Course syllabus

See the full syllabus here: Syllabus Environmental Policy Instruments 2020

Course coordinators

Thomas Sterner and Marion Dupoux, Environmental Economics Unit, Department of Economics, University of Gothenburg,, 031 786 13 77 and, 031 786 26 41. Course assistant: Ahmet Mandev, Physical Resource Theory, SEE, Chalmers,, 031 772 31 24.


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.


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.

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 18 “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.

Course digital learning platform - Canvas

All preparatory material will be available beforehand on the Canvas platform. If you are not registered and cannot access the course material, immediately notify Ahmet Mandev or Erik Sterner (see above for contact details) and ask to be enlisted.


The evaluation consists of a case study and an exam. 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 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.

  • Examination for PhD students will be decided on a case by case basis and generally involve the writing of a paper.



  • Sterner, T. and Coria, J., 2012. Policy instruments for environmental and natural resource management, Second Edition, Resources for the Future, Routledge Taylor & Francis Group.
  • Varian, H., 2014. Intermediate microeconomics, Eighth edition, Norton. (Few selected chapters)


Course summary:

Date Details Due