Accueil > Introduction to environmental economics (lecture)

OADD 2145 - Introduction to Environmental Economics (Lecture)

Type d'enseignement : Lecture alone

Semester : Autumn 2017-2018

Number of hours : 24

Language of tuition : English

Voir les plans de cours et bibliographies



Course Description

Economics provides a framework for thinking about environmental policy choices, and some distinctive insights what have had a major influence on policy in recent years. This course provides an overview of the economic approach to key environmental policy issues, including air pollution, climate change, and biodiversity, and an assessment of the merits of different policy interventions – comparing conventional regulation and market mechanisms such as emissions trading and taxation. Policy case studies examine in detail the experience of some recent policy innovations, and the contribution that economics can make to better policy assessment. Exposition is non-technical, and the course should be accessible to students with little previous economics as well as those with a more extensive grounding in the discipline.


  • CARDENAS RODRIGUEZ, Miguel (Economiste environnemental)
  • SMITH, Stephen e. (Professeur)

Pedagogical format

The course assumes no prior knowledge of economics, and will be taught in a non-technical style, without the use of formal mathematics. The aim is to introduce students to the key concepts and ideas in environmental economics, so that they can understand economists' contributions to policy debates, and the strengths and weaknesses of the economic approach to environmental policy.

Course validation

- controle continu
- mid-term take-home exam – 40% of total grade
- final written assignment (maximum 1500 words) – 60% of total grade


24 hours of lectures, which set out the key theoretical ideas of environmental economics, and discuss relevant empirical research and policy applications.

Students are expected to supplement the lectures by reading a range of relevant literature, including selected book chapters, policy papers and academic journal articles.

Required reading

  • Stephen Smith (2011), Environmental Economics. A Very Short Introduction. Oxford University Press. ISBN 978-0-19-958358-4
  • David M. Newbery (1990), "Acid Rain", Economic Policy, issue no. 11, October 1990
  • David Pearce, Anil Markandya and Edward Barbier (1989) Blueprint for a Green Economy. London: Earthscan Publications Ltd. ISBN 1-85383-066-6. Chapter 3 'Valuing the environment' (pages 51-81). Chapter 6. 'Discounting the future' (pages 132-152)
  • Symposium on Contingent Valuation, Journal of Economic Perspectives, 1994, Vol. 8, No. 4, pages 3-64, (papers by Portney, Hanemann; Diamond & Hausman)
  • A. Denny Ellerman, Claudio Marcantonini and Alexsandar Zaklan (2015) "The European Union Emissions Trading Scheme: Ten Years and Counting". Review of Environmental Economics and Policy. Published online doi: 10.1093/reep/rev014

Additional required reading

  • Dallas Burtraw and Karen Palmer (2004) "SO2 cap-and-trade program in the United States: A "Living Legend" of market effectiveness", in Winston Harrington, Richard D Morgenstern and Thomas Sterner (eds) Choosing Environmental Policy. Comparing Instruments and Outcomes in the United States and Europe. Washington DC: RFF Press
  • Richard Schmalensee and Robert N. Stavins. 2013. "The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment." Journal of Economic Perspectives, 27(1): 103-22..
  • R. Coase (1960), "The problem of social cost" Journal of Law and Economics, vol 3, pp 1-44
  • Nicholas Stern (2007) "The Economics of Climate Change. The Stern Review". Chapter 2 ‘ Economics, Ethics and Climate Change'. Pages 25-45. Cambridge University Press. ISBN 978-0-521-70080
  • William Nordhaus (2008), "A Question of Balance. Weighing the options on global warming policies." New Haven: Yale University Press. Chapter 1. "Summary for the concerned citizen". pages 1-29

Plans de cours et bibliographies

  • Session 1: The economic context of environmental policy: externalities, market failure, and the case for policy intervention.
  • Session 2: The costs and benefits of pollution abatement. How much intervention is needed?
  • Session 3: The Coase Theorem: bargaining and optimal pollution control
  • Session 4: Acid rain case study: optimal abatement where intervention has international spillovers
  • Session 5: Instrument choice: “Command and control” versus market mechanisms
  • Session 6: The economics of tradeable permits: case study of the US Acid Rain Program
  • Session 7: Environmental Valuation and Cost-Benefit Analysis
  • Session 8: Climate change: the economic framework for policy
  • Session 9: Climate change: the "social cost of carbon"
  • Session 10: Climate change: economic aspects of international negotiation
  • Session 11: Climate change policy: Case study of the EU ETS
  • Session 12: Climate change policy and the economy

Biographical information

Stephen Smith is a Professor of Economics at University College London (UCL). He began his career as a UK government economist, and then worked for 12 years with a leading independent think-tank, the Institute for Fiscal Studies. His research studies the use of “market-based” policy instruments including environmental taxes and emissions trading.