ENVIRONMENTAL ECONOMICS

Teachers: 
Credits: 
6
Site: 
PARMA
Year of erogation: 
2021/2022
Unit Coordinator: 
Disciplinary Sector: 
Rural economy and evaluation
Semester: 
First semester
Year of study: 
2
Language of instruction: 

Italian

Learning outcomes of the course unit

The strong influence of the economic activity on natural resources requires an analysis of the reasons behind economic behavior and the study of tools able to improve the relationship between the economic facts and the environment. The objective of the course is to provide the knowledge needed to understand the economic reality and its relationship with the environment and natural resources through the study of the market mechanisms, the analysis of individual choice, and applying economic instruments to reduce negative externalities and enhance the positive ones. In particular, the course provides an introduction to microeconomics, the conceptual keys to understand how environmental issues can be managed within an economic approach and, finally, the main economic instruments to assess the environmental resources and to drive individual choices. The student, through the proposed study path, will apply the knowledge in the context of environmental resource evaluation and for formulating projects including environmental issues and impacts from an economic perspective. The course will offer opportunities for discussion on key environmental issues and exercises for enabling students to assess and apply with critical thought and autonomy the interactions between economic and environmental systems.

Prerequisites

Not required

Course contents summary

The course of Environmental Economics aims to provide students with the necessary knowledge to evaluate environmental goods. The course is divided into two main parts. The first part will provide the basic knowledge of microeconomics, with a specific emphasis on the fundamental concepts of scarcity and efficiency. In particular, consumer theory and producer theory will be discussed in the context of constrained choices. In addition, the model of perfect competition will be discussed by analyzing the characteristics of the supply and demand functions. The second part of the course will propose the analysis of public economics themes within the framework of environmental resources. The concepts of public goods and externalities will be used to develop the economic approaches to control the effects of human behavior on the environment and to evaluate environmental goods. The main economic instruments covered include environmental taxes, the negotiating mechanisms, the trading pollution entitlements, the cost-benefit analysis, and the direct and indirect methods for evaluating environmental resources. The last part of the course will concern the theme of sustainable development.

Course contents

PART I
Introduction to Microeconomics
1. The market
1.1 Scarcity and prices
1.2 The circular economic system
1.3 The economic models
1.4 The law of supply and demand
1.5 The market equilibrium
2. Consumer Choice
2.1 The budget constraints
2.2 The preferences
2.3 The indifference curves and the consumer’s utility
2.4 The consumer choice
3. The firms and their objectives
3.1 The production function
3.2 The cost function
3.3 The maximization of the economic profit
3.4 The firm and the market: perfect competition and monopoly

ENVIRONMENTAL ECONOMICS
1. The environment and the economic system
1.1 The environment from free resource to economic good
1.2 Neoclassical environmental economics
1.3 Economic System and Sustainable Development
1.4 The market imperfections
2. The optimal use of natural resources according to economic theory
2.1 Public goods and externalities
2.2 The regulation of environmental externalities
2.3 Evaluation of environmental goods
2.4 The measurement of environmental value
PART III
THE TOOLS OF ENVIRONMENTAL POLICY
3. The definition of environmental policies
3.1 The tools of environmental policies
a) The optimal tax
b) The Coase theorem and the negotiating approach
c) Subsidies for non-polluting
3.2 The Cost-Benefit Analysis
3.3 Sustainable economic development
3.4 Eco-labelling

Recommended readings

- Michael L. Katz, Harvey S. Rosen, Carlo Andrea Bollino, Wyn Morgan,
Microeconomia, McGraw-Hill, 2020
- R.K. Turner, D.W. Pearce, I. Bateman, Economia Ambientale, Il Mulino, Bologna, 2003.

Teaching methods

Acquisition of knowledge: lectures provided in blended mode (face-to-face and via Teams)
Acquisition of the ability to apply knowledge: exercises (to be evaluated whether to organize exercises through small groups in presence).
Acquisition of judgment: During the course, students will be encouraged to develop a capacity of critical analysis and evaluation of the themes discussed.
Acquisition of learning skills: each topic will start from the illustration of the theoretical background and will be analyzed the on-going dynamics related to the relationship between economy and environment.
Acquisition of technical language: students will learn the meaning of the terms commonly used in the context of environmental resource evaluation.

Assessment methods and criteria

The exam is in written form and divided into two parts. The first part (1h30m) provides students with two open questions, one of which is designed to test the knowledge acquired on one of the main topics of microeconomics, and the second concerns the economic tools aimed at controlling the effects of human activities on the environment. The open form of the two questions is useful to assess the student's ability to draw connections between the principles of microeconomic theory and the tools of environmental economics. Both questions are valued out of thirty.
The second part of the exam (30min) is a test with 10 closed questions about all the topics presented during the course. The second part aims to evaluate the knowledge of the key concepts of environmental economics. Each right answer corresponds to a score of 3 points, the wrong ones -0.5 points, while the not given answers 0 points. The maximum score of the test is 30 points. The final score of the exam is calculated as an average of the three final scores.