Introduction

[Econ 2277](http://www.richard-sweeney.com/intro_env_econ)
[Prof. Richard L. Sweeney](http://www.richard-sweeney.com/)

[(print this presentation)](http://www.richard-sweeney.com/intro_env_econ/slides/IntroEnvEcon.html?print-pdf)


The environment is valuable

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More salient when quality is poor

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Source


Essential inputs to many processes

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Source


Pollution exposure is often very costly

hill

Source: Currie, Greenstone and Meckel (2017)


What does this have to do with economics?


Part 1:

How much environmental quality should we have?


The answer is not “as much as possible”

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The optimal environmental policy maximizes NET benefits


We’ll answer important questions like:


Review why markets are unlikely to get us to the economically efficient level of environmental protection



Common misconception: Economists always advocate free markets


When US environmental movement took off in US in 1960s, economists had been teaching as much to grad students for decades.


Part 2:

How should we design environmental policy?


Example: US lead standards

EPA’s science panel recommends airborne lead be limited to 0.15 micrograms per cubic metre

How should we craft a policy to hit that goal?

Options:


We’ll learn the benefits of “market”-based approaches


Environmentalists: Cost-effectiveness is important!

Economists know that demand slopes downward

Implication: the cheaper it is to protect the environment, the more protection people will “demand”


Learn the difference between key environmental policy tools


We’ll discuss several real world applications / policies


Part 3: Global climate change

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“The mother of all externalities”

Larger, more complex, and more uncertain than any other environmental problem. (Tol 2009)

Two major challenges:

  1. Emissions stay in atmosphere for a long time.
    Implication: costs today, benefits far in the future.

  2. Impacts from local emissions felt globally. Implication: countries can’t solve this problem on their own.


What we’ll cover


What I hope you’ll take away from this course

Required Readings

Fullerton & Stavins [link]