Economics 331b.
The Economics of Energy and Climate Change
Yale University
William D. Nordhaus
Fall 2014
Course web site: http://www.econ.yale.edu/~nordhaus/homepage/EE2011.htm
READINGS AND CLASS SCHEDULE
Week 1 (Aug 27). Introduction and Some Demography
Wednesday: Describe course and introduction to population
Friday: Production theory, Malthusian theories, and carrying capacity
Readings for this week:
George Borjas, “Immigration,” Journal of Economic Perspectives, Summer 1995,
pp. 3 – 22, click here.
Joel Cohen, “Population growth and earth's human carrying capacity,” Science,
21 July 1995: Vol. 269. no. 5222, pp. 341 – 346, click here.
Production theory is critical to the course and will be used repeatedly. Make
sure you have it under control. The basics are can be found in McAfee, Chapters
9 and 10, especially pp. 109 – 112.
Week 2 (Sept 3). More on demography and growth
Wednesday: Solow model; add demographics to Solow model; start discussion
of tipping points.
Friday: Finish tipping points; Kremer model
Readings:
Robert M. Solow, “A Contribution to the Theory of Economic Growth,” The
Quarterly Journal of Economics, Vol. 70, No. 1. (Feb., 1956), especially pp. 90-91,
click here.
If you have not taken intermediate macroeconomics, you will need to
understand the neoclassical growth model. This is used extensively in climate
change models. A good survey is from Mankiw, Chapter 7 (click here) and
Chapter 8 (click here). You need to understand particularly sections 7-1 and 81.
Michael Kramer, “Population Growth and Technological Change: One Million
B.C. to 1990,” The Quarterly Journal of Economics, Vol. 108, No. 3. (Aug., 1993),
pp. 681-716, click here. You should study carefully pp. 681-687 and the
conclusions (pp. 712-714).
Timothy Lenton et al., “Tipping elements in the Earth’s climate system,” PNAS,
2009, 106:20561-20563, click here.
For the mathematically inclined and interested, the “Tipping points:
mathematical appendix,” pp 1 – 5, click here.
Week 3 (JSept 8). Exhaustible Resources and Oil
Monday: Energy Primer (see lecture notes for slides and Primer)
Wednesday: Economics of exhaustible resources: Hotelling v. Hubbert
Friday: How to use Excel Solver (critically important lab for those who don’t
know)
Readings:
Energy primer: Part of understanding energy and climate change is the basics
of the industry, energy use, measurement, etc. This is the IPCC primer, click
here. Also, you can look at my notes on the lecture notes, which is less technical
but maybe more fun.
On exhaustible resource theory: This is extremely important. Hotelling
pricing of exhaustible resources is one of the most important ideas in all
resource economics.
Robert M. Solow, “The Economics of Resources or the Resources of Economics,”
The American Economic Review, 1974, click here.
Harold Hotelling, “The Economics of Exhaustible Resources,” QJE, 1931, click
here. This is an absolutely brilliant article. Read through p. 146 and skim the
section on taxation.
On the peak oil hypothesis: This is a fiery controversy largely devoid of much
economics. You can look over some of the following. We need to think about
what economics would have to say about all this.
The Hubbert curve, click here for the Internet reading (Sorry, can't find a better
one. This is long but extremely influential.)
The Department of Energy experts’ report
(http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2004/world
oilsupply/oilsupply04.html )
The CERA report (they are a premier consulting group) at
http://www.cera.com/aspx/cda/public1/news/pressReleases/pressReleaseDe
tails.aspx?CID=8444 .
Week 4 (Sept 15)
Monday: Hotelling v. Hubbert continued
Wednesday: The Economics of an Integrated World Oil Market
Reading: William Nordhaus, “The Economics of an Integrated World Oil
Market,” paper for the International Energy Workshop, June 2009, available at
http://www.iccgov.org/iew2009/4-2-c-1.htm or click here.
For a history of the law of one price, see Karl Persson, "Law of One Price"
EH.Net Encyclopedia, edited by Robert Whaples. February 10, 2008. URL
http://eh.net/encyclopedia/article/persson.LOOP
Friday: Optional discussion session.
From time to time, I will have an unstructured session in which we can discuss more
general questions that have come up in recent lectures. I will not prepare anything, so
you should come prepared.
...
Week 7 (Oct 6). Introduction to climate science
Monday. Hour test in class