🌍 Environmental Economics

Study the economic causes of environmental problems and design market-based solutions

← Back to Economics Courses

Environmental Economics Curriculum

12
Core Units
~95
Environmental Concepts
15+
Policy Tools
50+
Real-World Applications
1

Introduction to Environmental Economics

Understand the intersection of economic theory and environmental challenges.

  • Economic approach to environment
  • Market failures
  • Sustainability concepts
  • Natural capital
  • Ecosystem services
  • Environmental valuation
  • Policy framework
  • Historical development
2

Externalities and Market Failures

Analyze how external costs and benefits lead to market inefficiencies.

  • Negative externalities
  • Positive externalities
  • Coase theorem
  • Property rights
  • Transaction costs
  • Public goods
  • Common pool resources
  • Tragedy of commons
3

Environmental Valuation

Learn methods to assign economic values to environmental goods and services.

  • Total economic value
  • Use vs non-use values
  • Revealed preference methods
  • Stated preference methods
  • Contingent valuation
  • Choice experiments
  • Hedonic pricing
  • Travel cost method
4

Pollution Control Policies

Compare command-and-control and market-based approaches to pollution control.

  • Command-and-control
  • Environmental standards
  • Pigouvian taxes
  • Pollution permits
  • Cap-and-trade systems
  • Subsidies
  • Deposit-refund systems
  • Policy effectiveness
5

Climate Change Economics

Examine the economic dimensions of climate change and mitigation strategies.

  • Climate science basics
  • Social cost of carbon
  • Discount rates
  • Integrated assessment models
  • Carbon pricing
  • Adaptation economics
  • International agreements
  • Carbon markets
6

Natural Resource Economics

Study the optimal use and conservation of renewable and non-renewable resources.

  • Resource depletion
  • Hotelling's rule
  • Renewable resources
  • Maximum sustainable yield
  • Fisheries management
  • Forest economics
  • Water resources
  • Resource substitution
7

Cost-Benefit Analysis

Learn to evaluate environmental projects and policies using economic analysis.

  • CBA framework
  • Present value calculation
  • Benefit identification
  • Cost estimation
  • Uncertainty analysis
  • Sensitivity analysis
  • Distributional effects
  • Decision criteria
8

Environmental Justice

Explore the distributional impacts of environmental problems and policies.

  • Environmental inequality
  • Distributional analysis
  • Environmental racism
  • Procedural justice
  • Corrective justice
  • Policy design
  • Compensation mechanisms
  • Community participation
9

Green Growth and Development

Examine the relationship between economic development and environmental quality.

  • Environmental Kuznets curve
  • Decoupling
  • Green GDP
  • Sustainable development
  • Circular economy
  • Green innovation
  • Resource efficiency
  • Developing countries
10

Trade and Environment

Analyze the complex interactions between international trade and environmental policy.

  • Trade-environment linkages
  • Pollution haven hypothesis
  • Environmental dumping
  • Border tax adjustments
  • Green trade measures
  • WTO environmental provisions
  • Carbon leakage
  • Global value chains
11

Corporate Environmental Strategy

Study how firms integrate environmental considerations into business decisions.

  • Environmental management
  • Green supply chains
  • Corporate sustainability
  • Eco-innovation
  • Environmental reporting
  • Porter hypothesis
  • Stakeholder pressure
  • Competitive advantage
12

Future Challenges

Explore emerging issues and evolving approaches in environmental economics.

  • Behavioral economics
  • Experimental methods
  • Big data applications
  • Artificial intelligence
  • Planetary boundaries
  • Ecosystem accounting
  • Nature-based solutions
  • Policy innovation

Unit 1: Introduction to Environmental Economics

Understand the intersection of economic theory and environmental challenges.

Economic Approach to Environment

Learn how economists analyze environmental problems using market principles and efficiency concepts.

Market Analysis Efficiency Welfare Economics
Environmental economics applies economic theory to environmental problems. It assumes people respond to incentives and seeks to design policies that align private incentives with social goals.
# Environmental Economics Framework
environmental_economics = {
  "definition": "Application of economic theory to environmental problems",
  "core_assumptions": {
    "rational_actors": "People respond to incentives",
    "scarcity": "Resources are limited",
    "trade_offs": "Every choice has opportunity costs",
    "efficiency": "Markets generally allocate resources well"
  },
  "key_questions": [
    "Why do environmental problems occur?",
    "What are the costs and benefits of environmental protection?",
    "How can policy correct market failures?",
    "What is the optimal level of pollution?"
  ],
  "tools": ["Supply and demand", "Cost-benefit analysis", "Game theory", "Welfare economics"]
}

Market Failures

Understand why markets alone often fail to protect the environment and lead to overuse of natural resources.

Market Failure Sources:
• Externalities (costs/benefits not reflected in prices)
• Public goods (non-excludable, non-rivalrous)
• Common pool resources (rivalry without excludability)
• Information asymmetries
• Market power
The Environment as Market Failure:
Environmental problems often arise because the environment provides services (like waste absorption) for free, leading to overuse. Markets work best when property rights are clearly defined and enforceable.
Classic Example - Air Pollution:
A factory polluting the air imposes costs on society (health problems, reduced visibility) that aren't included in the factory's costs. This leads to too much pollution from society's perspective.

Sustainability Concepts

Explore different definitions of sustainability and their implications for economic policy.

Types of Sustainability:
• Weak sustainability: Natural capital can be substituted by human-made capital
• Strong sustainability: Critical natural capital must be preserved
• Environmental sustainability: Focus on ecosystem health and resilience
# Sustainability Framework
sustainability_types = {
  "weak_sustainability": {
    "principle": "Total capital stock (natural + human-made) is maintained",
    "assumption": "Perfect substitutability between capital types",
    "policy_focus": "Economic growth with some environmental protection",
    "example": "Converting forest to farmland if economic value increases"
  },
  "strong_sustainability": {
    "principle": "Critical natural capital must be preserved",
    "assumption": "Limited substitutability",
    "policy_focus": "Protect essential ecosystems",
    "example": "Biodiversity hotspots cannot be converted"
  },
  "indicators": {
    "weak": ["GDP per capita", "Total wealth", "Genuine savings"],
    "strong": ["Species count", "Forest cover", "Water quality"]
  }
}

Unit 2: Externalities and Market Failures

Analyze how external costs and benefits lead to market inefficiencies.

Negative Externalities

Study situations where private activities impose costs on others without compensation.

External Costs Pollution Overproduction
Negative Externality Effects:
When producers don't pay the full social cost of their activities, they produce too much from society's perspective. The market equilibrium exceeds the socially optimal level.
# Negative Externality Analysis
negative_externality = {
  "definition": "Cost imposed on third parties without compensation",
  "market_outcome": {
    "private_cost": "Cost borne by producer",
    "external_cost": "Cost imposed on others",
    "social_cost": "Private cost + External cost",
    "problem": "Market price only reflects private cost"
  },
  "examples": [
    "Factory air pollution affecting public health",
    "Loud music disturbing neighbors",
    "Traffic congestion from individual driving",
    "Greenhouse gas emissions contributing to climate change"
  ],
  "solutions": ["Pigouvian taxes", "Regulations", "Property rights", "Cap-and-trade"]
}

Coase Theorem