Environmental, resource and energy economics for less developed countries

Transcription

1 Environmental, resource and energy economics for less developed countries Course description Course content The course addresses topics in environmental, natural resource and energy economics that are specific to, or particularly relevant for, less-developed (low-income, and middle-income) countries. The course focuses on and explains problems related to the environment, natural resources and energy that are particularly severe in lower-income countries, and on how institutional and governance problems create obstacles to achievement of targets. One important topic is the impacts of climate change on less developed countries, and these countries relationships to the Paris Agreement on international climate action. Course requirements As a basis for taking the course, you should have background from the following: Have a solid background in microeconomics, preferably with some understanding of basic game theory Have a basic understanding of welfare economics including the theories of externalities and public goods. Learning outcome After taking the course you should Have a good understanding of environmental problems in developing countries, both those problems that may follow from activities in the countries themselves (such as pollution and urban congestion), and those that may follow from climate change Have a good knowledge of some widespread policy failures related to the management of natural resources and energy, such as fossil energy subsidies, and the resource curse, and their reasons Understand some of the policy paths, and institutional improvements, required to overcome these problems Understand how environmental problems in rich and poor countries differ. Skills On the basis of this course you should have developed the following skills: Have a basic understanding of the most serious environmental and resource management problems in lower-income countries, and why they have not been adequately addressed to date Have a basic understanding of political and governance problems in lower-income countries

2 Understand how institutional problems aggravate these problems, and what it may take to overcome the institutional barriers. Understand how government policies may solve or reduce these problems Competence On the basis of knowledge obtained in this course, you should Be able to seriously address environmental, natural resource and energy issues and problems in less-developed countries Become acquainted with the literature on environmental, natural resource and energy issues and problems in less-developed countries Have a good basis for writing a Master Thesis within the topic area of the course. Teaching Lectures: 2 hours per week throughout the semester Seminars: 2 hours per week during parts of the semester There might be some weeks exempt from teaching The seminars will be integrated with the lectures, and will form an important part of the course by giving the students important practical skills and more hands-on training, in understanding and handling the topics of the course. Students are strongly encouraged to (attempt to) solve the problems on their own or in groups, ahead of the seminar sessions. Examination A 3-hour written exam at the end of the course. Language The course will be given in English. The exam may be answered in English, Norwegian, Swedish or Danish.

3 Course in Environmental, resource and energy economics for less-developed countries Jon Strand, March 2017 Background for the course: Developing countries today and for the years ahead face many severe, and special, problems within the topic areas of environmental, resource and energy economics, and in closely related fields such as transport and infrastructure development. Understanding these problems, and remedying them, will be central topics on the development agenda for the years to come. First, developing countries today face problems of environmental quality of a dimension far surpassing those of richer countries, with sometime devastating impacts, on public health and well-being, and also on life expectancy and productivity. Secondly, the provision of essential public goods such as water, sewerage and electricity service, and other aspects of urban infrastructure including transport systems, is highly deficient in large groups of developing countries. Thirdly, most developing countries are located to hot and often risky zones of the globe, which are greatly at risk of additional adverse developments due to increasing climate change. The course will seek to analyze these problems, the main reasons for why the problems exist, and what can be done to remedy them, both in terms of the countries own policies, and in terms of support from higher-income (donor) countries to remedy them. The basis will be the international literature Key themes 1. Background: Why do we need a special environmental analysis for low-income countries? 2. Some political economy problems related to environment, resources, and energy policy. Political economy-type of problems are pervasive in developing countries, and lie behind many of the other issues and problems discussed in this course. This is related to a wide range of governance and other political problems, which include corruption; politicians lack of accountability to important population groups (often, the poorest); lack of secure property rights; and conflicts over the management of resources. Special topics discussed in this part: Environmental Kuznets curves; energy subsidies and distortions in energy markets. 3. Pollution and related problems in developing and emerging economies. The greatest pollution problems in the world today are found in some developing countries, and in major high-growth emerging economies (China and India). This part of the course describes and analyzes these problems and their impacts, including the magnitudes of social costs to the countries (mortality and morbidity effects; productivity impacts), and what policies are relevant to meet or reduce the problems. Some special topics considered include: The pollution haven hypothesis; Cost-benefit analysis of policies and projects, including the value of statistical life (VSL) in low-income countries. 4. Climate-related problems, including problems of adaptation to climate change. Most developing countries are already hot. They will suffer disproportionately from a hotter climate and more frequent and severe extreme weather episodes that follow with global warming (hurricanes, flooding, and extreme droughts), and more persistent climatic changes such as changes in rainfall patterns. This part of the course deals with the economic impacts

4 of such problems, and (adaptation) policies to deal with them. Special theme: The Samaritan s dilemma; strategies for long-run adaptation through infrastructure investment. 5. Climate policy issues for developing countries. Basically all developing and emerging countries have put forth proposed actions under Paris Agreement up to 2030, so-called INDCs, unconditional and conditional. In this part of the course we will discuss the nature of these plans, whether they are realistic, to what degree they depend on support from outside, and some specific forms they may take (including support to renewable energy development). We will specifically discuss the Paris Agreement s possibility for establishment of an international mechanism for international emissions trading, and likely levels and forms of international transfers to support mitigation policies. 6. Public-goods supply, infrastructure quality, and growth in developing countries. Still, many developing countries have severely deficient supply of water, sewerage, and electricity, most so in rural areas, but in many countries (most in Sub-Saharan Africa and South Asia) also in urban areas. This part of the course discusses reasons for this situation, its implications for the respective economies and their development and growth, and what can and should be done to improve the situation. 7. Urban transport. Excessive urban road traffic is a special problem hampering the efficiency and development of many low- and middle-income countries. This part of the course analyzes the nature and magnitudes of such costs and problems, how they may affect overall economic efficiency, and how to deal with them. Special topics: Energy subsidies and their possible phase-out; co-benefits from climate mitigation policies; urban planning and infrastructure development in developing countries. 8. Natural resources and management, and macroeconomic management. Many developing countries are rich in natural resources, including forest resources, and minerals (metals; fossil fuels). This part of the course discusses the optimal, and actual, management of such issues in different low-income and middle-income countries, and describes current developments in light of other themes within the course (including various political economy issues, the problems raised by these for natural resource management, and for overall resource allocation and macroeconomic management). Special themes: North-South conflicts; Resource curse issues.

5 Literature for the course Environmental, resource and energy economics for less-developed countries Jon Strand The following reading list indicates the 8 separate themes for the course, to which each item belongs. There are however overlaps between some of the themes, so that some documents may belong under more than one theme for the course. 1. Background Venables, A. J. (2016), Using Natural Resources for Development: Why has it Proven so Difficult? Journal of Economic Perspectives, 30, Greenstone, M. (2014), Energy, Growth, and Development. International Growth Centre Working Paper. 2. Political economy problems related to environment, resources, and energy policy. Special topics discussed: Environmental Kuznets curves; fossil energy subsidies. Dinda, S. (2004), The Environmental Kuznets Curve Hypothesis: A Survey. Ecological Economics, 49, Coady, D., I. Parry and B. Shang (2017), Energy Price Reform: A Guide for Policymakers. CESifo Working Paper no Group of 20 (2011), Joint report by IEA, OPEC, OECD and World Bank on fossil-fuel and other energy subsidies: An update of the G20 Pittsburgh and Toronto Commitments. Vagliasindi, M. (2013), Implementing Energy Subsidy Reforms: Evidence from Developing Countries. Washington DC: The World Bank. 3. Pollution and related problems in developing and emerging economies. Hammitt, J. and L. Robinson (2011), The Income Elasticity of the Value per Statistical Life: Transferring Estimates between High and Low Income Populations. Journal of Cost-Benefit Analysis, vol 2 issue 1, article 1. Levinson, A. and S. Taylor (2008), Unmasking the pollution haven effect. International Economic Review, 49, Parry, I., D. Heine, E. Lis, and S. Li (2014), Getting energy prices right: From principle to practice. Chapter 3. Washington DC: International Monetary Fund.

6 4. Climate-related problems, including problems of adaptation to climate change. Special theme: The Samaritan s dilemma. World Bank (2014), Turn Down the Heat: Confronting the New Climate Normal. Washington DC: World Bank. (parts of the document only) 5. Climate policy issues for developing countries. Strand, J. (2017), Unconditional and conditional INDCs under the Paris Agreement: Interpretations and their relations to policy instruments, Unpublished, University of Oslo, March Parry, I., D. Heine, E. Lis, and S. Li (2014), Getting energy prices right: From principle to practice. Chapter 5. Washington DC: International Monetary Fund. 6. Public-goods supply, infrastructure quality, and growth in developing countries. Bardhan, P. and Mookherjee, D. (2006), Decentralization and accountability in infrastructure delivery in developing countries. The Economic Journal, 116, Strand, J. (2012), Allocative Inefficiencies Resulting from Subsidies to Agricultural Electricity Use: An Illustrative Model. Policy Research Working Paper no 5955, Development Research Group, the World Bank. Strand, J. and I. Walker (2005), Water markets and demand in Central American cities. Environment and Development Economics, 10 no 3, Mundaca, G. (2017), Energy Subsidies, Public Investment, and Endogenous Growth. Unpublished, World Bank. 7. Urban transport. Parry, I. and J. Strand (2012), International Fuel Tax Assessment: An Application to Chile. Environment and Development Economics, 17, Parry, I., D. Heine, E. Lis, and S. Li (2014) Getting Energy Prices Right: From Principle to Practice. Chapter 4. Washington DC: International Monetary Fund. 8. Natural resources and management, and macroeconomic management. Special themes: North-South conflicts; Resource curse issues

7 World Bank (2002), Treasure or Trouble: Mining in developing countries. Washington DC: World Bank and International Finance Corporation. Ross, M. (2015), What have we learned about the resource curse? Working paper UCLA.