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Environmental Economics (2011)
Number of credits: 4
Number of hours: lectures-tutorial-practicals: 40 hours (approximately)
Faculty: Sangeeta Bansal and Meeta K. Mehra

Course outline:

This one semester optional course is designed to introduce students to key contemporary issues in environmental economics and equip them with the tools and methodologies that are in general applied to analyse environmental problems and policies. The course comprises of lectures, plus 1 term paper to be submitted per student. Students are also expected to search for currently debated environmental problems and policies in India and other countries that would trigger discussions in the class.

 Evaluation procedure:

- 1 Term paper: 20%
- Mid semester examination: 30%
- End semester examination: 50%

Course Outline and Reading List

I Introduction

The Environment and Economics
Genesis of Environmental Problems: Market Failures, Public Goods and Externalities
Baumol and Oates, Chs 2 ,3, 6, 14.
Nordhaus, “The problem of global public goods” working paper 2005.
Handbook Ch 13. 

II Environmental Regulation

Command and Control methods: Standards, Technology Mandates,
Market based incentives: Taxes and Tradable Permits, Property Rights, Liability Rules
Incentives and Market Structure
Voluntary Mechanisms

R. H. Coase, “The problem of Social Cost,” JLE, 3, 1- 44 (1960)

Robert Hahn, Economic Prescriptions for Environmental Problems”, J. Economic Perspectives (1989).

Hanley, Shogren and White, ch 4

Segerson and Miceli “Voluntary environmental agreements: Good or bad news for environmental protection?” JEEM, 36: 109 – 30 (1998).

Maxwell et al, “Self regulation and social welfare: The political economy of corporate environmentalism”, JLE, 43: 583-617 (2000).

Bansal Sangeeta and S. Gangopadhyay, 2003, Tax-Subsidy Policies in the Presence of Environmentally Aware Consumers’ Journal of Environmental Economics and Management 45(2S), 333-355. 

III Role of Information in environmental decision making and regulation

Asymmetric information
Uncertainty
Public Disclosure 

Weitzman, “Prices vs Quantities”, RES, 41 (4) 477 – 491 (1974).

Roberts, M.J. and M. Spence, 1976, Effluent charges and licences under uncertainty, Journal of Public Economics 5, 193-208. 

Kwerel, To tell the truth: Imperfect information and optimal pollution control, Review of Economic Studies, 1977, 44 (3), 595 – 560.

Tietenberg and Wheeler, Empowering the community: Information strategies for pollution control

Afsah, Laplante, Wheeler, Regulation in the information age: Indonesia’s public information program for environmental management, The World Bank, Development Research Group, Washington DC, March, 1997. 

IV Economic Growth, Technical Change, and Environmental Pollution

Economic growth and environment
Incentives for technological Development

Downing, P.G. and L. J. White, 1986, ‘Innovation in Pollution Control,’ Journal of Environmental Economics and Management 13, 18-29.

Milliman S.R. and R. Prince, 1989, ‘Firm incentives to promote technological change in pollution control’, Journal of Environmental Economics and Management 17, 247-265.

Porter and Linde, JEP, 9: 97 – 118 (1995).

Bansal Sangeeta and S. Gangopadhyay, 2005, Incentives for Technological Development: BAT is Bad, Environmental and Resource Economics 30, 345-367.

Jaffe and Stavins, “Dynamic incentives of environmental regulations: The effect of alternative policy instruments on technology diffusion”, JEEM, 29: S-43-63 (1995).

Xepapadeas, Anastasios, ‘Economic Growth and the Environment’ in M-V, 2005.

Bovenberg, Lans and Smulders, Sjak, ‘Environmental Quality and Pollution Augmenting Technological Change in A Two-Sector Endogenous Growth Model, Journal of Public Economics 57: 369-91, 1995.  

Barbier, Edward, ‘Endogenous Growth and Natural Resource Scarcity’, Environmental and Resource Economics 14: 51–74, 1999.

Chapter 5, ‘Endogenous Growth and Sustainable Development’, in Aghion, Philippe and Howitt, Peter, ‘Endogenous Growth Theory’, 1999, The MIT Press, Cambridge, Massechusetts. 

V Transboundary Environmental Issues 

Economics of Climate Change: Causes; possible effects; costs of mitigating green house gas emissions; adaptation measures
Design of international agreements
Environmental conflict, bargaining and cooperation 
International Trade, FDI and the Environment

Baumol and Oates Ch: 16

Hanley Shogren and White Ch. 6.

Scott Barrett, Self enforcing international environmental agreements, Oxford Economic Papers 46 (1994), 878 – 894. 

M. Toman, U Chakravorty and S Gupta (eds) India and Global Climate Change: Perspectives on Economics and Policy from a Developing Country, Resources for the Future Press, Washington DC. 

J Aldy and Stavins (eds), Architectures for Agreement: Addressing Global Climate Change in the Post Kyoto World. 

Main Books

  1. Nick Hanley, Jason F Shogren and Ben White. Environmental Economics in Theory and Practice. MacMillan 1997.
  2. Kolstad Charles D. Environmental Economics. Oxford University Press. 2003.
  3. Baumol William J. and Oats Wallace E. The Theory of Environmental Policy. Second Edition. Cambridge University Press. 1994.
  4. Sterner Thomas. Policy Instruments for Environmental Protection. RFF. 2002
  5. Stavins Robert N. Economics of the Environment: Selected Readings. Fourth Edition. W.W. Norton and Company. 2000.
  6. Jeroen C.J.M. van den Bergh, Handbook of Environmental and Resource Economics
  7. Maler Karl-Goran and Jeffrey R Vincent. Handbook of Environmental Economics. Environmental Degradation and Institutional Responses. Volume I. North-Holland, 2003. Ch 11.
  8. Carroro, Carlo, and Siniscalco, Domenico, New Directions in the Economic Theory of the Environment, 1997, Cambridge