) |
Perman et al., Chapter 6, section 6.5-6.6 Romstad (2016) |
| Exerc./disc. 1 Updated |
Tue 13.02 | Covers lectures 4-6 - topics on the agenda: - Case 1: The Norwegian government aims to introduce CAF to offset climate gas negative income effects (background: environmental taxes and revenues Presentation (6:07 min, 20 Mb), PDF) - Case 2: Public goods from agriculture (discussion) (background: production possibility fronts Presentation (7:55 min, 28 Mb), PDF) with summary note - Run through of exercises where people struggle (an email with exercise no. helps me prepare) |
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| Lec. 7 Updated |
Wed 14.02 | Monitoring and enforcement (ME) +
note on monitoring prob. in reputation based models
to show that reputation models give cost savings (14.02: corrected on monitoring probabilities for reputation based ME models)
Videos from 2021: - ME Introduction, slides 1-4 (8:22 min) - ME Stochastic emissions and safety intervalls, slide 5 (5.19 min) - ME Penalty function, slide 6 (5:04 min) - ME Basic model, slides 7-8 (4:29 min) - ME Reputation based models - model setup, slides 9-11 (9:41 min) - ME Reputation based models - intuition, slides 12-13 (8:15 min) - ME Deviations in reported emissions, summary, slides 16-18(4:16 min) |
Romstad (2006) |
| Lec. 8 Updated |
Fri 16.02 | Pollution control, (economic) policy with imperfect information
Videos from 2021: - Uncertainty on the benefit side (2:58 min) - Taxes and (tradable) permits - information extraction (4:24 min) - Optimality under different forms of the maginal damage function (5:01 min) - Weitzman proposition (5:34 min) |
Perman et al., Chapter 7 |
| Exerc./disc. 2 Updated Information about group project ECN 375/376 (last 15 minutes) | Tue 20.02 | Covers lectures 7-8 - For your preperation - repeat decision trees and expected utility (lecture 3) - The basic ME model - decision trees + expected utility - Reputation based models - compliance rents - Optimal emissions when marginal abatement costs are unknown - The Weitzman theorem |
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| Lec. 9 Updated |
Wed 21.02 | Presentation: Provision of public goods: procurement auctions Videos from 2021: - Multiple unit auctions (25:23 min, p. 5-13 in presentation) - Compliance and bidding behavior (4:32 min, p. 14-15 in presentation) - Bidiversity habitat auctions - utlizing forest owner private information (6:21 min, p. 20-24 in presentation) |
Romstad (2012) |
| Lec. 10 Updated |
Fri 23.02 | Presentation game theory International environmental problems, international trade Videos from 2021: - Games with coopoerative outcomes: Introduction (5:26 min) - The Folk theorem (12:39 min) - The safety level and the negotiation space (9:09 min) - International environmental problems and welfare (5:56 min) - Cooperative outcomes in N-player games - the case of climate agreements (7:48 min) |
Romstad (2005), section 5 Perman et al., Chapter 9-10 |
| Exerc./disc. 3 Updated |
Tue 27.02 | Covers lectures 9-10 - Public goods and payments: Truth-telling properties of procurement auctions, implications for policy. - International environmental issues: Their difference from national/regional env. issues, policy implications (summary) |
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| Sum 1 Updated |
Wed 28.02 | Summary part 2: Environmental regulation, policy instruments (i) Test instructions (ii) Example on exam document (from 2022 test in MS Word) you are to use when answering. Do not delete questions, but leave open if not answered. |
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| Test 1 | Tue 05.03 | Take home test 1: Environmental regulation, policy instruments - time: 12:15-15:15 | -- |
| Part 3: Natural resource utilization, risk implications | |||
| Lec. 11 Updated |
Wed 06.03 | Efficient and optimal use of natural
resources (1)
Note on isoquants and the economic theory behind (strongly recommended) Note on the derivation of the elasticity of substitution for the Cobb-Douglas production function (for specially interested, not directly exam relevant) Summary recordings (2021): - Basic model with natural and man made production capital (13:31 min) - Isoquants (13:37 min) + correction for infinite elasticity of substitution (replaces min 8:10-9:05, duration: 2:38 min) - Weak and strong sustainability (1:39 min) - Hartwick rule (1:56 min) |
Perman et al., Chapter 14 |
| Lec. 12 Updated |
Fri 08.03 | Efficient and optimal use of natural resources (2)
The time derivative of a state variable Summary recordings (2021): - State and flow variables (2:30 min) - Discrete time - state and flow variables: "Sheep farm example" with constraints (1:56 min) - Continuous time - State and flow variables: "water from dam example" (6:00 min) - Net present value and the Hotelling price path (9:38 min) - Dynmamic welfare maximization with the use of a natural resource (R) and man-made capital (K) (6:19 min) |
Perman et al., Chapter 14 |
| Exerc./disc. 4 Updated |
Tue 12.03 | Covers lectures 11-12 (click here). Suggested answers (will be made available after the session) |
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| Lec. 13 Updated |
Wed 13.03 | Optimal resource extraction of non-renewables | Perman et al., Chapter 15 |
| Lec. 14 Updated |
Fri 15.03 | Stock pollution issues Extended explanatory note (same change in equivalent figure) |
Perman et al., Chapter 16 |
| Excerc./disc. 5 Updated |
Tue 19.03 | Covers lectures 13-14 (click here with suggested elements that could enter answers). | - |
| Lec. 15 Updated |
Wed 20.03 | Renewable resources (1) - Fisheries part 1 (i) Time derivative of stock and (ii) t-subscripts removed in steady state) Supporting videos to the hand-out. Note: videos use old notation for interest rates: i = private discount rate, r = social discount rate - Fisheries - population stock and growth, maximum sustainable yield, and stable equilibria (4:44 min, 67 Mb) - Fisheries - open access and rent maximization (5:05 min, 60 Mb) |
Perman et al., Chapter 17 |
| Lec. 16 Updated |
Fri 22.03 | Renewable resources (1) - Fisheries part 2 Supporting videos to the hand-out. Note: videos use old notation for interest rates: i = private discount rate, r = social discount rate - Fisheries - rationale for safe minumum standards (2:28 min, 38 Mb) - Fisheries - safe minimum standards - the Farmer/Randall framework (4:00 min, 59 Mb) |
Perman et al., Chapter 17 |
| -- | Tue 25.03 to Fri 29.03 |
Easter break - No lectures/meetings during the Easter break | -- |
| Lec. 17 Updated |
Tue 02.04 | Renewable resources (2) - Forests and forestry
Supporting videos to the "Forests and forestry" hand-out. Note: old notation for interest rates: i = private discount rate, r = social discount rate - Forestry - the basic single rotation model (4:27 min, 57 Mb) - Forestry - multi use forestry and optimal rotation (3:02 min, 47 Mb) Discussion question 1+2 - clarifying comments |
Perman et al., Chapter 18 |
| Exerc./disc. 6 Updated Deadline for ECN 375 topics/groups moved to Tuesday April 16 |
Wed 03.04 | Covers lectures 15-17 (click here with suggested answers) | - |
| Sum 2 Updated |
Fri 05.04 | Summaries and test info.: - Summary part 3: Natural resource economics - Test instructions (same as for env.econ. part) |
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| Test 2 | Wed 10.04 | Take home test 2: Natural resource economics and risk - time: 12:15-15:15 Questions made available on this site at the starting time of the test | -- |
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| Last updated: 25.03.2024 Copyright © Eirik Romstad |