ECON 520 Environmental Economics (Writing Intensive) Spring 2017

Transcription

1 ECON 520 Environmental Economics (Writing Intensive) Spring 2017 Jeffrey Wagner Rochester Institute of Technology Department of Economics Building 1 - Room 1351 Office hours: Mondays, Wednesdays, and Fridays, 9am-10am and by appointment. jeffrey.wagner@rit.edu Departmental web page: Phone: Greetings, and welcome to Environmental Economics! This course investigates many environmental issues from an economic point of view. Studying the economic aspects of environmental issues provides each of us with new strategies and tools with which to participate in public policy making and enriches our understanding of influences upon our personal, national and global standards of living. My teaching goal for this term is two-fold. Firstly, I would like to introduce the language of environmental economics. Then, with this terminology in hand, we shall turn our attention to analyzing alternative environmental economic policies. I believe you will very much enjoy reading the text for our course: Environmental Economics: An Introduction, Sixth Edition (2013), by Barry C. Field and Martha K. Field, ISBN I look forward to teaching this course, and I welcome your striving with me to attain these important goals. RIT is committed to providing reasonable accommodations to students with disabilities. If you would like to request accommodations such as special seating or testing modifications due to a disability, please contact the Disability Services Office. It is located in the Student Alumni Union, Room 1150; the Web site is After you receive accommodation approval, it is imperative that you see me during office hours so that we can work out whatever arrangement is necessary. Course Requirements: Exam #1 20% Exam #2 20% Exam #3 20% Research paper 20% Exam #4 (final) 20% Examinations: We will have three midterm exams and a final exam. The first exam will be given on Friday, February 17; the second exam will be given on Wednesday, March 22; the third exam will be given on Wednesday, April 19. The final exam is scheduled by the Institute for Friday, May 19, 8-10am, in our regular classroom. The second and third exams will not be cumulative; however, the final exam will be cumulative. Note that

2 sample exam questions are available at The scope of the exams shall strictly regard the materials we discuss in class, and the sections of the readings corresponding to these materials discussed in class. Thus, it is crucial to have a complete set of lecture notes. I strongly encourage you to exchange greetings and contact information during this first week of class with at least one other person in this class, so that you may call upon that person for a copy of the lecture notes, should you need to miss a class for any reason. I encourage you to bring a $15 calculator to the exams which is to say, a scientific calculator like a TI-30XIIS that does not have graphing, wireless, or keyboard functions. If there is any uncertainty regarding the admissibility of one s calculator, please do check with me in advance. Please note that while I am eager to discuss your questions regarding the exam materials, I cannot answer questions after I begin preparing the exam. Therefore, my deadline for answering questions is 5PM the evening before each exam. Lastly, please note that if we determine that a make-up exam is appropriate, that exam will almost surely be an oral exam. Course Grades: Course grades will be determined as follows: Research Paper Percentage Plus/Minus Equivalent A A B B B C C C D <50 F Please note that this course is designated as a general education writing intensive course. The goal for the research paper assignment is to pursue an environmental economic topic of your interest beyond the standard course materials. The paper must either consider the environmental economics of an aspect of the work you plan to engage upon graduation, or the paper must revisit an environmental problem that appeared in (or is currently of concern in) your home town and explore how the environmental economic theory and practice we study in this course suggests new ways of addressing that problem. This is a conceptual paper; we do not need to collect data and test hypotheses. Rather, this is a paper in which one will set forth a basic optimization problem (profit maximization, utility maximization, cost minimization, welfare maximization, or other); discuss which aspects of the problem should be included and which aspects can be set aside for now

3 (including the identification of endogenous variables and exogenous parameters); discuss what researchers have done to date on problems like this; evaluate how the private solution to the optimization can deviate from the social solution to the optimization; and then discuss multiple environmental economic policy approaches that could, in principle, align the private and social decision-making. The paper will be assessed according to three criteria: (1) Does the paper demonstrate and explain the microeconomics of the environmental problem?; (2) Does the paper show a solid grasp of what the economics literature says thus far about the problem?; and (3) Does the paper propose and discuss one or more extensions to that literature that could be developed in future research (as a senior year capstone project or in graduate school, for instance)? Please note that your paper must feature at least three EconLit database references. Please consider submitting a complete first draft of your paper to me by Wednesday, April 12 at noon. I will provide feedback on the mechanics, organization, and clarity of your draft paper by April 14 (ideally) or by April 17 at the latest. The final paper must span 8-12 double-spaced pages (excluding the cover page and references). Please submit a laser-printed copy of the final paper in a nice folder, along with the first draft paper that includes my comments, if applicable. The final paper is due by Monday, May 8 at Noon. Note that while I cannot accept late papers, I am pleased to receive incomplete papers that are on time and award partial credit. If you are unable to submit your paper in class on the due date, you may (before the strict Noon deadline) slide it under my office door; send it to me via (as a Word or PDF document); fax it to my office at ; or send it by traditional mail. If the or fax options become necessary, I must reduce the grade by 3%. Reading and Homework Assignments: We will proceed linearly through Chapters 1-13 and 15 (and if time permits, 16, 17 and 20) of the Field and Field text. Outline of some introductory materials that do not appear in the text. a. Let s focus upon paradigms for a moment, by way of the concept of unemployment, to suggest how environmental changes have occurred parallel to economic changes. Discuss Plato, Smith, Thoreau, O Keeffe, and Elder, with regard to points (c) and (d) below. b. The main idea: the history of environmental problems and the larger changes in our local, national and international economies is important to ascertain how we might best proceed. c. A key theme in economic history, and perhaps the strongest theme, is the movement away from self-sufficiency and toward specialization of greater and greater intensity. We, of course, glean several benefits from greater and greater specialization among us; however, to fully capture these benefits we must vigilantly guard against detachment between groups of people, and between all people and the biosphere. I am concerned whether markets naturally generate the optimal amount of attention from

4 each person to our individual and group interfaces with the biosphere. And to put it succinctly, this course explores the clever ways by which this interface can be strengthened. d. Strengthening the interface, it seems to me, must be focused upon building bridges between aspects of the economy and the environment with which specialists are familiar and those with which specialists are not familiar (familiar as in direct sensory perception). Consider John Elder s work regarding our usage of metaphor and simile in order to communicate our concerns between intense specialists. A very important contribution of environmental economics work to this effort is to try to envelope environmental concerns within familiar financial instruments and marketbased transactions. In addition to our textbook materials, please plan to read as many of the following documents as time permits; at a minimum, please read the documents indicated with stars. The documents are listed in the approximate order of their appearance in our class discussions. Chapters 1-3: Introduction *Plato (380 BC). Republic, Book II. *Wagner, J. (2007). Plato s Republic and Liberal Economic Education for the Twenty- First Century, Economics Bulletin 1(2): 1-10., *Smith, A. (1776). Wealth of Nations, Chapters 1 and 2. Dasgupta, P. (2001). Human Well-Being and the Natural Environment, New York: Oxford University Press. RIT Library shelves, HD.75.6.D , 4 th floor. *Thoreau, H. D. (1854). Walden, Chapter 1 (Economy). Becker, C. (2008). Thoreau s Economic Philosophy, European Journal of the History of Economic Thought 15(2): Eriksson, R. (2005). On the Ethics of Environmental Economics as Seen from Textbooks, Ecological Economics 52(4): Steinberg, T. (2002). Down to Earth: Nature s Role in American History, New York: Oxford University Press. RIT Library shelves, GF27.S , 4 th floor.

5 Elder, J. (1996). Structure of Evolving Consciousness, Chapter 7, in Imagining the Earth: Poetry and the Vision of Nature, Second Edition, Athens: University of Georgia Press. RIT Library shelves, PS310.N3 E , 3 rd floor. Elder, J. (1998). Reading the Mountains of Home, Cambridge: Harvard University Press. RIT Library shelves, F59.B85E , 4 th floor. Chapter 4: Economic Efficiency and Markets Wagner, J. (2006). On the Economics of Sustainability, Ecological Economics 57(4): Wagner, J. (2004). Free-Riding on Eiseley s Star Thrower, Thoreau s Huckleberry Patch and Havel s Streetcar in the Local and Global Commons, Interdisciplinary Studies in Literature and Environment 11(1): Chapter 5: Economics of Environmental Quality Chein, H. and T. M. Chen (2003). Emission Characteristics of Volatile Organic Compounds from Semiconductor Manufacturing, Journal of the Air & Waste Management Association 53(8): Koop, G. and L. Tole (2004). Measuring the Health Effects of Air Pollution: To What Extent Can We Really Say that People Are Dying from Bad Air? Journal of Environmental Economics and Management 47(1): He, G., Fan, M., Zhou, M. (2016). The Effect of Air Pollution on Mortality in China: Evidence from the 2008 Beijing Olympic Games, Journal of Environmental Economics and Management 79: Laukkanen, M. and A. Huhtala (2008). Optimal Management of a Eutrophied Coastal Ecosystem: Balancing Agricultural and Municipal Abatement Measures, Environmental and Resource Economics 39(2): Muller, N. Z. and R. Mendelsohn (2009). Efficient Pollution Regulation: Getting the Prices Right, American Economic Review 99(5): McKitrick, R. (1999). A Derivation of the Marginal Abatement Cost Curve, Journal of Environmental Economics and Management 37(3): Endres, A., Bertram, R. (2006). The Development of Care Technology under Liability Law, International Review of Law and Economics 26(4):

6 Chapter 6: Frameworks of Analysis *Banzhaf, H. S. (2009). Objective or Multi-Objective? Two Historically Competing Visions for Benefit-Cost Analysis, Land Economics 85(1): Sunstein, C. (2005). Cost-Benefit Analysis and the Environment, Ethics 115(2): Hansson, S. O. (2007). Philosophical Problems in Cost-Benefit Analysis, Economics and Philosophy 23(2): Hauser, V. L., B. L. Weand and M. D. Gill (2001). Natural Covers for Landfills and Buried Waste, Journal of Environmental Engineering 127(9): Barnswell, K. D. and D. F. Dwyer (2011). Assessing the Performance of Evapotranspiration Covers for Municipal Solid Waste Landfills in Northeastern Ohio, Journal of Environmental Engineering 137(4): Viscusi, W. K. and J. Aldy (2003). The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World, Journal of Risk and Uncertainty 27(1): Kniesner, T. J., Viscusi, W. K., Woock, C., Ziliak, J. P. (2012). VSL: Evidence from Panel Data, Review of Economics and Statistics 94(1): Banzhaf, S. (2014). The Cold-War Origins of the Value of Statistical Life, Journal of Economic Perspectives 28(4): Van Houtven, G. and M. L. Cropper (1996). When is a Life Too Costly to Save? The Evidence from U.S. Environmental Regulations, Journal of Environmental Economics and Management 30 (3): *Viscusi, W. K. and J. T. Hamilton (1999). Are Risk-Regulators Rational? Evidence from Hazardous Waste Cleanup Decisions, American Economic Review 89(4): Harrington, W. and R. D. Morganstern (2004). Evaluating Regulatory Impact Analyses, Resources for the Future Discussion Paper, Chapter 7: Benefits Estimation *Cropper, M. L. (2000). Has Economic Research Answered the Needs of Environmental Policy? Journal of Environmental Economics and Management 39(3):

7 Abdalla, C. W., B. A. Roach, and D. J. Epp (1992). Valuing Environmental Quality Changes Using Averting Expenditures: An Application to Groundwater Contamination, Land Economics 68(2): Rosado, M. A., M. A. Cunha-E-Sá, M. M. Ducla-Soares, and L. C. Nunes (2006). Combining Averting Behavior and Contingent Valuation Data: An Application to Drinking Water Treatment in Brazil, Environment and Development Economics 11(6): Kim, C. W., T. T. Phipps, and L. Anselin (2003). Measuring the Benefits of Air Quality Improvement: A Spatial Hedonic Approach, Journal of Environmental Economics and Management 45(1): Poor, P. J., K. L. Pessagno, and R. W. Paul (2007). Exploring the Hedonic Value of Ambient Water Quality: A Local Watershed-Based Study, Ecological Economics 60(4): Cameron, T. A. (1992). Combining Contingent Valuation and Travel Cost Data for the Valuation of Non-Market Goods, Land Economics 68(3): Kling, C. L., Phaneuf, D. J., Zhao, J. (2012). From Exxon to BP: Has Some Number Become Better than No Number? Journal of Economic Perspectives 26(4): Carson, R. (2012). Contingent Valuation: A Practical Alternative When Prices Aren t Available, Journal of Economic Perspectives 26(4): Cameron, T. A. and J. Englin (1997). Respondent Experience and Contingent Valuation of Environmental Goods, Journal of Environmental Economics and Management 33(3): *Banzhaf, H. S., D. Burtraw, D. Evans, and A. Krupnick (2006). Valuation of Natural Resource Improvements in the Adirondacks, Land Economics 82(3): Jin, J., Z. Wang, and S. Ran (2006). Comparison of Contingent Valuation and Choice Experiment in Solid Waste Management Problems in Macao, Ecological Economics 57(3): Boyce, R. R. et al. (1992). An Experimental Examination of Intrinsic Values as a Source of the WTA-WTP Disparity, American Economic Review 82(5): Chapter 8: Cost Estimation *Bullard, C. W., H. T. Weger and J. Wagner (1998). Managing the Uncertainties of Low-Level Radioactive Waste Disposal, Journal of the Air and Waste Management Association 48(8): (Available on our mycourses site.)

8 Stevens, B. J. (1978). Scale, Market Structure, and the Cost of Refuse Collection, Review of Economics and Statistics 60(3): Callan, S. J. and J. M. Thomas (2001). Economies of Scale and Scope: A Cost Analysis of Municipal Solid Waste Services, Land Economics 77(4): Chapter 9: Criteria for Evaluating Environmental Policies *Yang, T. (2002). Melding Civil Rights and Environmentalism: Finding Environmental Justice s Place in Environmental Regulation, Harvard Environmental Law Review 26(1): (Available on-line via Wallace Library, Lexis-Nexis database) Turaga, R. M. R., D. Noonan, and A. Bostrom (2011). Hot Spots Regulation and Environmental Justice, Ecological Economics 70(7): Chapter 10: Decentralized Policies Illinois Low-Level Radioactive Waste Management Act, %26nbsp%3B20%2F&ChapterID=37&ChapterName=NUCLEAR+SAFETY&ActName =Illinois+Low%2DLevel+Radioactive+Waste+Management+Act%2E. GAO (2004). Nuclear Regulation: NRC s Liability Insurance for Nuclear Power Plants Owned by Limited Liability Companies, U. S. Government Accounting Office Report GAO , May Klass, A. (2007). Common Law and Federalism in the Age of the Regulatory State, Iowa Law Review 92: Bhole, B. and J. Wagner (2010). Punitive Damages and the Recklessness Requirement with Uninformed Injurers, International Review of Law and Economics 30(3): Kotchen, M. J. (2005). Impure Public Goods and the Comparative Statics of Environmentally Friendly Consumption, Journal of Environmental Economics and Management 49(2): Teisl, M. F., Roe, B., Hicks, R. L. (2002). Can Eco-Labels Tune a Market? Evidence from Dolphin-Safe Labeling, Journal of Environmental Economics and Management 43(3): Shavell, S. (2002). Law versus Morality as Regulators of Conduct, American Law and Economics Review 4(2):

9 Chapter 11: Command-and-Control Standards Holland, S. P., Hughes, J. E., Knittel, C. R. (2009). Greenhouse Gas Reductions under Low Carbon Fuel Standards, American Economic Journal: Economic Policy 1(1): Chapter 13: Transferable Permits Montero, J.-P. (2002). Permits, Standards, and Technology Innovation, Journal of Environmental Economics and Management 44(1): Chapter 15: Federal Air Pollution Control Policy Burtraw, D. and S. J. Szambelan (2009). U.S. Emissions Trading for SO2 and NOx, Resources for the Future Discussion Paper Schmalensee, R. et al. (1998). An Interim Evaluation of Sulfur Dioxide Emissions Trading, Journal of Economic Perspectives 12(3): Carlson, C., D. Burtraw, M. Cropper, and K. L. Palmer (2000). Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade? Journal of Political Economy 108(6): Ellerman, A. D. and J.-P. Montero (1998). The Declining Trend in Sulfur Dioxide Emissions: Implications for Allowance Prices, Journal of Environmental Economics and Management 36(1): Chestnut, L. G. and D. M. Mills (2005). A Fresh Look at the Benefits and Costs of the U.S. Acid Rain Program, Journal of Environmental Management 77(3): Schmalensee, R., Stavins, R. N. (2013). The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment, Journal of Economic Perspectives 27(1): Chapter 16: Toxic and Hazardous Substances Levinson, A. (1999). State Taxes and Interstate Hazardous Waste Shipments. American Economic Review 89(3): GAO (2004). Low-Level Radioactive Waste: Disposal Availability Adequate in the Short Term, but Oversight Needed to Identify Any Future Shortfalls. United States General Accounting Office Report

10 Wagner, J. (2000). Estimating the Optimal Scale of Public Investments: The Case of Low-Level Radioactive Waste Disposal Facilities, Journal of Regulatory Economics 17(2): Chapter 17: State and Local Environmental Issues Ley, E., M. Macauley and S. W. Salant (2002). Spatially and Intertemporally Efficient Waste Management: The Costs of Interstate Trade Restrictions. Journal of Environmental Economics and Management 43(2): Klein, C. (2003). The Environmental Commerce Clause, Harvard Environmental Law Review 27(1): Longo, C. and J. Wagner (2010). Bridging Legal and Economic Perspectives on Interstate Municipal Solid Waste Disposal in the US Waste Management 31(1): Wagner, J. (2011). Incentivizing Sustainable Waste Management, Ecological Economics 70(4): Petre, A., Wagner, J. (2013). Green Consumption under Misperceived Prices: An Application to Active Transportation, Southern Economic Journal 80(1): Williams III, R. C. (2012). Growing State-Federal Conflicts in Environmental Policy: The Role of Market-Based Regulation, Journal of Public Economics 96(11-12): Chapter 20: The Global Environment Heal, G. (1999). New Strategies for the Provision of Global Public Goods: Learning from International Environmental Challenges, in Global Public Goods: International Cooperation in the 21 st Century, edited by Inge Kaul, Isabelle Grunberg and Marc A. Stern, published for the United Nations Development Programme by Oxford University Press, pp Heal, G. and B. Kristöm (2002). Uncertainty and Climate Change, Environmental and Resource Economics 22(1-2): Karp, L. and J. Zhang (2006). Regulation with Anticipated Learning about Environmental Damages, Journal of Environmental Economics and Management 51(3): Kolstad, C. D. (2007). Systematic Uncertainty in Self-Enforcing International Environmental Agreements, Journal of Environmental Economics and Management 53(1):

11 Weitzman, M. L. (2009). On Modeling and Interpreting the Economics of Catastrophic Climate Change, Review of Economics and Statistics 91(1): Metcalf, G. E. (2009). Market-based Policy Options to Control U.S. Greenhouse Gas Emissions, Journal of Economic Perspectives 23(2): Stern, N. (2008). The Economics of Climate Change, American Economic Review (Papers and Proceedings Ely Lecture) 98(2): Newell, R. and R. Stavins (2000). Climate Change and Forest Sinks: Factors Affecting the Costs of Carbon Sequestration, Journal of Environmental Economics and Management 40(3): Hall, D. C. and R. J. Behl (2006). Integrating Economic Analysis and the Science of Climate Instability, Ecological Economics 57(3): Newell, R. G., Pizer, W. A., Raimi, D. (2013). Carbon Markets 15 Years after Kyoto: Lessons Learned, New Challenges, Journal of Economic Perspectives 27(1):