Modul 32801

Climate change is one of the most urgent issues of our time. Our course on Environmental and Resource Economics, therefore, begins with an introduction to this problem, conveying a general understanding of the physical processes underlying global warming, as well as an overview of the possible consequences for the life on our planet. The economic part of the course begins with an introduction to neoclassical welfare analysis. According to the neoclassical theory, markets lead to Pareto efficiency if there are no externalities or other sources of market failure. Introducing such market failures into the formal analysis is, thus, a key aspect of environmental economics. Sir Nicholas Stern, author of the famous “Stern review” on the economics of climate change, put it this way: “The problem of climate change involves a fundamental failure of markets: those who damage others by emitting greenhouse gases generally do not pay” ... “Climate change is a result of the greatest market failure the world has seen.” Our course will also familiarize you with the concept of “abatement”. And you will gain a deeper understanding of the different tools that policy-makers can use to tackle the issue of global warming. In the second part of the course that focuses on resource economics, intertemporal aspects play a key role. This is relevant for any resource extraction problem, because resources are usually not extracted at once from the earth’s crust, but gradually over time. In order to be able to analyze such problems formally, the method of “dynamic optimization” will be introduced. Similarly as the well-known Lagrangian method, it is a constrained optimization procedure, but for dynamic problems. Possible applications are ranging from optimal growth models with scarce resources, all the way to pollution problems, where the earth’s atmosphere is used as a waste sink for greenhouse gas emissions. The course familiarizes you with various formal tools that are used in modern environmental economic research. It is, thus, an ideal starting point for students who are planning to work in academia, as well as a valuable asset for students who plan their career outside of academia but enjoy an analytical way of thinking about problems, that is trained during this course. The course material contains also a variety of exercises, where the formal methods are trained by applying them to specific problems.