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 2025

 

Course main teacher and course assistant

Thomas Sterner, Environmental Economics Unit, Department of Economics, University of Gothenburg, thomas.sterner@economics.gu.se.

Course assistant: Maximilian Forberg, Physical Resource Theory, SEE, Chalmers, forbergm@chalmers.se

Course facilitator: Viking Lindberg, Environment for Development, University of Gothenburg, viking.lindberg@efd.gu.se 

 

Course Objective/Aim

This course is intended to give sufficient insight in applied environmental economics for the students to contribute to a discussion in e.g. companies or regulatory authorities, concerning the design and implications of policies in the area of environmental and natural resource management. In addition, the course aims to provide practical training in this type of discussion and advocacy in Swedish as well as international contexts. Towards this objective, this course aims at providing students with a broad overview of the economic concepts underlying environmental policymaking. 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 the market mechanism works, through supply and demand functions that interact to form prices. This is necessary background to be able to analyze the market failures that underlie environmental problems.
    • 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.
    • Relate one's own perspective on fairness to that of decision makers in other parts of the world with regards to 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. 
    • Use AI tools to enhance learning processes (such as requesting tailored explanations) and for simpler tasks apply text and image generating AI as a versatile project support tool, as well as being able to reflect on the risks associated with the use of technology.

    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, concepts like demand, supply, market equilibrium, price mechanism and consumer surplus.
    • Need for environmental policy-making: In this section we explain why there is sometimes a need for environmental policy when the market fails or does not work very well – as when we experience major environmental problems. 
    • Review of policy instruments: In this section we describe a variety of environmental policy instruments, from taxes to cap and trade, from regulation to information or legal instruments, emphasizing their similarities and differences.
    • Selection and design of policy instruments: The course continues with the study of how to choose and design policy instruments for particular situations, incorporating multiple perspectives such as principles for a fair distribution of global responsibility as highlighted in international climate negotiations. This is enriched through a perspective-shifting exchange with students from different parts of the world.
    • 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 climate change, chemicals and biodiversity conservation.

    The course also includes a few minor elements on learning and the use of AI for learning and for the sustainability transition.

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), Volvo Cars 

Course Assistants

Maximilian Forberg, Physical Resource Theory, SEE, Chalmers forbergm@chalmers.se (main course assistant)

Viking Lindberg, EfD, GU, viking.lindberg@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 Maximilian Forberg (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, if you have scored more than 50 points in total, you can earn 2 bonus points for being engaged in 75% or more of all the discussion forums (or 1 bonus point for >50% of the discussion forums) - towards earning a higher grade 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 65 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

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)

They have a couple of relevant playlists, some examples are:
Basic economic concepts, Supply, demand, and market equilibrium, Theory of consumer choice, Production and costs, Market failure and the role of government

 

MIT OpenCourseWare

(Longer, more in-depth videos in a classroom setting - good for deepening understanding)

Microeconomics Playlist

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)