Environmental Economics B

Environmental Economics at DIS introduces students to the key economic theories and policy tools used to address today’s pressing environmental challenges. The course is organized around 5 modules, each focused on a distinct theme within environmental economics. Emphasizing both theory and application, students will engage with academic literature, real-world case studies, guest lectures, and field visits to examine the intersection of economics, the environment, and policymaking.

Module 1: Foundations of Environmental Economics

We begin with an introduction to environmental economics as a discipline, focusing on two foundational concepts: externalities and public/common goods. These concepts help frame environmental problems as market failures, laying the groundwork for understanding the rationale behind policy intervention. During this module, we also take a deep dive into climate change as a profound externality. As 20% of the course grade is based on an assignment examining climate change through the lens of environmental economics, this module equips students with essential ecological and theoretical insights.

Module 2: Solutions to Market Failures

We evaluate policy solutions to externalities and public goods problems, comparing command-and-control regulations with market-based mechanisms such as carbon taxes (Pigouvian) and cap-and-trade systems (Coasian). This module additionally focuses on how policymakers design and implement environmental policies. Topics include policy instrument design, evaluation, and selection, with an emphasis on principles such as the polluter-pays principle, cost-effectiveness, and incentive compatibility. We also discuss the importance of distinguishing correlation from causation in ex-post policy assessments. A classroom simulation allows students to take on the role of policymakers choosing between instruments. Finally, we examine community-based solutions to market failures, inspired by the work of Elinor Ostrom.

Module 3:  Midterm Exam & the Tradeoff Between Conservation and Development

 During this module, students have the chance to demonstrate their knowledge by taken a midterm exam, which is co-designed with them. Following this, we look at the conservation vs development tradeoff from a global level, investigating the intersection of international trade and the environment. Topics include the Environmental Kuznets Curve and Copeland-Taylor's scale, composition, and technique effects. Revisiting the "tragedy of the commons" concept from module 1, we ask whether some countries are caught in such a dilemma—and whether it is justifiable to sacrifice environmental protection for economic growth. We also analyze carbon markets, addressing challenges such as additionality, leakage, non-permanence, and transaction costs. The module also includes a discussion into environmental economics in practice, with a guest visit by a sustainability expert from Danish logics and transport company DSV.

Module 4: Conservation vs Development in Practice: Case Studies of Health and the Environment

The final teaching weeks of the course bring empirical applications that contrast the assumption of conservation and development being mutually excluding. We explore cases where development and conservation align, such as how pollution affects health and productivity and how forest conservation in the Brazilian Amazon produces unintended health benefits like malaria reduction. We learn a new tool of policy analysis in depth: cost benefit analysis, using case studies from Copenhagen and surroundings. We also discuss the potential of NBS and the concept of a nature-positive economy, in a guest lecture, as well as the distinction between climate mitigation and adaptation.

Module 5: Course Wrap-Up

The course concludes with student presentations based on their final written assignment, in which they analyze an environmental issue through the lens of environmental economics. We additionally reflect on with discussions on the discipline itself—its tools, applications, and potential to shape environmental policy.

Learning Objectives

The objectives of the course are (1) to give you a broad understanding of the causes and alternative solutions to modern environmental problems from an economic perspective, and (2) to apply insights derived from economic theory in designing and evaluating policy solutions to a variety of environmental issues.

You will learn to understand the role of economics in environmental issues and in the formation of environmental policy. You will learn that economic objectives do not necessarily conflict with environmental goals, and that while environmental crises commonly arise as a result of market failures, market incentives can at times be used to improve environmental quality.

By the end of this course, you will be able to express an informed view on the role, contribution, and limitations of economic tools in providing policy guidance on environmental issues.

 

Faculty

Luiza Karpavicius. Postdoctoral researcher at the University of Copenhagen. PhD candidate in Environmental Economics (Aarhus University - current), Msc in Environmental and Natural Resource Economics (University of Copenhagen, 2021), Bsc in Economic Sciences (university of São Paulo, Brazil, 2018). 

Course Requirements

This course presupposes at least one introductory economics course, preferably microeconomics. This means that you are expected to be comfortable handling basic supply and demand analysis both graphically and algebraically (i.e. with simple equations). If you are unsure that you can fulfill this expectation, please inform me as soon as possible.

Course Materials

Required reading assignments from course books will be made available online, along with  supplementary articles. The course outline will be posted on DIS Canvas, listing the required readings for each lecture. Check the course outline and the calendar for each lecture frequently for updates.

The required readings for each lecture should be read prior to the lecture. Here is a suggestion to prepare for class: Write down 2-3 things that strike you about the day’s reading, such as some key findings, interesting arguments, questions you had, etc. This will help you be prepared to answer questions and make insightful comments in class, which greatly contributes to your participation grade.

Please note, any class materials (slides; notes) will be added to canvas, either shortly before or immediately after each class.

 

Field Studies & Guest Lectures

• Field Studies - We will make Copenhagen our classroom in two field studies. In the first one, we will participate in a workshop organized by Climate Fresk. In the second, we will visit to a green space to learn about environmental valuation in practice. 
• Guest lectures - This course includes a series of guest lectures, both academics and professionals, and including economists and those with a background from other disciplines, to aid in your understanding and application of class topics.

Grading

In addition to the readings and through active participation in class discussions, a variety of written and oral assignments will be used to develop students' facility with the tools of environmental economics and policy analysis both inside and outside of class. Preparation for and participation in these assignments will contribute greatly to your overall grade.

The grading allocation will be as follows:

Participation: 30%, where...

                       Key Take Away assignments (Pass or Fail) - 10%

                       Class participation (Subjective grade) - 5%

                       Class Participation attendance (%) - 5%

                       Review Lecture presentation (Pass or Fail) - 10%

Climate change paper assignment: 15%

Midterm Exam (multiple choice aids allowed in-class exam): 20%

Final assignment: 35%, where:

                              5%: Topic

                              30%: Average between submission of essay & presentation

Further, there are several in-class exercises. Although they do not count towards your grade, they will be helpful to inform on your participation grade.

1) In order for you to get an A in participation you are expected to come to every class unless excused, hand-in all take-away assignments (there is one each module), actively engage in class discussions and do all class-exercises.

2) In order for you to get an A on the climate change paper assignment, you are expected to hand-in a quality essay (1 page) that fits with the scope of the assignment, and fulfills the criteria specified in the assignment.

3) In order for you to get an A on the final assignment, you are expected to propose a topic by the due date, hand-in a high quality group project (5 pages max, between 1-4 students) that fits with the scope of the assignment & shows that you have taken up relevant feedback from the climate change assignment. It should additionally fulfill the criteria specified in the assignment, allowing you to show your dominance over class concepts. Finally, you are expected to deliver a good presentation of your assignment, where both the instructors and your peers can learn about your chosen topic.

Graded Assignments Policy 

Assignments must be submitted by the stated deadline. Late submissions will not be accepted unless you have a valid, motivated reason communicated before the deadline. It is your responsibility to plan ahead, consult the course schedule on Canvas, and manage your time effectively.

Please take note:

• Requests for extensions must be made before the assignment is due, and must include a clear explanation of the reason for the delay.
• Extensions will be granted only in cases of serious personal, medical, or academic conflicts, and documentation may be required.
• Last-minute requests without justification or those made after the deadline will not be considered.

Exercises (Ungraded but Required) Policy

Class exercises are mandatory but ungraded. While there is more leniency with timing, you are expected to complete them consistently. Completing all exercises does not directly affect your grade, but will be taken into account when evaluating your participation in this course.

ChatGPT and Generative AI Tools Policy

 Generative AI is permitted in specific contexts and with acknowledgment. 

Understanding and effectively utilizing generative AI tools (such as ChatGPT, DALL-E, and others) is becoming an essential skill across various professions, including for environmental economists. In this class, you are allowed to explore and use generative AI tools as a resource for learning and completing assignments, provided your use aligns with ethical guidelines and standards for academic integrity (see academic regulations below). Most importantly, any substantial use of generative AI tools must be transparently documented and properly cited into any submitted work. For example, if you choose to use any AI software to assist with your climate change or final assignment essays, you should mark in the end of the assignments: "This content was revised for grammar and clarity using ChatGPT" or "This initial draft was generated with assistance from ChatGPT." Using AI and not properly acknowledging it in your essays risks that the assignment will be flagged as plagiarism.

Further, I advise caution and critical thinking when deciding how to use AI tools in this class. Not only because it may harm your own learning experience (if you are not writing or thinking on your own, you are not learning) but also because of ethical and environmental issues associated with certain AI tools. A few examples of relevant environmental issues can be found here:

https://apnews.com/article/chatgpt-gpt4-iowa-ai-water-consumption-microsoft-f551fde98083d17a7e8d904f8be822c4Links to an external site. 

https://www.theguardian.com/commentisfree/2023/dec/23/ai-chat-gpt-environmental-impact-energy-carbon-intensive-technologyLinks to an external site.

https://www.techradar.com/pro/chatgpt-is-having-a-really-bad-impact-on-the-environmentLinks to an external site.

Ultimately, it is up to you as a student to decide how to use AI within this course. However, the following guidelines apply:

Permitted purposes of AI Use

• Help with brainstorming ideas for essays (being mindful that chat GPT and other software may make mistakes and are not reliable sources of information!)
•  Revising language for clarity, grammar, or cohesion or refining the structure and flow of content that you have written.
• Clarifying complex concepts from class or materials or asking AI to provide examples to support your understanding of class concepts.

Prohibited Uses

• Copy-pasting unedited content directly generated by AI into submitted work.
• Using AI tools to bypass critical thinking, problem-solving, or creative processes central to the assignment's learning objectives (during the midterm exam or in any other capacity)
• Submitting work that has been edited or developed with the assistance of AI softwares without clear acknowledgements of how such software was used.
• Use of AI in any way that conflicts with DIS academic regulations (see below)

DIS Accommodations Statement

Your learning experience in this class is important to me.  If you have approved academic accommodations with DIS, please make sure I receive your DIS accommodations letter on the first days of class. If you can think of other ways I can support your learning, please don't hesitate to talk to me. If you have any further questions about your academic accommodations, contact Academic Support academicsupport@dis.dk

Academic Regulations  

Please make sure to read the Academic Regulations on the DIS website. There you will find regulations on: 

• Course Enrollment and Grading  
• Academic Expectations and Honor Code 

DIS - Study Abroad in Scandinavia - www.DISabroad.org

Special note about laptop use in class: Use of laptop computers in class is allowed for the purpose of note-taking ONLY; other computer activities can prove distracting.  Students should also refrain from any activity/behavior that may be disturbing to other students who are making the effort to be attentive.

Readings

Textbooks (all required excerpts will be posted on Canvas, no textbooks to be picked up from the DIS Library during arrivals week)

• Copeland, B. R., & Taylor, M. S. (2005). Trade and the Environment: Theory and Evidence. Princeton University Press.
• Field, B. C., & Field, M. K. (2006). Environmental Economics: An Introduction (4th ed.). McGraw-Hill Irwin.
• Harris, J. M. (2005). Environmental and Natural Resource Economics: A Contemporary Approach (2nd ed.). Houghton Mifflin.
• Sterner, T., & Coria, J. (2013). Policy Instruments for Environmental and Natural Resource Management. Routledge.
• Tietenberg, T., & Lewis, L. (2018). Environmental and Natural Resource Economics (11th ed.). Routledge.

Articles/Reports (all required readings will be made available in Canvas)

• Andersen, C. M., et al. (2024). Air Pollution and Cognition in Children: Evidence from National Tests in Denmark (No. 11434). CESifo Working Paper
• Coase, R. H. (1960). The Problem of Social Cost. The Journal of Law & Economics, 3, 1–44.
• Copeland, B. R., & Taylor, M. S. (2009). Trade, tragedy, and the commons. American Economic Review, 99(3), 725–749.
• Croci, E. (2005). The economics of environmental voluntary agreements. Handbook of Environmental Voluntary Agreements, 3–30. Springer.
• Fullerton, D., & Stavins, R. (1998). How Economists See the Environment. Nature, 395, 433–434.
• Helbling, T. (2012). Externalities: Prices Do Not Capture All Costs. International Monetary Fund, 3 pp.
• IPCC. (2014). Climate Change: Mitigation of Climate Change - Summary for Policy Makers.
• Jackson, M. O. (2011). A Brief Introduction to the Basics of Game Theory. Stanford University.
• Karpavicius, L. (2024). Empirical Essays on the Transaction Costs of Land Use Carbon Sequestration.
• Karpavicius, L. M., & Chimeli, A. (2024). Forest Protection and Human Health. FEA/USP.
• Ledgard, J. (2005). Bjorn Lomborg is the World’s Most Optimistic Statistician. Strategy+Business, 38, 7 pp.
• Lynas, M. (2003). Natural Bjorn Killer. The Ecologist, 33(2), 26–29.
• McKibben, B. (2012). Global Warming’s Terrifying New Math, 9 pp.
• McKinsey & Company. (2008). Greenhouse Gas Abatement Opportunities in Sweden: Report.
• Penn, G., et al. (2024). General ecosystem health indicators: A scoping review. CABI One Health. https://doi.org/10.1079/cabionehealth.2024.0006
• Rayamajhee, V., & Paniagua, P. (2021). The Ostroms and the contestable nature of goods: Beyond taxonomies and toward institutional polycentricity. Journal of Institutional Economics, 17(1), 71–89.
• Salvo, A. (2020). Local pollution as a determinant of residential electricity demand. Journal of the Association of Environmental and Resource Economists, 7(5), 837–872.
• Singer, P., & Lomborg, B. (2011). Does Helping the Planet Hurt the Poor? Wall Street Journal, 8 pp.
• Surowiecki, J. (2014). Climate Trades. The New Yorker (October 13), 1 page.
• Sunstein, C. R., & Weisbach, D. A. (2008). Climate Change and Discounting the Future: A Guide for the Perplexed. Harvard Law School Working Paper, sections I and II, pp. 1–12.
• The Economist. (2007). Playing Games with the Planet, 3 pp.
• Yan, D., et al. (2018). Environmental sustainable decision making– The need and obstacles for integration of LCA into decision analysis. Environmental Science & Policy, 87, 33–44. https://doi.org/10.1016/j.envsci.2018.05.018Links to an external site.