Specialization courses: Spring 2016

Environmental Climate Modelling and Natural Resource Policy Instrument

Valuation Energy Systems Economcis Design
7.5 creds 7.5 Creds 7.5 Creds 7.5 Creds

Course description

1. Environmental Valuation
This course provides a detailed introduction to the valuation of environmental goods and
projects, and evaluation of environmental policies. The course is based on the idea that
valuation is often a part of a more general welfare assessment, e.g. as a part of a cost-benefit
analysis. The course will mainly cover the theory and practical implementation of stated
preference methods, impact evaluation and revealed preference methods. The course begins
with covering discrete choice econometrics.
• The student should be familiar with first-year graduate microeconomics (corresponding to
the graduate textbook by Varian) and econometrics (corresponding to textbooks such as
Greene’s Econometric Analysis). We will use NLogit 5 in the lab sessions and it is an
advantage if the student has gained familiarity with a similar statistical package, although
this is not necessary. All students are encouraged to bring data sets for experimentation and
discussion.

2. Climate Modelling and Energy systems:

This course will start with the basic physics of the climate system and extend into modeling of
energy systems and climate economics. Ability to build a very simple climate model that
predicts average temperature response. Overview of energy use in the economy and ability to
discuss scenarios for future energy demand and supply that can be coupled to climate models.
There will be an increased focus on understanding of Integrated Assessment Models, IAMS,
such as DICE. This will create a natural link to economics. There will also be more focus on
the impacts, and damage from climate change and how that should be modeled in IAMs.

3. Natural Resource Economics:

The goal of this course is to understand some of the temporal, spatial and ecological
dimensions of what we call the environment. The first part will be focused on ecosystem
analysis and climate, and “the understanding of the complexity and functions of interlinked
socio-ecological systems, and the implication this has for governance”. It will include concepts
such as the resilience of ecosystems and the importance of thresholds and the understanding of
 carbon, nitrogen and other cycles as well as “planetary boundaries”. The course will focus a lot
on climate and there will be links to climate effects, damage and adaptation. The course will
extensively cover dynamic optimization over time.

4. Policy Instrument design:

We will look into the market failures as reasons for using policy instruments, overview of
policy instruments available, theories of when to use what instruments, special attention to
policy failures and political feasibility, distributional effects and policy making under
uncertainty, asymmetric information and lobbying. We also want to include public economics
when it comes to taxation and Ind Org with policy design under non-competitive assumptions.