AØKA08227U Economics of the Environment, Natural Resources and Climate Change

After completing the course, the student should be able to:

Knowledge: account for..

• The central economic services provided by the environment
• The basic theory of optimal management of natural resources 
• The economic definitions and applicability of the concepts of “Green Growth” and “Sustainable Development”
• The distinction between “weak” and “strong” sustainability”
• The key issues in the debate on the choice of discount rate in the evaluation of environmental and climate policies
• The basic principles for valuation of environmental goods and services
• The theory of the environment as a public good
• The basic theory of optimal environmental policy and regulation, including the distinction between first-best and second-best policy
• The advantages and disadvantages of alternative instruments of environmental policy
• The theory of optimal environmental taxation and the debate on the “double dividend” from a “green” tax reform
• The assumptions underlying standard Integrated Assessment Models of climate change
• The issues involved in the debate on the valuation of damages from climate change
• The basic theory of optimal climate policy, including guidelines for a rational climate policy under fundamental uncertainty
• The basic economic issues and incentives relating to international negotiations on climate policy 

Skills:

• Apply the standard mathematical method for static optimization subject to constraints to analyze environmental policy problems such as the determination of the optimal level of pollution abatement and the optimal environmental tax rates
• Apply optimal control theory to solve dynamic optimization problems subject to constraints such as the determination of the optimal extraction of natural resources and the optimal pace of reduction of greenhouse gas emissions

Competencies:

• Explain and present central parts of economic theories and models of the environment, natural resources and climate change in a clear and correct language
• Undertake a critical evaluation of the strengths and weaknesses of the theories and models presented in the course      
• Present and evaluate key parts of the theory of environmental regulation and discuss the role of the state and the market in the implementation of environmental policy goals
• Apply the theoretical and empirical insights from the course in a critical analysis and discussion of important real-world problems of environmental and climate policy