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Economics of Human-Environment Interactions

Required Texts:
Hackett, S. C. 2001. Environmental and Natural Resource Economics: Theory, Policy,
and the Sustainable Society. M. E. Sharpe, Armonk, NY

Perman, R., Y. Ma, J. McGilvray, and M. Common . 2003. Natural Resource and
Environmental Economics. Pearson Addison Wesley , New York

Daly, H. E. and Farley, J. (2004) Ecological Economics: Principles and Applications.
Island Press, Washington (1st ed.)

Description: This course covers advanced topics in environmental, resource, and
ecological economics, with a focus on the sustainability of human economic activities
and their impact on the natural environment. Particular focus will be placed on
intertemporal resource allocation. The reading for the class are grounded in traditional
neoclassical economic models and recent extensions in the areas of sustainability,
behavioral economics, spatial modeling, and bioeconomic modeling. While there is some
overlap with the field of ecological economics, this is not a pure ecological economics
class. The course will consist of overview lectures, student presentations, and discussions
of weekly readings and short writing assignments. Student participation is encouraged
throughout.

Prerequisites: Any student who has taken EVPP/GEOG524 (Introduction to
Environmental and Resource Economics) or the equivalent may take this class. Students
should be proficient in basic microeconomics at an advanced undergraduate or beginning
master’s level. In addition, students will be expected to have completed at least one
semester of introductory environmental and resource economics. The ability to solve
simple systems of linear equations and familiarity with exp onential and logarithmic
functions is required. An understanding of calculus is helpful, but not required. Because
much of the mathematics for this class is so advanced, in many cases, we will not go
over, and you will not be required to replicate, the mathematics used in the papers. We
will instead focus on the main ideas of the papers, their applicability, and their
implications for sustainability. I am, however, happy to focus on mathematical details
with more advanced students. The Perman book has a very nice presentation of the more
advanced
math.

Goals of the Course: Having completed the course, student should be able to use
economic logic to discuss the sustainability of human activity and the impacts of human-environment
interactions. Students should also be able to discuss the strengths and
limitations of the neoclassical economic approach to modeling the impacts of human-environment
interactions. Students should also be able to verbally apply the concepts
learned in class to analysis of real -world problems, including in-depth analysis of a
particular topic of interest.

Course Requirements and Grading: Each student will be required to present 2 articles
to the class and lead class discussion. Papers for student presentation are marked with an
* on the syllabus. I will hand out a spreadsheet so that you can request articles you
would like to present . Students will also complete a term paper on a related topic of
interest and present their findings to the class at the end of the semester. Term papers can
focus on literature review, case studies, or, for more advanced students, development of
an economic model. Students will also be required to complete weekly short writing
as signment and very occasional analytical home works, with greatest emphasis on written
work that synthesizes the course readings and discussions. Students may also be required
to read and comment on other students’ short writing assignments. A take-home final
exam will be given. Grades will be based on the following:

Paper presentations and class participation: 25%
Homework/writing assignments: 25%
Term paper and presentation: 25%
Final Exam: 25%

Weekly writing assignments should be e-mailed to me posted by 9 AM Tuesday morning.
Late homeworks/writing assignments will not be accepted. However, you may make up
two missed assignment by reporting to the class on an outside seminar or interesting
article that you have found (with my approval of the topic), or alternatively, your lowest
two assignment grades will be dropped. Since it is not possible to make up a paper
presentation, please be sure that you will be in town the day that you are required to
present a paper. Late abstracts and term papers lose 1/4 letter grade per day. Late takehome
final exams cannot be accepted, because of the short deadline I face for posting
final grades.

Potential term paper topics: Depending on the student’s interests and abilities, the term
paper can be in the form of a literature review or, for more advanced students,
development of a theoretical or empirical model designed to investigate a specific
hypothesis. Term papers can potentially expand on topics already covered in the course.
Other potential topics include the economics of global climate change , industrial ecology,
sustainable development, endangered species preservation, altruism, the economics of
invasive species, protected area management, ecological economics, etc. (Any of these
topics would require a narrower focus to be a successful term paper). Literature reviews
should be sufficiently narrow so that no more than around 15 articles are required for a
thorough review. An extended abstract (2 pages double spaced) and bibliography are due
to me on Oct. 8, and final papers are due Nov. 19. The final paper should be 20-30 pages
in length, double spaced 12 point font, including tables, figures, and bibliography. Your
bibliography and final paper must incorporate at least four references from economics
journals. Late papers will be penalized a quarter of a letter grade per day. Please review
your potential paper topic with me before getting started.

Course schedule and required readings:

Week 1: (Aug. 27) Introduction
Strengths and limitations of the neoclassical economics approach
Open challenges in the economics of human-environment interactions
1. Perman chapter 2: “The origins of the sustainability problem”
2. Daly, introduction, Chapter 1, 2, and 3 (Chapter 2 from p. 29
on can give lighter read)
3. Krutilla, J. V. 1967. Conservation Reconsidered. American
Economic Review 57 (4): 777-786.

Week 2: (Sept. 3) The Stern Report Debate: Framing the issues
1. Nordhaus, W. 2007. Critical Assumptions in the Stern Review
on Climate Change. Science 317: 201-202
2. Stern, N., and C. Taylor. 2007. Climate Change: Risk, Ethics,
and the Stern Review. Science 317: 203-204.
3. Mendelsohn, R. 2008. Is the Stern Review an Economic
Analysis? Review of Environmental Economics and Policy 2
(1): 45-60.
4. Sterner, T., and U. M. Persson. 2008. An Even Sterner Review:
Introducing Relative Prices into the Discounting Debate.
Review of Environmental Economics and Policy 2 (1): 61-76.
5. Weyant, J. P. 2008. A Critique of the Stern Review's
Mitigation Cost Analyses and Integrated Assessment. Review
of Environmental Economics and Policy 2 (1): 77-93.
6. Dietz, S., and N. Stern. 2008. Why Economic Analysis
Supports Strong Action on Climate Change: A Response to the
Stern Review's Critics. Review of Environmental Economics
and Policy 2 (1): 94-113.
7. Mendelsohn, R., T. Sterner, U. M. Persson, and J. P. Weyant.
2008. Comments on Simon Dietz and Nicholas Stern's Why
Economic Analysis Supports Strong Action on Climate
Change: A Response to the Stern Review's Critics. Review of
Environmental Economics and Policy 2 (2): 309-313.

Week 3: (Sept. 10) Political Economy of Environmental Legislation
Article presentation choices due to me by 9 AM Tuesday Sept. 9
1. Hackett, chapter 8: “The Political Economy of Environmental
Regulation and Resource Management”
2. *Keohane, N. O., R. Revesz, and R. Stavins. 2000. The choice of
regulatory instruments in environmental policy. Pages 559-602 in
R. Stavins, ed. Economics of the Environment: Selected Readings.
W. W. Norton, New York.

Intergene rational issues
Week 4: (Sept. 17) Discounting: standard methodology
Non- exponential discounting
Time inconsistency
1. Hackett, pp. 313-320.
2. Rabin, M. 1998. Psychology and economics. Journal of
Economic Literature 36 (1): 11-46.
3. Rabin, M. 2002. A perspective on psychology and economics.
European Economic Review 46 (4-5): 657-685. Section 2.5.
4. *Brekke, K. A., and O. Johansson-Stenman. 2008. The
Behavioural Economics of Climate Change. School of
Business, Economics, and Law, University of Gothenburg
Publication 305. (P. 4-14).
5. *Pezzey, J. C. V. 2006. Reconsidering reconsidered: Why
sustainable discounting need not be inconsistent over time in
D. Pannell and S. Schilizzi, eds. Discounting and Discount
Rates in Theory and Practice. Edward Elgar, Cheltenham, p 69-
76.

Weeks 5 and 6: (Sept. 24 and Oct. 1) Evaluating Sustainability
Intergenerational equity criteria
Economic definitions of sustainability
Ecological vs. Economic sustainability
1. Perman Chapter 4: “Concepts of Sustainability”
2. Pezzey, J. C. V., and M. A. Toman. 2002. Introduction in J.
C. V. Pezzey and M. A. Toman, eds. The Economics of
Sustainability. Ashgate, Aldershot, UK. (Optional)
3. *Ayres, R. U. 2008. Sustainability economics: Where do
we stand? Ecological Economics In Press.
4. *Solow, R. 1994. An Almost Practical Step Toward
Sustainability in E. a. R. Commission on Geosciences, ed.
Assigning Economic Value to Natural Resources. National
Academy Press.
5. *Ekins, P., S. Simon, L. Deutsch, C. Folke, and R. D.
G root . 2003. A framework for the practical application of
the concepts of critical natural capital and strong
sustainability. Ecological Economics 44 (2-3): 165-185.

Week 7: (Oct. 8) More behavioral economics
Term Paper Abstracts Due
1. Rabin, M. 1998. Psychology and economics. Journal of
Economic Literature 36 (1): 11-46
2. Rabin, M. 2002. A perspective on psychology and economics.
European Economic Review 46 (4-5): 657-685.
44XCB5M-2/2/6a6fe9ca92b4999e11b262afdb046e28 .
Section 2.2.
3. Shogren, J. F., and L. O. Taylor. 2008. On Behavioral-
Environmental Economics. Review of Environmental
Economics and Policy 2 (1): 26-44. (Optional)
4. *Cooper, B. 1999. Chasing After the Wind: the Pursuit of
Happiness Through Economic Progress. Kategoria (13): 4-12.
(Please disregard the religious element)
5. *Brekke, K. A., R. B. Howarth, and K. Nyborg. 2003. Status-
Seeking and Material Affluence: Evaluating the Hirsch
Hypothesis. Ecological Economics 45 (1): 29-39.

Ecosystem models
Week 8: (Oct. 15)
Fisheries models: the traditional approach
1. Perman Chapter 17: “Renewable Resources” (more technical)
2. Hackett pp 88-106
3. Daly Chapters 6 and 12
4. *Imeson, R. J., and J. C. J. M. v. d. Bergh. 2006. Policy failure
and stakeholder dissatisfaction in complex ecosystem
management: The case of the Dutch Wadden Sea shellfishery.
Ecological Economics 56: 488– 507.

Week 9: (Oct. 22) Biodiversity
1. *Nunes, P. A. L. D., and J. C. J. M. van den Bergh. 2001.
Economic valuation of biodiversity: sense or nonsense? Ecological
Economics 39 (2): 203 – 222.
2. *Heal, G. 2002. Globalization and Biodiversity. Social Science
Research Network Publication
3. Christie, M., N. Hanley, J. Warren, K. Murphy, R. Wright, and T.
Hyde. 2006. Valuing the diversity of biodiversity. Ecological
Economics 58: 304– 317 (Optional)
4. Costanza, R., H. Daly, C. Folke, P. Hawken, C. S. Holling, A. J.
McMichael, D. Pimentel, and D. Rapport. 2000. Managing our
Environmental Portfolio. Bioscience 50 (2): 149 – 55 (Optional)
5. Hanley, N., J. Shogren, and B. White. 2001. Biodiversity. Pages
294-315. Introduction to Environmental Economics. Oxford
University Press, New York (Less technical).

Week 10: (Oct. 29) Stern Report Technical Details

Week 11: (Nov. 5) Ecosystem Services and Valuation
1. *Limburg, K. E., R. V. O'Neill, R. Costanza, and S. Farber. 2002.
Complex systems and valuation. Ecological Economics 41 (3):
409-420
2. *Farber, S., M. A. Wilson, and R. Costanza. 2002. Economic and
ecological concepts for valuing ecosystem services. Ecological
Economics 41 (3): 375-392.
3. *Constanza, R., R. d’Arge, R. d. Groot, S. Farber, M. Grasso, B.
Hannon, K. Limburg, S. Naeem, R. V. O’Neill, J. Paruelo, R. G. R.
Suttonkk, and M. v. d. Belt. 1997. The Value of the World's
Ecosystem Services and Natural Capital. Nature 387 (6630): 253-
59.
4. Brander, L. M., R. J. G. M. Florax, and J. E. Vermaat. 2006. The
Empirics of Wetland Valuation: A Comprehensive Summary and a
Meta-Analysis of the Literature. Environmental and Resource
Economics 33: 223–250 (Optional)

Week 12: (Nov 12) Spatial economics and ecosystem management
1. Parker, D. 2007. Revealing "Space" in Spatial Externalities: Edge-
Effect Externalities and Spatial Incentives. Journal of
Environmental Economics and Management 54 (1): 84-99.
2. Robinson, E. J. Z., H. J. Albers, and J. C. Williams. 2005.
Analyzing the Impact of Excluding Rural People from Protected
Forests: Spatial Resource Degradation and Rural Welfare.
(Optional)
3. *Swallow, S. K. 1996. Economic Issues in Ecosystem
Management: An Introduction and Overview. Agricultural and
Resource Economics Review 25 (2): 83-100.
4. Grazia, F., and J. C. J. M. v. d. Bergh. 2008. Spatial organization,
transport, and climate change: Comparing instruments of spatial
planning and policy Ecological Economics In Press. (Optional)

Week 13: (Nov. 19) Term Papers Due Student term paper presentations, week 1.

Week 14: (Nov. 26) Thanksgiving holiday, no class

Week 15: (Dec. 3) Student term paper presentations, week 2. Final exam
distributed .

Week 16: (Dec. 10) Final Exam Due, 7:10 PM

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