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The Economics of Environmental Crises

Module description

This module is designed to expose you to frontier developments in environmental economics, bringing economic insights to understand and tackle some of the most pressing issues of our time, from climate change to biodiversity loss. We will apply concepts developed in co-requisite modules (BEEM011 Applied Econometrics, BEEM100 Microeconomics) to understand the causes of and solutions to the twin crises of biodiversity loss and climate change. We will define policy effectiveness, causally estimate environmental policy outcomes; and design and critically evaluate climate and biodiversity solutions from the perspective of economics. 

Module aims - intentions of the module

This module will equip students with the economic skills and understanding to critically assess the impacts of climate change and biodiversity loss; suggest policies to mitigate their effects; and causally evaluate the mechanisms used to address these challenges. Students who successfully complete the module will be prepared to pursue further study or employment in environmental economics. We will discuss the underlying environmental crises facing the planet, identify benchmarks for effective policy, and explore existing and potential policy solutions through the lens of economics. Students should expect to apply and reinforce skills developed in Microeconomics and Applied Econometrics applied to understand market and non-market policy instruments, additionality and leakage, and the role of institutions in regulation and policy outcomes. The module will help students navigate the cutting-edge of the environmental economics literature to apply economic understanding and data analysis skills to critically assess environmental policy. The final essay, and critical readings of cutting-edge research will equip students with the skills required for successfully completing the dissertation.

Intended Learning Outcomes (ILOs)

ILO: Module-specific skills

On successfully completing the module you will be able to...

• 1. Interrogate the impacts of climate change and biodiversity loss to propose and critically assess policy solutions
• 2. Apply economic principles to identify environmental externalities and a detailed understanding of how these can undermine economic growth and prosperity

ILO: Discipline-specific skills

On successfully completing the module you will be able to...

• 3. Apply causal inference techniques to identify and evaluate policy outcomes, both local and distant, in order to robustly assess policy effectiveness and potential backfire effects
• 4. Draw on normative economic ideas to assess the intergenerational and intragenerational effects in order to deliver just and equitable outcomes

ILO: Personal and key skills

On successfully completing the module you will be able to...

• 5. Critically assess the data needs, methodologies and pitfalls in understanding mechanisms underpinning questions regarding cause and effect
• 6. Articulate economic arguments regarding the need for policy interventions and regulation in specific settings

Syllabus plan

• Introduction to the key environmental issues of our time: climate change and biodiversity loss
• Define, interrogate and estimate what it means for a policy to be effective locally (additionality) and globally (leakage)
• Understand deforestation dynamics and current policy options for a critical lever in climate and biodiversity outcomes
• Examine social justice issues in environmental contexts to identify pathways to a just transition
• Emerging instruments for climate and biodiversity action: design of trade for environmental services and environmental concerns in financial markets

Learning activities and teaching methods (given in hours of study time)

Details of learning activities and teaching methods

Formative assessment

Summative assessment (% of credit)

Details of summative assessment

Details of re-assessment (where required by referral or deferral)

Indicative learning resources - Basic reading

• Keohane and Olmstead. Markets and the Environment. (2016) [Background]
• Weekly papers from the environmental economics literature. E.g.:
  • Jensen et al. “An Introduction to the Green Paradox”.REEP. (2015).
  • Millner, A. (2013). “On Welfare Frameworks and Catastrophic Risk.” Journal of
  • Environmental Economics and Management 65:310-325
  • Weitzman, M.L. (1974). “Prices vs. Quantities.” Review of Economic Studies 41(4):477491
  • Burke, Marshall, and Kyle Emerick. 2016. "Adaptation to Climate Change: Evidence from US Agriculture." American Economic Journal: Economic Policy 8 (3): 106–40.

Indicative learning resources - Web based and electronic resources

• ELE

Indicative learning resources - Other resources

• Field and Field. Environmental Economics. (2020)

Key words search

Environment, economics, just transition, climate, biodiversity