AØKA08227U  Economics of the Environment, Natural Resources and Climate Change

Volume 2018/2019

MSc programme in Economics – elective course

Bacheloruddannelsen i økonomi – Prioriteret valgfag på 3. år

The Danish BSc programme in Economics - prioritized elective at the 3rd year

FAGET ERSTATTER Miljø-, ressource- og klimaøkonomi (AØKK08094U). Grundet pensum overlab er det ikke tilladt at deltage på AØKA08227U - Economics of the Environment, Natural Resources and Climate Change, hvis Miljø-, ressource- og klimaøkonomi (AØKK08094U) er bestået.



The course introduces the basic economic concepts relevant for analyzing problems and policies relating to the environment, natural resources and climate change, using theories and analytical tools from microeconomics and macroeconomics.

Learning Outcome

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 



  • 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



  • 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


The syllabus consists of a selection of scientific papers by leading authors in the field plus lecture notes by Peter Birch Sørensen. A detailed list of the syllabus is posted in Absalon.


Knowledge of microeconomic and macroeconomic theory and mathematical tools for economists corresponding to the requirements in the first two years of the Bachelor programme in the Department of Economics.
The teaching will consist of a combination of lectures presenting the relevant theories and evidence and class instruction in solving exercises that involve applications and extensions of the theories presented in the lectures as well as training in the application of the mathematical analytical tools used in the course, including optimal control theory.
As a complement to the ordinary lectures, the course will include a couple of guest lectures by Danish experts who will present examples of practical applications of the theories presented in the course.
An active dialogue between teachers and students will be strived for during the lectures and the work with exercises.
2 hours lectures 1 to 2 times a week from week 36 to 50 (except week 42).

The overall schema for the BA 3rd year can be seen at https:/​/​intranet.ku.dk/​polit_ba/​undervisning/​Lektionsplan-E18/​skemaer/​Sider/​default.aspx

or the Master at https:/​/​intranet.ku.dk/​economics_ma/​courses/​CourseCatalogue-E18/​Courseschema/​Pages/​default.aspx

Timetable and venue:
To see the time and location of lectures and exercise classes please press the link/links under "Se skema" (See schedule) at the right side of this page. E means Autumn. The lectures is shown in each link.

You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E17; [Name of course]””
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5”
Press: “ View Timetable”
7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
at the computers of Copenhagen University.
The exam assignment is in English and must be answered in English.
Exam registration requirements

To sit the exam, students must hand in a mandatory exercise involving the application of optimal control theory to the solution of an environmental policy problem.


Without aids
Marking scale
7-point grading scale
Censorship form
No external censorship
Exam period

The exam takes place at the exam venues of the university:

21 December 2018

The exact time and room of the exam will be informed in the Self-Service at KUnet


Exam information:

For enrolled students more information about examination, rules, exam schedule etc. is available at the intranet for Master students (UK), Master students (DK) and Bachelor students (DK).



The reexam takes place at the exam venues of the university:

12 February 2019

The exact time and room of the exam will be informed in the Self-Service at KUnet


Reexam information:

If only a few students have registered for the written re-exam, the reexam might change to an oral exam including the date, time and place for the exam, which will be informed by the Examination Office.

More information is available at Master students (UK), Master students (DK) and Bachelor students (DK).


Criteria for exam assesment

Students are assessed on the extent to which they master the learning outcome for the course.

To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.

  • Category
  • Hours
  • Lectures
  • 42
  • Class Instruction
  • 28
  • Exam
  • 3
  • Preparation
  • 133
  • Total
  • 206