Lecture 1 Notes - Maris Goldmanis PDF

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Maris Goldmanis...

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Lecture 1 Notes Deals with impact of economy on environment Significance of environment to the economy

Why environmental economics important    

Climate change Pollution (air, water, soil, radiation etc.) – Effects ppl quality of life and sustainability of natural environment Loss of natural environment/biotopes Misalignment of outcomes in market with environmental goals

Climate change and pollution are worsening because of  

Increase population Wealth increase

What will you learn in course    

How economics methods can be applied to environmental issues facing society Understand difficulties arising in using economics analysis in environmental policy design Solve, manipulate, and evaluate variety of diagrammatic and algebraic models Familiar with real-world environmental policy problems and understand how economics analysis can be used to solve

Course outline and logistics     

Email: [email protected] Additional videos on Moodle Weekly problem sets: Not an assignment, used for seminar Seminars based on problem sets Assessment o 40% final exam – 2 hours o 20% weekly quiz on Moodle  Friday morning – Monday morning o 40% 2 graded assignments  Assignment 1: Feb 12  Assignment 2: March 26

Economics and Environment 1

Lecture 1 Notes

Environmental policy questions 

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What is the right amount of pollution o What are the costs of pollution o What are the benefits of polluting o Is it possible to reduce pollution and still produce o What consequences do limits on pollution have for employment and consumption How can we get polluters to control their emissions o What are the issues with government intervention o Is it better to set predetermined limits or to create extra incentives in markets

Environmental economics and policymaking  

For most goods/services, markets match producer cost (Supply) with consumer demand Due to polluters not bearing the full costs of pollution, markets fail to properly balance costs and benefits of pollution o Markets fail to create the ‘right’ amount of pollution

Climate Change    

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Climate change is arguably the most severe environmental problem the world faces Direct body of evidence that climate change is a direct consequence of economic activity Global warming can be attributed to emissions of greenhouse gases, primarily CO2 Since CO2 is a necessary by-product of burning fossil fuels and timber, reducing global requires either o Tech shift away from these sources o Reduction in economic activity Climate change a prime example of clash between economic activity and environment that is at the centre of environmental economics

Positive v Normative Analysis 

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Positive o Seeks to describe world as it is o Doesn’t make value judgements (not: good, bad, like, dislike) Normative o Seeks what should be prescribed/ what should be done o Compares costs/benefits of taking particular public policy actions o How to weight costs/benefits experienced by  People vs nature  Different groups of people (poor vs rich, producer vs consumer)  Different generations of people (Current generation vs future generation)

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