Course syllabus
Very Welcome to the course!
We promise you an exciting course!
The course you have chosen is more relevant than ever. The whole world is struggling to manage environmental issues and climate without alienating voters.
The EU has launched a very ambitious and comprehensive program to reduce emissions by 55% by 2030. According to the plan, it has reformed the EU ETS1 emissions trading scheme for industry and also proposed a new emission trading scheme for housing and transport. In Sweden, the government must meet long-term climate goals but would prefer to lower fuel taxes and the obligation to reduce emissions in the short term to provide cheaper fuel. Can climate goals be met while also reducing fuel costs? The solution might be to introduce a third emissions trading scheme in Sweden – but then fuel becomes expensive again …
In the USA, the government is pouring subsidies into alternative energy but avoids taxes. However, in New York, congestion charges will be introduced - Isn't it strange that Gothenburg and Stockholm have such charges but not New York, Shanghai and Paris…?
See the full syllabus here: Syllabus for Environmental Policy Instruments 2024
Course main teacher and course assistant
Thomas Sterner, Environmental Economics Unit, Department of Economics, University of Gothenburg, thomas.sterner@economics.gu.se.
Course assistant: Ridwan Dzikrurrokhim (course assistant), Physical Resource Theory, SEE, Chalmers ridwand@chalmers.se
Objective
This course aims at providing students with a broad overview of the economic concepts underlying environmental policy-making, as well as with insights into the practicalities of these sorts of policies, both from the perspective of those implementing the policy, but also of those facing new regulations. The course also gives a brief introduction to a number of vital concepts in economics such as supply, demand, markets, consumer surplus, market failure, prices and taxes. At the end of the course we expect students to understand why there is pollution and to have some understanding of what society can do to solve environmental problems.
Learning outcomes (after completion of the course the student should be able to)
- describe and analyze how environmental policy instruments work;
- describe the influence of a certain policy instrument both on incentives for technical change and on the distribution of costs in connection to environmental improvement;
- in a professional role, relate to the political game around policies and be prepared for pressure that different firms or other polluters can use to accomplish their agenda concerning policy choices.
- evaluate how policies should be selected and designed so as to meet not only the criteria of efficiency but also of equity, political feasibility and other criteria.
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Develop the ability to shift perspectives on fairness so that they can understand how decision makers in other parts of the world view issues of distribution and feasibilty and how this can be combined with an economic analysis of efficiency. The student can problematize around how to combine efficiency and feasibilty in the design of e.g. international climate agreements.
Contents
The course will be divided into 5 main sections.
- Introduction to economics: In this section we explain the most fundamental concepts in economics that are necessary to understand how the economy works – and in some cases does not work very well – as when we experience major environmental problems.
- Need for environmental policy-making: In this section we review the conceptual economic and institutional framework underlying the need for environmental policy. We start by introducing the economic concepts of efficiency and markets and move on to explain the reasons why markets sometimes fail to achieve an optimal allocation of environmental resources.
- Review of policy instruments: In this section we cover a variety of environmental policy instruments, from taxes to legal instruments, emphasizing their similarities and differences.
- Selection of policy instruments: The course continues with the study of selection criteria and potential implications of the policy instruments discussed above.
- Policy instruments in practice: We close the course with a series of applied examples of environmental policy-making, covering a wide variety of topics, ranging from road transportation and industrial pollution to land use and biodiversity conservation.
Teachers
Thomas Sterner (TS), thomas.sterner@economics.gu.se
Jens Ewald (JE), jens.ewald@economics.gu.se
Claes Ek (CE), claes.ek@economics.gu.se
Erik Sterner (ES), erik.sterner@chalmers.se
Guest Lecturers
Daniel Slunge (DS), daniel.slunge@gu.se
Mattias Johansson (MJ)
Course Assistants
Ridwan Dzikrurrokhim, Physical Resource Theory, SEE, Chalmers ridwand@chalmers.se (main course assistant)
Magdalena Andersson Paul, EfD, GU, magdalena.paul@efd.gu.se (Course Facilitator)
Teaching arrangements and teaching method
For most parts of the course, we will apply the concept of the “flipped classroom”. This is a form of blended learning where activities that traditionally have been considered homework are moved into the classroom, and part of the lectures are recorded and must be watched before coming to class.
The course now consists of a textbook, other reading material, exercises and around 20 “classes”. Note that these classes contain less classical lecturing than earlier and have generally been shortened to 2x45 minutes each (although some are still 3x45 minutes!). Throughout the course there are a few large and several small exercises and at the end there is a final examination. The course spans through 8 weeks, see schedule below. Some exercises will be done outside of scheduled lecture time.
It is absolutely crucial for the success of the whole course that you are active, do exercises, read course material and watch the recorded material (short videos and podcasts) before you come to the classroom as all activities in class build upon the knowledge and information delivered in the short videos. These are usually shorter than 20 minutes, and you will be asked to watch one to at most three of those before coming to class. One advantage is that you can always go back when you feel that you have not fully understood the concepts conveyed in the videos. In class, we will use group assignments, mathematical exercises, brainstorming and other techniques to engage you in the flipped classroom experience, deepen your understanding of the covered material and actively involve you in knowledge acquisition and construction.
Note: Please also watch the first video before coming to the introductory meeting. We will begin our flipped classroom journey right away. The online material is available on Canvas.
Hybrid lectures
A few of our lectures may be given in a hybrid format - meaning we will have partcipants both in the room and via the Zoom video conference system.
Course digital learning platform - Canvas
All preparatory material will be available beforehand here on the Canvas platform. If you are not registered and cannot access the course material, immediately notify Ridwan Dzikrurrokhim (see above for contact details) and ask to be enlisted.
Evaluation/Examination
The evaluation consists of a case study and an exam. No supporting resources may be used in addition to the software necessary to answer the questions. The case study may give maximum 20 points. The exam is composed of several questions and may give maximum 80 points. Thus, the maximum for the case study and the exam is 100 points in total. In addition, 2 bonus points for being engaged in 75% or more of all the discussion forums (or 1 bonus point for >49%) can be added to the total point. Note: These bonus points can be used only to get higher grades, not to get a pass grade (3)
In order to get grade
3 you must have at least 50 points in total,
4 you must have at least 60 points in total,
5 you must have at least 80 points in total.
Literature
Books
- Sterner, T. and Coria, J., 2012. Policy instruments for environmental and natural resource management, Second Edition, Resources for the Future, Routledge Taylor & Francis Group. ISBN 978-1-61726-097-1
- Varian, H., 2014. Intermediate microeconomics, 9th edition, Norton. (Few selected chapters)
- See further articles in the course syllabus
Additional on Basic Economics: optional online lectures (Youtube)
We have included examples of relevant clips – but feel free to watch more videos if you want to dive deeper.
Khan Academy
(Very pedagogical, short videos - good for improving understanding of fundamental concepts)
Examples of relevant clips:
Budget Line and Budget Constraints: clips 39-40
Marginal utility: clip 36
Producer theory, supply: clips 13-14
Costs of producers: clips 44 - 49
Perfect Competition: clips 50
Market Equilibrium: clip 15
Consumer & producer surplus: clips 27-30
Monopoly: clips 51-54
Externalities: clips 64-66
MIT OpenCourseWare
(Longer, more in-depth videos in a classroom setting - good for deepening understanding)
Examples of relevant clips:
Preferences and utility (clip 2)
Budget constraints and constrained choice (clip 3)
Demand curves and income/substitution effects (clip 4)
Producer theory (clip 5)
Firm costs (clip 6)
Competition (clips 7-8)
Supply, demand & consumer and producer surplus (clip 9)
Externalities (clips 23-24)
Monopoly (clips 11-12)
Information asymmetries (clip 25)