F1ES 4020 - Accounting for the Environment at Scale: Macro-Interactions between the Economy and the Environment

The goal of this class is first to understand how economic and environmental systems can interact, and second to use these interactions to refine our comprehension of the key macro-economic questions of national accounting, growth, industrial policy and inequalities.

The class will be divided into three parts. In the first, we will cover natural resource accounting and sustainable growth. Here we will study both methods and debates surrounding the valuation of natural resources as wealth, the measurement of sustainable growth beyond GDP, and models evaluating the feasibility of sustainable growth (green growth vs. degrowth). This section will end on the concept of planetary boundaries and recent economic analyses of ecosystem collapse (e.g. the American bison and the Indian vulture).

In the second part, we will focus on the impacts of climate change on growth, and how these can be measured: from the scaling of micro-level damage functions, to integrated assessment models and the direct measurement of climate effects on growth. We will end this section with the debates surrounding climate change and inequalities.

In the last section, we will focus on industrial and trade policies for the green transition: covering the green new deal, environmental policies for international trade, resource use efficiency and how it relates to within industry misallocations, and finally electric vehicles as case studies. This section will end with the labor market effects of the green transition.

Learning Outcomes:

• Become familiarized with the reading and critique of contemporary academic research.
• Learn how to develop policy arguments using contemporary economic research, and be able to update one’s (future) knowledge of economics as the field keeps advancing.
• Build an understanding of the interactions between macroeconomic systems and climate change, and the means and consequences of valuing the environment as capital.
• Knowledge of key examples of green environmental policy.

Professional Skills

Critical reading and summarizing of contemporary research, development of policy arguments/critiques of existing policies based on this research, written presentation skills.

Most of the class will rely on the reading and interpretation of recent economic research papers. While the emphasis will not be put on the quantitative aspects of these papers, students should feel at ease discussing questions of measure, identification, and have a critical understanding of the assumptions these papers rely on.

Students will receive short written feedback on assignments that are handed in to the professor. For presentations in class (if applicable), the professor will give feedback directly. Grading of in-class exams will be explained by an answer sheet (for the midterm) and short comments on the exams. But most of all, everyone will learn from discussions in class, and students are encouraged to ask questions on the subject matter directly in class.

The grading for this class will be based on four elements:

• a written midterm (30%), and a final written exam (30%), both in class;
• participation in class discussion 10%
• written online participation to moodle discussions, each week students will be asked to write their thoughts about one assigned article and prepare in-class discussion (30%);

• In Class Presence: 2 hours a week / 24 hours a semester
• Online learning activities: 2 hours a week / 24 hours a semester
• Reading and Preparation for Class: 4 hours a week / 48 hours a semester
• Research and Writing for Individual Assessments: 2 hours a week / 24 hours a semester