Environmental and Natural Resource Economics

Peter J. Wilcoxen
Department of Economics
The University of Texas at Austin

Preliminary Course Outline

Here is a tentative list of the topics to be covered in class this semester. Depending on the background and interests of the class we may cover more material or cover it in a slightly different order. An up to date and slightly more detailed version of this is available from the class web page.

Introduction

What makes the environment different from other economic problems?

Fundamental Concepts

Basic ideas from microeconomics

Willingness to pay, willingness to accept; Consumer and producer surplus; Pareto efficiency, equity, fairness, transfers and compensation.

When might problems arise?

Externalities; Common property; Public goods

Efficiency over long time horizons

Present value and discounting

Controlling Externalities

Basic principles

The Coase critique; Command and control regulation; Market based methods

Measuring the value of the environment

Risk assessment; Hedonic pricing; Travel cost method; Contingent valuation.

Further complications

Jurisdiction: local vs national vs international control; Priorities: which problems first?

Managing Common Property

Overview of natural resources

Classification; Role of uncertainty; Reserve ratio fallacy

Exhaustible resources

Basic theory; Extensions to the basic model; Recycling; Resource scarcity

Environmental amenities
Renewable resources

Fish; Trees; Water

Conclusion

When is intervention needed?
What form should it take?