 |
ecn371 - Environmental economics |
 |
Case studies (2017)
Note: The group project in this course requires each student having to deliver 3 presentations
(pass needed on all to be allowed to take the final exam in May) as part of a group project. Students form their
own groups of 3-4 students pending the number of students taking the course. Once groups are formed, they bid
on available topics in an auction. When forming the groups, I strongly advice you to make a group
that is wide in terms of background, study orientation, etc. so that group members' skills become
more complimentary.
- Wednesday February 15: Groups are made public, and hand in bids at start of lecture for all three topics.
- Monday March 6: First round of presentations.
- Monday March 27: Second round of presentations
- Wednesday May 3: Third round of presentations.
If there are more that 3-4 groups, additional times will be allocated to the case study presentations, i.e., there may be changes in the schedule.
- To give students opportunites to apply economic theory on a wide array of problems, thereby increasing their
exposure to applied economics. The focus is on the application of theory -- some key articles on each topic/application will be provided prior to presentions.
- A good presentation frames the topic well, argues for the choice of approach and methods, and serve as a discussion opener.
- Presentations last for no more than 20 minutes, leaving 10-15 minutes for discussion in the class including the 5 minute prepared comments by the opponent group.
Presentations are to be held in English (unless all students taking the class speak and read Norwegian, and all students
agree on Norwegian). A good presentation outlines the main issues on the given topic, and motivates a chosen regulatory approach using a base model.
A key focus of all presentations is that proposed regulations shall seek to maximize expected benefits. That implies awareness of the tradeoffs between
expected costs and benefits of the policy proposed. A brief mentioning of possible problems with the proposal is helpful in terms of facilitating good
discussions in class. Duration of presentations: no more than 20 minutes.
Prior to each presentation, the presenting group is provided with a few selected key references on the topic at hand. Based
on these paperes, lectures held prior in the course, relevant literature the group has found themselves, and their own
reasoning, the group delivers a discussion opener.
The presenting group is required to send their presentation to the opponent group 36 hours prior to the presentation.
After the initial presentation, the opponent group discusses the main issues brought forward by the presenters (5 minutes). Next, topic is the discussed in class, before the presenting group summarizes the discussion.
Topics for spring 2016 are divided in three rounds to match the materials covered in the class up to the time of the presentations.
- Round 1 topics -- Basic emission regulation
- Global pollutants with multiple emission sources
Case - climate gas emissions: Until recently, industrialized countries have been the main source
of climate gas emissions. The picture is rapidly changing, with China expected to be the world's largest emitor
of climate gas emissions. Deforestation reduces carbon sequestration, thereby increasing net damages from climate
gas emissions.
- Multiple pollutants from one sector with local damages
Emissions of particulate matter to air from transportation in Oslo: Asphalt particles, primarily from
studded tires, combustion residues and NOx emissions from road traffic are the main sources.
- "Single" pollutant and multiple sectors with down stream damages
Nutrient emissions to water - the Hobøl watershed - Vansjø:
Main nutrient emissions to water are Nitrogen and Phosporus. Agriculture, sewage from dispersed rural housing,
and sewage from housing clusters are the main sources.
- Single pollutant when spatial distribution matters
SO2 emissions in Europe: Sulphur dioxide emissions "travel" with the weather, implying
that damages occurs in other places than at the origin of emissions. Typically some countries
are main emitters (England, Germany or Poland), while other countries (Sweden and Norway) bear damages.
- Round 2 topics -- Information difficulties in environmental regulation
- Nonpoint source pollution (NPS)
Nutrient runoffs from agriculture are characterized by high costs and technical difficulties
of controlling emissions. Conventional NPS policies have therefore focussed on controlling the agricultural
production process (restrictions on when manure can be spread, acreage requirements for manure, catch crops,
and taxes on inputs (like fertilizers) that are perceived to cause damages. While such policies have been
assumed to be less costly, they are also not very precise in terms of reducing damages.
- Compliance and penalty structures
Trading off penalty and the monitoring probability. It is well known from the basic literature on
monitoring and compliance that if the monitoring probability exceeds the extra utility from noncompliance
divided by the penalty, then expected compliance results. A corrolary to this basic M&E insight is that if
the penalty is increased, the necessary monitoring probability to induce compliance falls. However, increases
in the penalty also increases the "burden of proof", making it less likely that someone is found guilty. What
are the tradeoffs to be made in this regard, in particular under the presence of type I errors (the not guilty
is found guilty) and type II errors (the guilty is aquitted)?
- Regulating of public goods with large cost and benefit heterogeneity
Biological diversity in forests has conventionally been managed using various forms of mandatory regulations like
restrictions on land use. This has led to increased use of temporary restrictions on the cutting of forests. Forest owners
has partly responded by trying to cut forests before preservation worthy occurences of species have been found. The regulatory
response has been to increase the use of temporary restrictions until sites have been surveyed. This has shifted costs to
forest owners, making the "climate" between regulators, environmental organizations and land owners more hostile.
- Precautionary regulations
Regulation when damages are unknown: The toxic impacts of many chemicals (through emissions, waste
their use) have been revealed long after the chemical agents were introduced. Asbestos, mercury and PCBs are prime examples.
How should regulations be designed to capture the future risks of damages in relation to the costs of delayed
implementation of new chemicals?
- Round 3 topics -- Extensions: regulatory approaches in "non standard settings"
- Regulation of connected private and public goods
Multifunctional agriculture has been used to explain the setting where the production of private
goods positively affect the extent of public goods in agriculture. The transaction costs of directly paying from the public
goods have traditionally been perceived as high. This has been used to justify extra supports to agricultural
commodity production to secure the provisioning of public goods from agriculture, like open landscapes, biological
diversity associated with special land uses (like on meadows being grazed), or rural employment. What are the
alternate regulatory instruments, and what are the benefits and costs of these relative to the current agricultural
support schemes?
- Risk and uncertainty - it's impacts on beneficial regulations
Emissions of nuclear materials or of highly toxic chemicals: These are emissions that are perceived to have
high damages, even at low emission rates. In some cases one talk about close to zero emissions, but accidents
may take place, rendering zero emissions a very costly target to reach. In other cases, there are uncertainty
regarding what constitutes "safe emission levels".
There may also be substantial uncertainties related to the costs of controlling emissions, in particular for low emission levels
or reducing the risk for accidental releases. In some cases it may be relevant to address mitigation, i.e., that measures and
policies are implemented to avoid to reduce damages if a release takes place.
- Damages from moving sources
Managing damages from large predators: Attempts to set up "predator free"
zones have for most parts not had the desired effects as predators understandably move to areas where feed is
more abundant. Reported losses of sheep (and other domesticated grazing animals) to predators have steadily
increased since the stocks of predators became larger. Compared to other countris, Norway with its "reimbursement
for damages" policy has far greater damage costs than for example Sweden, where the Sami gets an up front
compensation for expected damages.
- Regulation of connected environmental issues
Regulating automobile traffic reduces climate gas emissions, particulate emissions and traffic related accident.
How can such linked issues be analyzed, and what are the implications of formulation of more beneficial
environmental regulations, what constitutes optimal regulatory levels and policies?
As some topics could be more popular than others, I have decided to auction off topics in the following way:
- Each group receives 100 money units that it needs to allocate on the topics in the three rounds
- Each group freely distributes the 100 money units on the various
topics (a group may place all the 100 money units on one topic if
it finds this desirable), but then they end up last in selecting the remaining topics if another group
has bid the same amount for that round and the group looses the coin toss
- Each group hands in its bids on three topics (one from each round)
at the start of the lecture on Friday February 15, i.e., at 1415
in a closed envelope
- Topics are assigned according to the highest bid. If more than one
group have the same bid on any topic, a draw is made.
- Each group is also asked to rank the topics that they place zero bids on,
(as we suspect there could be some attempts at strategic bidding, so that
the bids may not contain all of the group's topic preferences)
With X students signing up for the case studies, Y groups (max 4) have been formed:
- Group A: Abinet, Albert, and Nawaraj
- Group B: Audun, Ingrid, Jon, and Mehdi
- Group C: Caja Charlotte, Håkon, Liv Anna, and Oskar
- Group D: Anders, Ann, Henrik, Simen, and William
If one member of a group gets sick, the remaining group member(s) is(are) responsible to present the case on the scheduled time to avoid rescheduling (which is time consuming, and runs the risk of miscommunication). This implies that one needs to
prepare for the eventuality that someone is sick by all group members having a copy of the presentation available (not unlike the precautionary actions taken in "real life").
(1) Any student who has not signed up for a group needs to join one of the groups with two persons.
(2) A student who is sick needs to show a doctor's statement confirming valid reason not taking part in the presentation.
| Group |
Case 1 |
Case 2 |
Case 3 |
| A |
(3) "Single" pollutant and multiple sectors with downstream damgaes
Discussant B @ Mon March 6, 09:30 |
(3) Regulation of public goods with large costs and benefit heterogeneity
Discussant C @ Mon March 27, 11:20 |
(3) Damages from moving sources
Discussant D @ Wed May 3, 09:30 |
| B |
(2) Multiple pollutants from one sector with local damages
Discussant C @ Mon March 6, 10:05 |
(2) Compliance and penalty structures
Discussant D @ Mon March 27, 09:30 |
(2) Risk and uncertainty - it's impacts on beneficial regulations
Discussant A @ Wed May 3, 09:00 |
| C |
(4) Single pollutant when spatial distribution matters
Discussant D @ Mon March 6, 10:45 |
(4) Precautionary regulations
Discussant A @ Mon March 27, 10:05 |
(4) Regulation of connected environmental issues
Discussant B @ Wed May 3, 08:00 |
| D |
(1) Global pollutants with multiple emission sources
Discussant A @ Mon March 6, 11:20 |
(1) Nonpoint source pollution (NPS)
Discussant B: @ Mon March 27, 10:45 |
(1) Regulation of connected private and public goods
Discussant C @ Wed May 3, 08:30 |
Course Home page
Last updated: 05.04.2017
Copyright © Eirik Romstad |
 |