Prof. Kinnaman Department of Economics EC 231, Spring 1999 Bucknell University

ENVIRONMENTAL ECONOMICS

General Information:

Time and location: MWF 2:00-2:52 and 3:00-3:52

Office hours: Monday through Thursday 4:00-5:00pm

Office: Coleman 169 (phone: 524-3465)

e-mail address: kinnaman@bucknell.edu

Course Content: This semester-long course will (1) develop concepts to explain why people so often choose to spoil their own natural environment and (2) suggest and evaluate policies designed to discourage such practices.

The course will begin by discussing the recent history of environmental policy in the Unites States as well as other developed and developing countries. A model of pollution abatement will be developed in the second section of the course. This model will be applied to understand the advantages and disadvantages of four categories of environmental policy: decentralized policies, command and control policies, emission taxes, and tradable permits. Once we have developed a firm understanding of these policy approaches, we will discuss how to best improve the environment in three cases: household solid waste, automobile congestion and pollution, and global warming.

Prerequisites: Before enrolling in this course you should have taken Economics 103

Reading Materials:

Field, Barry C. Environmental Economics, An Introduction. New York: McGraw Hill, 1994.

Repetto, Robert et. al, Green Fees: How a Tax Shift Can Work for the Environment and the Economy. Washington, DC: World Resources Institute, 1992.

Selected Readings on Electronic Reserve

Attendance: You will be penalized 1% point of your final grade for each unexplained absence.

Assignments and Grading: Grades will be based on two midterm exams on February 8th (20%) and March 22nd (20%), four assignments (5% each), class participation (10%), and a final exam (30%).

COURSE SCHEDULE

Jan. 13: Introduction (F: Chapter 1)

Section 1: A Brief History of Environmental Policy

Jan. 15: Water Pollution (F: Chapter14) Jan. 18: Air Pollution (FILM) Jan. 20: Air Pollution (F: Chapter 15) Jan. 22: Air Pollution (F: Chapter 15) Jan. 25: Toxic Waste (F: Chapter 16, Farney) Jan. 27: Toxic Waste (FILM) Jan. 29: State and Local Issues (F: Chapter 17) Feb. 1: The Experiences of Other Industrialized Countries (F: Chapter 18) Feb. 3: The Experiences of Developing Countries (F: Chapter 19, Friedland) Feb. 5: Global Environmental Issues (F: Chapter 20)

Feb. 8: MIDTERM EXAM #1

Section 2: The Economic Approach to Pollution Reduction

Feb. 10: Motivating the Economic Approach (Holusha, Hanson & Lott) Feb. 12: Modeling Pollution Damages (F: pp. 83-89, Passell - "Trying a", Stevens) Feb. 15: Modeling Pollution Abatement Costs (F: Chapter 5, pp. 89-95, Kilborn) Feb. 17: The Efficient Pollution Level (F: Chapter 5, pp. 95-103, Murray, Cushman)

Section 3: An Economic Analysis of Environmental Policy

Feb. 19: Economic Evaluation of Environmental Policy (F: Chapter 9) Feb. 22: Decentralized Policies: Liability Laws (F: Chapter 10, pp. 192-198, Ulman) Feb. 24: Decentralized Policies: Resource Privatization (F: pp. 198-204, Wells, Moffett) Feb. 26: Command and Control: Types of Standards (F: Chapter 11, pp. 210-214) Mar. 1: Economic Evaluation of Command and Control (F: Chapter 11, pp. 214-224) Mar. 3: Emission Taxes: Overview (F: Chapter 12, pp. 230-235) Mar. 5: Economic Evaluation of Emission Taxes (F: Chapter 12, pp. 235-247)

Mar. 8: SPRING BREAK Mar. 10: SPRING BREAK Mar. 12: SPRING BREAK

Mar. 15: Tradable Permits: How it Works (F: Chapter 13, pp. 253-259, Stevenson) Mar. 17: Economic Evaluation of Tradable Permits (F: Chapter 13, pp. 259-265) Mar. 19: Summary of All Policy Alternatives (Class Experiment)

Mar. 22: MIDTERM EXAM #2

Section 4: Three Applications of Market-Based Policy Strategies

Mar. 24: Reforming the Tax System (Repetto: Chapter I)

A. Household Solid Waste Mar. 26: Simple Economics of Solid Waste (Review F: pp. 359-371) Mar. 29: The Emissions Tax Approach (Repetto: Chapter II) Mar. 31: A Critique of the Emission Tax Approach (Fullerton and Kinnaman) Apr. 2: A Look at Curbside Recycling (Bailey, Kinnaman)

B. Automobile Congestion and Air Pollution Apr. 5: Background (show film "Taken for a Ride") Apr. 7: Discussion of Film and Review of Policy Background (Review F: pp. 315-322) Apr. 9: Recent Command and Control Approaches (Simons, Solomon) Apr. 12: The Emissions Tax Approach (Repetto: Chapter III, The Economist) Apr. 14: Technology to the rescue? (Blumenstein)

C. Climate Change Apr. 16: Background (review F: pp. 434-447) Apr. 19: The Tradable Permit Approach (Fialka, Passell - "Trading on") Apr. 21: The Emissions Tax Approach (Repetto: Chapter IV) Apr. 23: The Emissions Tax Approach (Repetto: Chapter IV)

Apr. 26: A Critical Review of Market Based Approaches (Power & Rauber)