OAFP 5330 - Economics of Environment - The Age of Constraints

Humankind pressure on the planet is now pushed to the limits as defined in (Rockström et al. 2009; Steffen, Richardson, et al. 2015). Economic development added to demographic pressure are building up a major ecological crisis which consequences may compromise the ability to live on the planet and induce a risk of a major shift in planet climate (Calvin et al. 2023), can trigger a mass extinction (Wagler 2018).

The first aim of the course is to grasp what is at stake, from climate change and earth physics to natural resource depletion or water crisis. An emphasis will be put on human activities and their impact on climate and planetary ecosystems. Link between inequality and emissions will also be discussed, producing a rather different view than the one promoted by (Chancel 2022).

The second aim is to evaluate what change is needed to allow 10 billion humans living as well as possible on a bounded planet. Simply put, the goal is to imagine the world of tomorrow and to explore from technology to sufficiency what could be the pillars of a human society respectful of planetary limits.

The third aim of the course will review theorical economic approaches and real-world public policy tools to limit human activities inside planetary limits. Here, we will explore the tools which have been defined by public choice theorists. But we need to go from theory to practice and to understand what has succeeded or failed (failures are numerous and important) in trying to apply those tools to real world green policies.

Some background knowledge in economics and microeconomics is required: what is a competitive market ?, what is a price?, supply and demand graphs, general equilibrium concept and its limits, discounted value and interest rate.

Some background knowledge in public economics (provision of a public good, redistribution, analysis of taxation and incentives) is a plus.

However, those concepts and knowledge will be re-explained during the course. There will no evaluation of abilities in those economic skills.

During the course, some models will be presented, mostly graphically and stressing the intuitions. Evaluation will not require any mathematical skill beyond very simple calculus (applying a tax rate to a price, using an elasticity to compute the reduction in volume or value due to a price increase).

The course is divided in sessions covering different topics (see sessions description section below). However, this routine is broken by the class debates, where students explore a subject and try to argument and counter argument. This brings more interactivity to the course. For non-debate sessions, tools such as wooclap are extensively used to deliver more lively classes. Open discussion is strongly encouraged. It is also possible, on demand, to adapt the content of one or more sessions to a specific topic students would like to see covered.

Students are evaluated on the basis of

• 3 quiz exams, online, during 3 sessions in class. Typically, the quizzes are composed of 8 to 10 closed questions (3 possible answers, one of which is correct) and 2 to 3 open questions (very short essay, 250 words, on a question). Quiz questions cover matters seen during the courses before the exam. The last quizz covers the whole course. Quiz questions are directly related to the course. Usually, the 2 best marks of the three tests are used to make the final quiz note. Quiz weighs 50% of the final mark.
• An essay, usually a book review, around 20k characters (±10%). The book for the book review has to be validated and should deal with environmental questions. A selection of eligible books is provided, but students are encouraged to select any book they’d like to review. Ideally, the book review should review a book not already read by the teacher and provide material for next year course ! The essay weighs 30% of final mark. The essay can be something else than a book review. Students should check with their teacher if their project is ok for the course validation.
• Alternatively to an essay, groups of students (2 to 3 students per group) can animate an in-class debate. The animation of a class debate is done on a predefined subject (like Nuclear Energy) and 2 groups present the pro and con side of the debate. Then the class participates. The groups have to complete this animation by a debrief of the debate, presented at the end of the semester as a presentation (slides plus oral presentation — no essay). This replaces the essay with the same weight (30%)
• Participation during class. While with a minor weight (20%) in the final mark, participation is granted.

The course is designed to bring students to deepen their thoughts on environmental matters. As such, regular but reasonable work is expected during the course, plus the writing of the essay or the preparation of the debate. Readings are proposed for each sessions (see main references for sessions and are expected to be read before each session).

Students who wish to complement their knowledge on some topics (economics, public choice economics, theory of measure, degrowth, cliometry, geophysics, environmental justice philosophy to cite some) are most welcome to ask for reading lists that we will be happy to supply.