Course Outline and Syllabus
Economics 523 – Topics in Environmental and Natural Resource Economics
Professor Steven Hackett
Fall 2005
Class Meeting Days and Times: Tues/Thurs 2:00 – 3:50 pm, Gist Hall 124
My Office Location: Siemens Hall 206 C.
My Office Consultation Hours: Tues/Thurs 4:00 – 5:00, Wed 1:30 – 3, and by appointment.
My Telephone Number: 826-3237.
My E-Mail: hackett@humboldt.edu
Course Description
We will investigate some of the primary topics of environmental and natural resource economics. These topics address market structure and performance (in general and for commodified natural resources), market failures (specifically for environmental externalities and common-pool resources), non-market environmental and natural resource values, and environmental and natural resource regulatory policy. Our goal is to understand some of the key economic phenomena at play in the interface between society and the environment. No prior economic background is assumed, and we begin by covering some economic fundamentals. Our analytic approach will make use of algebra, Excel, and in some cases calculus. Students need to have a solid understanding of algebra, Excel, and some understanding of calculus is recommended though not essential. Students will develop Excel spreadsheet-based model simulations to perform sensitivity analysis and develop a stronger understanding of cause-effect relationships in these models. Students will also write a research paper on a topic related to the course subject matter, and provide an in-class presentation on that research at the end of the semester.
Topic areas: We consider the nature of a static market model in an idealized
equilibrium state, as well as a social welfare criterion for evaluating market
efficiency. This case serves as a benchmark from which we can evaluate market
failures. We begin the unit on
environmental economics by reading and discussing three journal articles
addressing the economics of the Endangered Species Act. Next we will develop a
model of market failure in the presence of externalities, and then identify how
social welfare can be improved through idealized regulatory intervention. We
use economic models to evaluate environmental taxes relative to subsidies and
environmental standards. We consider economic methods for estimating non-market
economic values associated with preservation of the natural environment, as
well as aspects of benefit/cost analysis.
We begin the unit on natural resource economics with a discussion of
energy economics and policy, with application to the
Required Text:
Hackett, Steven. 2001. Environmental and Natural Resources Economics:
Theory, Policy, and the Sustainable Society, (2nd Edition).
Suggested Text:
Hartwick, John, and Nancy Olewiler. 1998. The
Economics of Natural Resource Use, (2nd Edition).
Course Calendar:
Week 1 (22-26 Aug): Hackett textbook chapters 1 and 2. –Introduction, foundational material. Tutorial on Excel.
Week 2 (29 Aug - 02 Sept): Hackett textbook chapter 3. –Static analysis of markets under idealized conditions, introduction to social welfare measurement, and an introduction to market failures. Homework: Program the model in Excel, evaluate model for different parameters, provide diagrams and brief summary description.
Topics in Environmental Economics:
Week 3 (05 – 09 Sept): Discussion of “Economics of the Endangered Species Act” (Brown and Shogren, J. Econ. Persp. 12 (Summer 1998), pp. 3-20.), “Conflicts and Choices in Biodiversity Preservation” (Metrick and Weitzman, J. Econ. Persp. 12 (Summer 1998), pp. 21-34.), and “Takings, Compensation, and Endangered Species Protection on Private Lands” (Innes, Polasky, and Tschirhart, J. Econ. Persp. 12 (Summer 1998), pp. 35-52.). Note: Students write a brief review of each paper that summarizes the key issues and concepts in each paper, and provides a critical evaluation of the analysis, approaches, and conclusions provided in each paper. Students will be asked to present their summaries to the class. These reviews will be turned in after our discussion is complete. If time permits, we will begin Hackett textbook chapter 4.
Week 4 (12 – 16 Sept): Hackett textbook chapter 4 –Static analysis of market failures due to positive and negative externalities. Discussion of property rights. Assessment of efficiency-enhancing regulatory interventions. Homework: Program the Pigouvian model in Excel, evaluate model for different parameters, provide diagrams and brief summary description.
Week 5 (Thurs 19 – 23 Sept): Tues: Hartwick and Olewiler textbook pp. 206-215 –Economic analysis of
environmental taxes versus subsidies vs. environmental standards. Homework:
Program the tax/subsidies/standards model in Excel, evaluate model for
different parameters, provide diagrams and brief
summary description. Thurs: Discussion of “Environmental Policy Making in a
Second-Best Setting” (
Week 6 (Thurs 26 – 39 Sept): Hackett textbook chapter 6 –Introduction to benefit/cost analysis. Economic methods for measuring non-market economic benefits. Review an application of this methodology. Homework: Program the TCM model in Excel, evaluate model for different parameters, provide diagrams and brief summary description.
Topics in Natural Resource Economics:
Weeks 7 - 8 (03 - 14 Oct): Hackett textbook chapter 5 & Hartwick and Olewiler textbook pp. 269-272 –Introduction to natural resource economics. Discussion of energy economics, including CA energy crisis (read and discuss key papers and reports at http://www.humboldt.edu/~envecon/econ_580/ENRON Memo 12-06-00.pdf and http://www.humboldt.edu/~envecon/econ_580/Final FERC Report.pdf and http://www.humboldt.edu/~envecon/econ_580/Final FERC Report Ch 5 to Appendix I.pdf. Note: All students read Enron memo. Student teams assigned to each chapter of FERC report. Students write a brief review of assigned material that summarizes the key issues, arguments, and findings in each document, and provides a critical evaluation of the analysis, approaches, and conclusions provided in each paper. Students will be asked to present their summaries to the class. These reviews will be turned in after our discussion is complete. Discussion of non-renewable natural resources. Intertemporal equilibrium analysis of the market allocation of a nonrenewable resource. Consider the effects of discount rates on this intertemporal allocation. Introduction to renewable natural resources; basic analysis of fisheries, tragedy of the commons. Homework: Program the depletion model in Excel, evaluate model for different parameters, provide diagrams and brief summary description. If time permits, discuss Peak Oil and its economic implications.
Weeks 9 - 10 (17 - 28 Oct): Hartwick and Olewiler textbook pp. 315-340 –Introduction to the commercially optimal timber rotation cycle. Comparision with the socially optimal timber rotation cycle. Consideration of government forest policy. Papers and reports to read and discuss: 1. Background on CA forest products industry (http://www.humboldt.edu/~envecon/econ_580/ CalForestryUCExtensionReport.pdf) 2. Economics of MAXXAM acquisition of PALCO (http://www.humboldt.edu/~envecon/econ_580/deangelo and deangelo J. Fin. Econ. 98.pdf). 3. Economics of regulatory conflict over MAXXAM/PALCO forestry methods: (MAXXAM/PALCO economic white paper: http://www.humboldt.edu/~envecon/econ_580/PALCOeconomics-03-16-05.pdf, Gjerde SWRCB analysis of white paper: http://www.humboldt.edu/~envecon/econ_580/Gjerde SWRCB Response to PALCO Economic White Paper.doc, and MAXXAM/PALCO rebuttal: http://www.humboldt.edu/~envecon/econ_580/PALCOrebuttal.pdf). 4. Current status of sustainable forestry (http://www.humboldt.edu/~envecon/econ_580/ISF_State_of_Sustainability_Report.pdf). Students write a brief review of assigned material that summarizes the key issues, arguments, and findings in each document, and provides a critical evaluation of the analysis, approaches, and conclusions provided in each paper. Students will be asked to present their summaries to the class. These reviews will be turned in after our discussion is complete. Homework: Program the forestry economics model in Excel, evaluate model for different parameters, provide diagrams and brief summary description.
Weeks 11 - 12 (31 Oct - 11 Nov): Hackett textbook chapter 5, Hartwick and Olewiler textbook pp. 95-122 –Introduction to bioeconomic modeling of marine capture fisheries. Discussion of common-pool resources, property rights systems, open access vs. group-optimal catch, and impacts on fish populations. Papers and reports to read and discuss: 1. Pew Oceans Commission report on the socioeconomics of marine fisheries in the US, and 2. Socioeconomic analysis of the California Dungeness crab fishery (http://californiaagriculture.ucop.edu/0404OND/pdfs/crabs.pdf). Students write a brief review of assigned material that summarizes the key issues, arguments, and findings in each document, and provides a critical evaluation of the analysis, approaches, and conclusions provided in each paper. Students will be asked to present their summaries to the class. These reviews will be turned in after our discussion is complete. Homework: Program the bioeconomic model in Excel, evaluate model for different parameters, provide diagrams and brief summary description.
If time permits: Seminar discussion of the economics of Klamath Basin water/fish/ag issues. Resources: EcoNWest Report Coping with Competition for Water, Aaron Douglas' Travel Cost/Contingent Valuation Study, The Cost of Doing Nothing, and Electric Power Subsidies in the Klamath Irrigation District.
Week 13 (14 - 18 Nov): Research papers due 15th Nov. Student presentations of research.
Thanksgiving Break 21-25 Nov
Weeks 14 - 15 (28 Nov - 09 Dec): Student presentations of research. Discussion of final exam, course evaluation.
Week 16 (13-17 Dec): Take-home final exam due Thurs 15 Dec 2004 @ 3:00 pm.
Policies, Procedures, and Responsibilities:
My responsibility as professor is to lead and motivate students who are committed to the learning process, and to determine the extent to which students have mastered the material covered in this course. I aim to be courteous, respectful, and responsive to student needs. Grades are assigned based on my professional judgment of the quality of your work and are not subject to negotiation. Students are responsible for their learning outcomes and their performance on all assignments. Students are expected to attend class regularly and on time, are expected to be active learners who contribute to the classroom discussion, and are expected to be courteous and respectful of others. Please contact me if you have a problem or a conflict relating to the course. Grade deductions will occur for late or missing work. The only exception is for serious and compelling reasons. If you have a serious and compelling reason for missing or late work, you must contact me immediately. All of us are subject to HSU and CSU policies, which include nondiscrimination, academic honesty, student discipline, and family educational rights and privacy.
While it is important to be clear on this points, the overwhelming majority of us understand how to act appropriately in the classroom. It is my goal to create a friendly, inclusive, and rigorous classroom culture in which everyone is welcome to comment and contribute, and in which diversity is respected. I want this to be a class that we all look forward to attending, and that we can look back upon as having been a very positive experience.
Grading:
30 percent of your grade will come from your Excel problem sets (assignments appended at end of PowerPoint slides, which are available for downloading on your course website -- www.humboldt.edu/~envecon/econ_580)
15 percent of your grade will come from your written reviews of readings during the semester
25 percent of your grade will come from your research paper (approximately seven to nine double spaced pages, at least five authoritative references, content addressing a topic related to environmental and/or natural resource economics)
15 percent of your grade will come from your presentation (I suggest the use of multimedia such as PowerPoint or visual aids or handouts. Ability to communicate core research ideas effectively is key.
15 percent of your grade will come from the final examination (take-home final, re-deriving equilibrium values in each Excel assignment with one or more new parameters, discussion of implications)