EC 476
Colby College
Spring, 2005
Professor Tietenberg
Miller Lib 234
email: thtieten
Tel: 5242
Advanced Topics in Environmental Economics
As a senior seminar, this course will acquaint you with the latest developments in the field (many of the
papers we shall consider have not even been published yet.) We shall examine the basic research (theory,
and the empirical work) as well as the lessons that can be learned from implementation experience as
these ideas have been put into practice.
This course is designed as a seminar in which all participants are expected to contribute to group
learning, not merely to absorb material passively. Sustainable Development, a concept that lies on the
frontier of environmental economics, provides the focus for our inquiry. Analyzing this concept closely
reveals the large contributions that economic analysis can make in understanding the nature of the
problems and in providing guidance on solutions, but it also raises fundamental questions about the
appropriate domain for economic analysis. You will be exposed to both the emerging insights and the
controversies and given ample opportunities to develop your own perspective. For an extended
bibliography on many aspects of sustainable development see my web site:
http://www.colby.edu/~thtieten/sustainbiblio.html
Topics will be examined using both discussion and presentation formats.
Discussion Format: Having read the background readings, each participant will be expected to contribute to a discussio
reading.
Presentation Format: These sessions will focus on presentations by students, faculty or guest
speakers.
The readings for this course will largely be on the web:
Many of the files are in pdf format. Reading a pdf report requires Acrobat Reader. If you don’t have
it, it can be downloaded free from http://www.adobe.com/products/acrobat/readermain.html
This course presumes that you have had a survey course in environmental and natural resource
economics. If you wish to review that material you may want to consult:
Tietenberg, T. (2006). Environmental and Natural Resource Economics. 7th
ed. Reading, MA: Addison-Wesley Longman.
The grades in this course will be based upon: (1) class participation (quality and consistency of
contributions - zeros are assigned for each missed class), 15%, (2) concept paper or Colby sustainability
research paper and oral presentation (content, analytical depth, organization and style), 25% (3) three
class presentation executive summaries and oral presentations 45% (15% each) and (4) the internet
project. 15%. Notice that here are no exams. All grades come from class participation, oral presentations
and written reports. To help you keep everything straight and to facilitate planning ahead I have
added a master schedule of dates at the back of the syllabus. I would urge that you communicate
among yourselves to prevent a circumstance where one or more of you select exactly the same topic
for one of your projects.
Each student will be expected to have set up an email address and to check it regularly. I will use email to
communicate with participants in the intervals between classes.
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Research Projects and Oral Presentation Assignments:
Each student is expected to do a major research paper of one of two types: (1) a concept
paper or a (2) campus sustainability paper.
Concept Paper: The concept paper assignment involves writing a major paper on some
economic aspect of sustainable development policy. While the internet project (described
below) is designed to focus on implementation issues in the context of a specific
economic and cultural setting, the conceptual paper is designed to provide a broad
overview of both the theory and empirical evidence which lie behind our current level of
understanding of that issue. The target audience for your paper is assumed to be
economically literate, but not familiar with your particular topic. Models for this type of
paper would be the survey articles that appear at the beginning of each issue of the
Journal of Economic Literature. The normal paper will contain about 7000 words. I have
included a list of possible topics at the end of this syllabus. (These are meant to be
suggestive, not meant to limit your choice.) Please include your word count on the
title page of your paper.
Campus Sustainability Paper: The campus sustainability research project involves
conducting a research study on some aspect of campus sustainability. The object is to
produce sufficient information, background and economic analysis that the final report
can be submitted to the Environmental Advisory Group as a reco0omendation for action.
Paper Proposal: For either type of paper the paper proposal will consist of a twopage, single spaced document which provides: (1) the title of the project, (2) the scope
of the project (research questions, coverage, etc.), (3) a tentative outline (using three
levels of headings) of the final report and a tentative bibliography of sources you will
consult. This proposal should reflect sufficient knowledge of the literature that you
can specify both the subjects to be covered by the report and how they fit together.
This proposal will count 10% of the conceptual paper grade. Due: Monday, March 6
at noon.
Optional First Draft: At your discretion you may submit a first draft of the paper for
my critique. I will make comments on the paper and provide suggestions for
improvement. No grades will be assigned to the first draft. You can use the comments
to improve the paper. If you chose this option, I must receive the paper by noon,
Friday, April 21. For me to make comments the paper must be substantially
complete—no half written sections of papers, missing references or footnotes to be
added later or spelling errors that could easily have been detected by a spelling
checker. (No exceptions—plan ahead.)
Final Paper: The final paper is due at noon Friday, May 12. A three-point-per-day
penalty will be assigned (out of 100) for each day the paper is late. This implies, for
example, that a paper, which, if handed in on time, would have received an 82%,
would, after a three-day-late penalty, receive a 73%.
Oral Presentation: Each member of the class will be responsible for a major oral
presentation on the work covered by the concept or campus sustainability paper. Each
presenter will have one half hour for the presentation. The presentation will be judged on
organization, depth of analysis, breadth of coverage and synthesis of findings and
delivery.
Case Study Class Presentations. Each seminar participant will be responsible for
reporting orally on three case studies to the class. Each case study will come from one of
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the three case study categories and each student must present one study from each of the
three categories.
Presentation Proposal: Your proposal should list: (1) the complete citation for the
case study, (2) the focus of the study, and (3) the features that appear to make this
particularly interesting for the class to hear. This will count 10% of your final case
study grade. Due dates listed below.
Oral Presentation. Each member of the class will be responsible for a 15-20 minute
presentation on the nature of the case study. The presentation will be judged on
organization, depth of analysis, and the value of the insights for the class.
Executive Summary. One week following the oral presentation each student will
hand in an approximately two-page executive summary of the case study. These
summaries will be graded on the quality of the description of the case study, the
relevance of it to our study of sustainable development and the quality of the critique,
including its contribution to class understanding.
Class Presentation Project Descriptions
Environmental Valuation Case Studies. Each seminar participant will be
responsible for selecting one study that uses a specific valuation methodology
to shed light on some subject of interest to the field of environmental and
natural resource economics. (To provide an entry into the literature one short
list of such studies is provided in Session 5 on this syllabus. Many more studies
exist and you are free to chose any study you wish, whether it is on this list or
not.) For the chosen study the participant will be responsible for: (1) identifying
the focus of the research, (2) briefly describing the valuation technique used
and any unique aspects of its use in this context, (3) the results of the exercise
and (4) the participant's critique of the exercise. Proposal Due February 14th.
Trade and Environment Case Studies. This assignment involves writing an
executive summary and making an oral presentation on one or more studies
that analyze a specific trade and environment relationship. The study or studies
should involve an actual situation involving actual data, not a conceptual
model. Proposal Due March 2nd
Corporate Sustainability Case Studies. This assignment involves writing an
executive summary and making an oral presentation on some corporation that
has made an explicit attempt to build sustainable development into its business
practices. The case study should examine what the corporation did and how it
worked out both economically and environmentally. Are there any more
general lessons that emerge from this study about when sustainability and
profitability are might be compatible? Was this experience the result of very
special circumstances or do you think it could be generalized? Proposal Due
March 2nd
Internet Project. This assignment involves creating material (one implementation case
study) to be put on the sustainable development home page created here at Colby for the
World Wide Web. Using a prescribed format (I will supply a template) those who select
the option will write a brief, but revealing report on the application of the principles of
sustainable development and conventional economic analysis to one particular
environmental problem (air pollution, fisheries, agriculture, energy, deforestation, etc.) in
a specific geographical and cultural setting. Do not choose studies that simulate what
might happen if the policies or circumstances were changed and do not choose a topic that
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covered by previous classes and, hence, already loaded onto the class web site. These
internet studies are designed to reveal actual, not hypothetical or possible outcomes.
Having selected a specific case, the author will review (and write a short executive
summary report on) the evidence that is available on that subject. (Examples of previous
reports can be found on the worldwide web at
http://www.colby.edu/~thtieten/sustain.html.) Each report will attempt to condense down
to no more than two pages the major conclusions to be taken away from that case study.
(These are to take the form of extended Boxed Inserts in a typical text). The objective is
to make available to worldwide audience brief, but revealing, summaries of the
application of economic principles to sustainable development. (If you pique web readers’
interest, they can get the details from the cited articles on which these summaries are
based.) The internet reports should be forwarded to me as an attachment via email. I will
load them on the web. Your internet report can be in the same topic area as your concept
paper, but it cannot duplicate any class presentation.
Topic Proposal: Your topic proposal should list: (1) the title of the case study, (2) the
main subject to be examined, (3) the features which appear to make this a particularly
interesting case study for the class to hear and (4) the literature on which this case
study will be based. This will count 10% of your final case study grade. The Colby
Sustainable Development site contains a large bibliography separated into specific
areas of interest. Due: Monday, February 27th at noon.
Final Report: The final internet project report is due at class time on Friday March
24th A three-point-per-day penalty will be assigned (out of 100) for each day the case
study is late. Since these reports will be placed on the internet, please be sure they are
in the same format as all the others. I will share with you the format, but you can also
visit the site to see how the others were done.
Other World Wide Web Sites of Interest
This information can be very useful in selecting topics and
researching the various projects required for this class.
National Center for Environmental Economics (EPA) Site:
http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/homepage
Free U. of Brussels Sustainable Development Site
http://www.ulb.ac.be/ceese/meta/sustvl.html
Institute for Sustainable Development:
http://iisd1.iisd.ca
United Nations Development Program
http://www.undp.org/
United Nations Environment Program
http://www.unep.org/
National Institute for the Environment:
http://www.cnie.org/
Association of Environmental and Resource Economists
http://www.aere.org/
And finally when only humor will do
http://netec.wustl.edu/JokEc.html
Let me know if you find some helpful sites not on this list.
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Part I. The Basics
Session #1 An Overview
Tuesday, February 7
Faculty Presentation Format
This session will open with an overview of the material to be covered and the mechanics of coverage.
Sessions #2 Defining and Modeling Sustainable Development
Thursday, February 9
Discussion Format
Assigned Reading
John Pezzey, Sustainable Development Concepts: An Economic Analysis (Washington,
DC: World Bank Environment Department Report #2) 9-19.
John C. V. Pezzey and Michael A. Toman (2002), “Progress And Problems In The Economics Of
Sustainability” in Tom Tietenberg and Henk Folmer, eds.The International Yearbook of
Environmental and Resource Economics 2002/2003 ( Cheltenham, UK: Edward Elgar): 165-232
Some Questions to Consider:
1. The concept of sustainability involves an obligation? Who owes the obligation? To whom is it owed?
What is the nature of the obligation?
2. The Pezzey piece confronts the task of trying to sort out what we mean by sustainability. In particular
he attempts to bridge the gap between “this vague concept” and the way in which we might
systematically investigate the implications of this concept within economic models.
3. Why has a call for “sustainable” development arisen? What “needs” are being addressed by this new
concept? What is the difference between sustainability and survivability?
4. The concept of sustainable development is primarily driven by ethical concerns. How does it relate to
the traditional economic concept of efficiency?
5. How does the economic approach to sustainable development differ from other approaches to the
same concept? Is an integration possible? Or are the various approaches mutually contradictory?
6. At what level should the concept of sustainable development be applied? At the global level?
national? regional? local? individual resource? all of these?
7. Economists tend to think about complex issues by translating them into mathematical terms and
using those formulations to derive specific results. How do economists model sustainable
development? What is being maximized? Is this constrained optimization or unconstrained
optimization? Do these models faithfully follow the definitions described in the preceding class?
How well do they capture the noneconomic views of sustainability? If they leave some crucial
ingredients out, what are those crucial ingredients?
8. How does sustainability depend on such crucial parameters as the rate of population growth, the rate
of technical progress, rate of social time preference? How do the results differ depending whether
technological progress is present or not? What is the rate of time preference and how does it affect
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outcomes? What difference does it make whether the economy is characterized as simply consuming
a depletable resource or whether the resource can be turned into capital?
9. How do the formulations of these three concepts differ for depletable resources and renewable
resources? What difference does it make whether stock effects are present or not? What are the
consequences of including “pollution effects” in the models? Can sustainable development ever
involve the use of depletable resources? How can a development plan use depletable resources
without depriving future generations?
10. What is the Hartwick Rule? How is it used?
11. Is the notion of carrying capacity relevant for modeling sustainable development?
Sessions #3
Measuring Sustainability
Tuesday, February 14
Valuation Case Study Proposals Due.
Discussion Format
Assigned Reading
Eric Neumayer, "On the Methodology of ISEW, GPI and Related Measures: Some Constructive
Suggestions and Some Doubt on the "Threshold" Hypothesis" Ecological Economics, Vol. 34, No. 3,
September 2000
Information on the Genuine Progress Indicator can be found at:
http://www.redefiningprogress.org/projects/gpi/
Information about the approach known as the ecological footprint can be seen at
http://redefiningprogress.org/newprojects/ecolFoot/methods/calculating.html
Information on the world Bank's Adjust net Savings ( formerly called genuine savings) can be found at;
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/ENVIRONMENT/EXTEEI/0,,contentMDK:2
0502388~menuPK:1187778~pagePK:148956~piPK:216618~theSitePK:408050,00.html
Optional Reading
De Soysa, I. and E. Neumayer (2005). "False Prophet, or Genuine Savior? Assessing the Effects of Economic
Openness on Sustainable Development, 1980-1999." International Organization 59(3): 731-772.
Some Questions to Consider
1. How can we tell whether current actions are consistent with sustainable development or not? What
tests can be established?
2. Can we use the national income accounts as currently constructed to determine whether we are on a
sustainable path or not? Why or why not? If they can be used, define the appropriate use. If not, discuss
what modifications would need to be made to get a sustainability measure. Does the search for
appropriate measures of sustainability depend on whether one is using the strong or weak definition of
sustainability? Why or why not?
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3. At what level of geographic aggregation should sustainability indicators be measured? Global?
National? Regional? Local?
4. Can we rely on broad economic aggregates or should we complement these with a host of other more
specific measures? If we can rely on the broad economic aggregates, why are they sufficient? If we
cannot, what else do we need? And why do we need it?
5. Can we rely on economic measures or do we need to complement them with physical measures such as
the ecological footprint? Why or why not?
6. The "ecological footprint" approach developed by William Rees and his students derives specifically
from the physical concept known as "carrying capacity". How does it work? What do you see as its main
strengths and weaknesses?
7. The ISEW/GPI approaches take basic national accounting measures and modify them in specific ways
to come up with an aggregate welfare measure. Studies using this methodology have been accomplished
for several countries. All seem to find a “threshold effect” in which growth in the economy is seen to
beneficial only up to a point - the threshold. After that further economic growth is seen as resulting in a
deteriorating quality of life. The studies uniformly find that industrialized countries have already passed
the threshold. Eric Neumayer examines these measures in some detail and concludes that the threshold
effect is an artifact of poor measurement strategies. What components of these measurements does he
examine? What criticisms does he level? Are you convinced? Why or why not?
8. The World Bank's Adjusted Net Savings approach derives from the concept of weak sustainability.
What factors does it consider? What results emanate from this indicator? Is a positive savings rate a
necessary condition for sustainability? A sufficient condition? Neither? Both?
Session #4 Individual Research Conferences
Thursday, February 16
During the class period we will schedule individual appointments to go over progress on the various
research projects, including, but not limited to the valuation projects.
Session #5 Environmental Valuation: Concepts, Methods and Applications
Tuesday, February 21
Faculty Presentation Format, followed by Discussion Format
Assigned Reading
Kenneth Arrow, et. al., “Is there a Role for Benefit Cost Analysis in Environmental,
Health and Safety Regulation?”
http://www.colby.edu/economics/faculty/thtieten/ec476/Arrow.pdf
Steven Kelman, “Cost-Benefit Analysis: An Ethical Critique (with replies)”
http://www.colby.edu/economics/faculty/thtieten/ec476/kelmanbca.pdf
Carson, R. T.; Flores, N. E. and Meade, N. F. “Contingent Valuation: Controversies and
Evidence”. Environmental and Resource Economics, June 2001, 19(2), pp. 173–210.
http://www.colby.edu/economics/faculty/thtieten/ec476/cont_val.pdf
An alternative web source is: http://www.ecosystemvaluation.org/contingent_valuation.htm
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Pendleton, L. and R. Mendelsohn (2000). "Estimating Recreation Preferences Using Hedonic
Travel Cost and Random Utility Models." Environmental & Resource Economics 17(1): 89-108.
http://www.colby.edu/economics/faculty/thtieten/ec476/travel_cost.pdf An alternative web source
is: http://www.ecosystemvaluation.org/travel_costs.htm
Raymond B. Palmquist and V. Kerry Smith "The Use of Hedonic Property Value Techniques for
Policy and Litigation" International Yearbook of Environmental and Resource Economics, Tom
Tietenberg and Henk Folmer, eds., pp. 116-154.
http://www.colby.edu/economics/faculty/thtieten/ec476/hedonic.pdf. An alternative web source
is: http://www.ecosystemvaluation.org/hedonic_pricing.htm
For a list of studies (with abstracts) using the hedonic method see:
http://www.sscnet.ucla.edu/ssc/labs/cameron/nrs98/hedoninv.htm
For a list of studies (with abstracts) using the contingent valuation method see:
http://www.sscnet.ucla.edu/ssc/labs/cameron/nrs98/cvinv.htm
For a list of studies (with abstracts) using the travel cost method see:
http://www.sscnet.ucla.edu/ssc/labs/cameron/nrs98/tcostinv.htm
Some Valuation Studies Published Over the Last four years or so
Since the above lists have typically not been updated in a few years, here are a few studies to give you a
foothold in the literature. You are, of course, free to find your own. If you find our library does not have
a study in which you are interested, check with me before ordering it on interlibrary loan. I may have a
personal copy and borrowing mine will save time and reduce the burden on the library staff.
Alberini, A., K. Boyle, et al. (2003). "Analysis of contingent valuation data with multiple bids and
response options allowing respondents to express uncertainty." J Environ Econ Manage 45(1): 40-62.
Amigues, J. P., C. Boulatoff, et al. (2002). "The benefits and costs of riparian analysis habitat
preservation: a willingness to accept/willingness to pay contingent valuation approach." Ecological
Economics 43(1): 17-31.
Amigues, J. P., C. Boulatoff, et al. (2003). "The benefits and costs of riparian analysis habitat
preservation: a willingness to accept/willingness to pay contingent valuation approach (Vol 43, pg 17,
2002)." Ecol Econ 44(1): 153.
Bandara, R. and C. Tisdell (2004). "The net benefit of saving the Asian elephant: a policy and contingent
valuation study." Ecological Economics 48(1): 93-107.
Barton, D. N. (2002). "The transferability of benefit transfer: contingent valuation of water quality
improvements in Costa Rica." Ecological Economics 42(1-2): 147-164.
Bastian, C. T., D. M. McLeod, et al. (2002). "Environmental amenities and agricultural land values: a
hedonic model using geographic information systems data." Ecological Economics 40(3): 337-349.
Belcher, K. W., M. M. Boehn, et al. (2003). "The Economic Value of Soil Quality under Alternative
Management in the Canadian Prairies." Canadian Journal of Agricultural Economics 51(2): 175-196.
Berrens, R. P., A. K. Bohara, et al. (2004). "Information and effort in contingent valuation surveys:
application to global climate change using national internet samples." Journal of Environmental
Economics and Management 47(2): 331-363.
Boxall, P. C., J. Englin, et al. (2003). "Valuing aboriginal artifacts: a combined revealed-stated
preference approach." J Environ Econ Manage 45(2): 213-230.
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Brown, T. C., I. Ajzen, et al. (2003). "Further tests of entreaties to avoid hypothetical bias in referendum
contingent valuation." Journal of Environmental Economics and Management 46(2): 353-361.
CamachoCuena, E., A. GarciaGallego, et al. (2003). "An experimental test of response consistency in
contingent valuation." Ecological Economics 47(2-3): 167-182.
Cameron, T. A., G. L. Poe, et al. (2002). "Alternative non-market value-elicitation methods: Are the
underlying preferences the same?" J Environ Econ Manage 44(3): 391-425.
Champ, P. A., A. Alberini, et al. (2005). "Using contingent valuation to value a noxious weeds control
program: the effects of including an unsure response category." Ecological Economics 55(1): 47-60.
Chien, Y. L., C. J. Huang, et al. (2005). "A general model of starting point bias in double-bounded
dichotomous contingent valuation surveys." Journal of Environmental Economics and Management
50(2): 362-377.
Cicia, G., E. DErcole, et al. (2003). "Costs and benefits of preserving farm animal genetic resources from
extinction: CVM and bio-economic model for valuing a conservation program for the Italian Pentro
horse." Ecological Economics 45(3): 445-459.
Cooper, P., G. L. Poe, et al. (2004). "The structure of motivation for contingent values: a case study of
lake water quality improvement." Ecological Economics 50(1-2): 69-82.
deMendonca, M. J. C., A. Sachsida, et al. (2003). "A study on the valuing of biodiversity: the case of
three endangered species in Brazil." Ecological Economics 46(1): 9-18.
Dupont, D. P. (2004). "Do children matter? An examination of gender differences in environmental
valuation." Ecological Economics 49(3): 273-286.
Farber, S. C., R. Costanza, et al. (2002). "Economic and ecological concepts for valuing ecosystem
services." Ecological Economics 41(3): 375-392.
Fleischer, A. and Y. Tsur (2003). "Measuring the recreational value of open space." Journal of
Agricultural Economics 54(2): 269-283.
Galster, G., P. Tatian, et al. (2004). "Supportive housing and neighborhood property value externalities."
Land Economics 80(1): 33-54.
Gollin, D. and R. Evenson (2003). "Valuing animal genetic resources: lessons from plant genetic
resources." Ecological Economics 45(3): 353-363.
Grijalva, T. C., R. P. Berrens, et al. (2002). "Valuing the loss of rock climbing access in wilderness areas:
A national-level, random-utility model." Land Econ 78(1): 103-120.
Guria, J., J. Leung, et al. (2005). "The willingness to accept value of statistical life relative to the
willingness to pay value: Evidence and policy implications." Environmental & Resource Economics
32(1): 113-127.
Hensher, D., N. Shore, et al. (2005). "Households' willingness to pay for water service attributes."
Environmental & Resource Economics 32(4): 509-531.
Hidano, N., T. Kato, et al. (2005). "Benefits of participating in contingent valuation mail surveys and
their effects on respondent behavior: a panel analysis." Ecological Economics 52(1): 63-80.
Kaiser, B. and J. Roumasset (2002). "Valuing Indirect Ecosystem Services: The Case of Tropical
Watersheds." Environment and Developmental Economics 7(4): 701-14.
Laitila, T. (2004). "Economic valuation with stated preference techniques: A manual." Ecological
Economics 50(1-2): 155-156.
Lew, D. K. and D. M. Larson (2005). "Accounting for stochastic shadow values of time in discretechoice recreation demand models." Journal of Environmental Economics and Management 50(2): 341361.
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Loomis, J. B., L. S. Bair, et al. (2002). "Language-related differences in a contingent valuation study:
English versus Spanish." Amer J Agr Econ 84(4): 1091-1102.
Lusk, J. L., M. Jamal, et al. (2005). "A meta-analysis of genetically modified food valuation studies."
Journal of Agricultural and Resource Economics 30(1): 28-44.
Macmillan, D. C., L. Philip, et al. (2002). "Valuing the non-market benefits of wild goose conservation: a
comparison of interview and group-based approaches." Ecological Economics 43(1): 49-59.
McDaniels, T. L., R. Gregory, et al. (2003). "Decision structuring to alleviate embedding in
environmental valuation." Ecological Economics 46(1): 33-46.
Murillas, A. and J. M. Chamorro (2006). "Valuation and management of fishing resources under price
uncertainty." Environmental & Resource Economics 33(1): 39-71.
Nunes, P. A. L. D. and E. Schokkaert (2003). "Identifying the warm glow effect in contingent valuation."
J Environ Econ Manage 45(2): 231-245.
Painter, K. M., et al. (2002). "Using Contingent Valuation to Measure User and Nonuser Benefits: An
Application to Public Transit." Review of Agricultural Economics 24(2): 394-409.
Pouta, E., M. Rekola, et al. (2002). "Willingness to pay in different policy-planning methods: insights
into respondents' decision-making processes." Ecological Economics 40(2): 295-311.
Powe, N. A. and I. J. Bateman (2003). "Ordering effects in nested 'top-down' and 'bottom-up' contingent
valuation designs." Ecol Econ 45(2): 255-270.
Prato, T. (2003). "Multiple-attribute evaluation of ecosystem management for the Missouri River
system." Ecol Econ 45(2): 297-309.
Rege, J. E. O. and J. P. Gibson (2003). "Animal genetic resources and economic development: issues in
relation to economic valuation." Ecological Economics 45(3): 319-330.
Rousu, M. C., W. E. Huffman, et al. (2004). "Estimating the public value of conflicting information: The
case of genetically modified foods." Land Economics 80(1): 125-135.
Sayadi, S., M. C. G. Roa, et al. (2005). "Ranking versus scale rating in conjoint analysis: Evaluating
landscapes in mountainous regions in southeastern Spain." Ecological Economics 55(4): 539-550.
Scarpa, R., A. G. Drucker, et al. (2003). "Valuing genetic resources in peasant economies: the case of
'hairless' creole pigs in Yucatan." Ecological Economics 45(3): 427-443.
Scarpa, R., E. S. K. Ruto, et al. (2003). "Valuing indigenous cattle breeds in Kenya: an empirical
comparison of stated and revealed preference value estimates." Ecological Economics 45(3): 409-426.
Scarpa, R. and M. Thiene (2005). "Destination choice models for rock climbing in the Northeastern Alps:
A latent-class approach based on intensity of a latent-class approach preferences." Land Economics
81(3): 426-444.
Schlapfer, F., A. Roschewitz, et al. (2004). "Validation of stated preferences for public goods: a
comparison of contingent valuation survey response and voting behaviour." Ecological Economics 51(12): 1-16.
Sengupta, S. and D. E. Osgood (2003). "The value of remoteness: a hedonic estimation of ranchette
prices." Ecol Econ 44(1): 91-103.
Svedsater, H. (2003). "Economic valuation of the environment: How citizens make sense of contingent
valuation questions." Land Econ 79(1): 122-135.
Turner, R. K., J. Paavola, et al. (2003). "Valuing nature: lessons learned and future research directions."
Ecological Economics 46(3): 493-510.
Turpie, J. K. (2003). "The existence value of biodiversity in South Africa: how interest, experience,
knowledge, income and perceived level of threat influence local willingness to pay." Ecological
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Economics 46(2): 199-216.
vanBeukering, P. J. H., H. S. J. Cesar, et al. (2003). "Economic valuation of the Leuser National Park on
Sumatra, Indonesia." Ecol Econ 44(1): 43-62.
Velarde, S. J., Y. Malhi, et al. (2005). "Valuing the impacts of climate change on protected areas in
Africa." Ecological Economics 53(1): 21-33.
Vogt, K. A., M. G. Andreu, et al. (2005). "Societal values and economic return added for forest owners
by linking forests to bioenergy production." Journal of Forestry 103(1): 21-27.
Vossler, C. A. and J. Kerkvliet (2003). "A criterion validity test of the contingent valuation method:
comparing hypothetical and actual voting behavior for a public referendum." J Environ Econ Manage
45(3): 631-649.
Whitehead, J. C. (2002). "Incentive incompatibility and starting-point bias in iterative valuation
questions." Land Econ 78(2): 285-297.
Wilson, M. A. and R. B. Howarth (2002). "Discourse-based valuation of ecosystem services: establishing
fair outcomes through group deliberation." Ecological Economics 41(3): 431-443.
Woodward, R. T. and Y. S. Wui (2001). "The economic value of wetland services: a meta-analysis." Ecol
Econ 37(2): 257-270.
Xu, Z. M., G. D. Cheng, et al. (2003). "Applying contingent valuation in China to measure the
total economic value of restoring ecosystem services in Ejina region." Ecol Econ 44(2-3): 345358.
Some Questions to Consider
1. A case recently before the Supreme Court (American Trucking Association v. EPA) raised a
fundamental question: How should environmental standards be set? What criteria should be
used? Who should set them? What role should benefit cost analysis play? What role does it
currently play? How is benefit/cost analysis connected to the economic concept of efficiency?
What are the strengths and weaknesses of this approach? What are the main criticisms of
benefit/cost analysis levied by Kelman? How do his critics rebut these arguments? Which
arguments do you find most compelling. Why?
2. How is benefit/cost analysis connected to the economic concept of efficiency? What are the
strengths and weaknesses of this approach? What do you see as its proper role? Do you agree
with the Arrow et al. point of view? Why??
3. Valuation of environmental amenities is required by the government regulatory agencies for
benefit cost analysis and by the courts to discover how much damage was done by pollution (the
Exxon Valdez oil spill, for example).
a. What values are being measured?
b. What concepts lie behind the measurements?
c. What broad techniques are available to apply these concepts?
4. Contingent valuation is the newest technique to be applied to valuing environmental resources.
How does it work? In what contexts is it used? What are is strengths and limitations?
5. Why is assessing the validity of contingent valuation difficult? How do the concepts of content
validity, construct validity and criterion validity differ?
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6. What kinds of things can undermine content, construct or criterion validity? What strategies
can be invoked to improve the validity of a particular survey?
7. How is hedonic estimation accomplished? What are the basic concepts that lie behind it? What
kinds of data are needed? What kinds of valuation problems can be attacked with hedonic
approaches?
8. How does the travel cost model work? What kinds of circumstances might it be used for?
What seem to be the strengths and weaknesses of this particular approach?
9. What was the NOAA panel? What did it conclude?
10. Now that you have examined the various types of valuation techniques think about how you
would decide what techniques to use. Does the context matter? How?
Session #6 First Two Environmental Valuation Case Studies
Thursday, February 23rd
Student Presentation Format
Session #7 Second Two Environmental Valuation Case Studies
Tuesday, February 27th
Student Presentation Format
Part II. Sources of Unsustainability
Session #8 Sources of Unsustainability: Externalities and Property Rights
Thursday, March 2
Trade and Environnent AND Corporate Sustainability Case Study Proposals Due.
Discussion Format
Assigned Reading:
Yandle, Bruce and Andrew, “The Technologies of Property Rights: Choice Among Alternative
Solutions to Tragedies of the Commons. Ecology Law Quarterly, 2001, Vol. 28 Issue 1, 124168. http://www.colby.edu/economics/faculty/thtieten/ec476/Yandle.pdf
Colin F. Camerer and Ernst Fehr, "When Does Economic Man’’ Dominate Social Behavior?" Science
Vol 311, (6 January 2006): 47-52.
http://www.colby.edu/economics/faculty/thtieten/ec476/Fehr.pdf
A site which describes the work on user managed common property regimes see:
http://www.ifpri.cgiar.org/reports/0694RPT/0694B.HTM
Some Questions to Consider:
1. Property rights are said to consist of a bundle of entitlements. In a very useful classification Elinor
Ostrom and her colleague Edella Schlager have identified the primary entitlements as: Access,
Withdrawal, Management (defined by them as the right to regulate internal use patterns and transform
the resource by making improvements), Exclusion and Alienation (right to transfer). Can you think of
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examples of resources that may have some or all of these characteristics? How does the presence or
absence of these characteristics relate to the efficiency of use? How can property rights be a source of
environmental problems? What are some examples of ill-defined property rights?
2. Five Property Right Regimes have been identified: free-access common pool, common-property, state
(or public) property and regulated property. Hardin’s classic essay deals with a circumstance in which the
normal behavior of normal individuals operating in a common property environment inevitably destroys
the resource. What, in his estimation, is the source of this “tragedy?” What would in his estimation be the
solution? Why?
3. In the classic literature Pigou had suggested that one major source of environmental problems was
externalities. And furthermore, he suggested, the solution was to internalize the externalities by imposing
a tax on the offending behavior. What would be some examples were externalities are a source of
environmental problems? Are externalities rare or relatively common?
5. Coase suggests that Pigou’s view is too simplistic. What is the nature of his argument? What are the
implications of his argument?
6. Yandle argues that the choice or property right regimes is in part determined by technologies. (In their
definition of technologies they not only include the traditional sense of a manner or process for
accomplishing something, but also the institutions that give rise to these technologies (specifically the
statutory and common law systems). In their story the system evolves toward the most efficient property
rights regime given the technological constraints. What are some examples of this evolution? They also
note that the evolution can be “path-dependent”? What does that mean? When might it occur?
7. This story is sympathetic to the evolution of property right approaches. Yet these approaches have also
generated significant controversy. Why do you suppose that it is so controversial? Does the story leave
something out?
8. The fact that some commons have experienced collective action responses while others haven't raises
the question of why? Can we say anything about the human behavior that underlies these differences in
outcomes. The Fehr article discusses this issue in some detail. What are the factors that matter? Why do
they matter? What are the implications for sustainability?
Session #9 Individual Research Conferences
Tuesday, March 7th
During the class period we will schedule individual appointments to go over progress on the various
research projects, including, but not limited to the trade and environment and corporate sustainability
projects.
Sessions #10 Sources of Unsustainability: Trade and the Environment
Thursday, March 9
Discussion Format
Assigned Reading:
Copeland, Brian R. And M. Scott Taylor, "Trade, Growth, and the Environment" Journal of Economic
Literature Vol. XLII (March 2004): 7–71, Read 14-15, 25-29 and 49-end. We'll read the "pollution
havens" section later. http://www.colby.edu/economics/faculty/thtieten/ec476/CopelandTaylor.pdf
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Michael E. Porter and Claas van der Linde, “Toward a new Conception of the EnvironmentCompetitiveness Relationship” Michael E. Porter; Claas van der Linde The Journal of
Economic Perspectives, Vol. 9, No. 4. (Autumn, 1995), pp. 97-118.
Stable URL: http://links.jstor.org/sici?sici=08953309%28199523%299%3A4%3C97%3ATANCOT%3E2.0.CO%3B2-Z
Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm? (in
Symposia: Might Environmental Regulation Promote Growth?) Karen Palmer; Wallace E.
Oates; Paul R. Portney The Journal of Economic Perspectives, Vol. 9, No. 4. (Autumn, 1995),
pp. 119-132.
Stable URL: http://links.jstor.org/sici?sici=08953309%28199523%299%3A4%3C119%3ATESTBO%3E2.0.CO%3B2-B
Some Questions to Consider
1. Basic economic theory suggests that due to the “law of comparative advantage” trade makes both
trading parties better off. What is the “law of comparative advantage” and why does it suggest that both
parties will be made better off? What is the economic logic that lies behind the presumption that trade is
good for the participating countries? What preconditions are necessary for this logic to hold?
3. Recently the clashes over trade and the environment have intensified. Why? What has been the basis
for the attacks on free trade coming from the environmental community? What are the specific issues that
have precipitated these conflicts? If trade makes both parties better off, what is wrong with it? Do the
conflicts simply reflect ignorance about basic economic principles? Or are there legitimate reasons for
concern? If so, what are they? Copeland and Taylor discussion the scale, technique and composition
effects. What are these? Why do they matter (see pp. 14-15).
4. Copeland and Taylor also conclude that the effect of trade on the environment depends on the
pollution control policy instruments in play. What are their conclusions? What is the source of these
results?
3. Conventional wisdom suggests that subjecting firms to more environmental regulation raises their
costs and makes them less competitive. In what has now become known as the “Porter Hypothesis”,
Michael Porter suggests that subjecting firms to environmental regulation can actually increase their
competitiveness. What is the logic behind this supposition? What are the implications of his analysis
assuming he is right?
4. If regulations do raise costs, we could expect firms and consumers to react in various ways. In an
attempt to seek out less stringent regulations firms might locate their production facilities in countries
with lax regulations. (This is known as the “pollution havens” hypothesis.) Consumers might switch to
lower cost goods imported from countries with lax environmental regulations. What is the evidence for
these two reactions?
5. One suggested approach for dealing with problems caused by international trade involves the use of
countervailing tariffs on the products coming from countries with lower environmental standards than the
importing country. Would this represent a move toward efficiency or not? Why or why not?
6. The WTO draws a distinction between “process pollution” (associated with the process of production)
and “product pollution” (associated with the product itself such as pesticides). It tends to suggest that
countries have the right to regulate trade involving product pollution, but not trade involving process
pollution. Do you agree? Why or why not?
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7. The US Marine Mammal Protection Act (P.L. 92-522, 86 Stat. 1027), enacted in 1972, requires the US
government to take steps to curtail the incidental killing of marine mammals by commercial fishermen,
both domestic and foreign. Specifically, the MMPA instructs the Secretary of Commerce to prohibit the
importation of tuna products from countries whose dolphin kill ratio (dolphin deaths per net dropped)
exceeds that of US fisherman beyond a certain margin. In 1988, believing that dolphins in the Eastern
Tropical Pacific Ocean were being killed by foreign tuna fisherman in violation of the law, Earth Island
Institute, a California-based environmental group, sued to enforce the congressional mandate (Earth
Island v. Mosbacher, 929 F.2d 1449, 1991). A federal judge agreed that the government was failing to
uphold the law and ordered Mexican tuna imports banned from the United States.
Mexico argued that its right to sell tuna in the United States had been violated and asked for a GATT
dispute settlement panel to adjudicate the matter. How should GATT have ruled? Why? Is this a
legitimate and efficient way to protect tuna or an inefficient infringement on international trade?
Session #11 First Two Trade and Environment Case Studies
Tuesday, March 14
Student Presentation Format
Session #12 Remaining Two Trade and Environment Case Studies
Thursday, March 16th
Student Presentation Format
Session #13 The Pollution Havens Hypothesis
Tuesday, March 21st
Assigned Reading:
Copeland, Brian R. And M. Scott Taylor , "Trade, Growth, and the Environment" Journal of Economic
Literature Vol. XLII (March 2004): 7–71, Read 29-48 for a survey of the pollution haven literature.
http://www.colby.edu/economics/faculty/thtieten/ec476/CopelandTaylor.pdf
Guest lecture by Andreas Waldkirch (Colby Dept of Economics), "Pollution Haven or Hythe? New
Evidence from Mexico" http://www.colby.edu/economics/faculty/thtieten/ec476/mexpollution.pdf
Abstract:
Foreign direct investment (FDI) flows into developing countries have been increasing dramatically over
the past decade. At the same time, there has been widespread concern that lax environmental standards
are in part responsible for this surge. This paper revisits the question of the existence of pollution havens
by examining the extent to which the pollution intensity of production helps explain FDI\ in Mexico. By
focusing on pollution intensities, which are directly related to emission regulations, we avoid the problem
of unobservable pollution taxes and allow for substitution between capital and pollution. Examining
several different pollutants, we find a positive correlation between FDI\ and pollution that is both
statistically and economically significant in the case of the highly regulated sulfur dioxide emissions.
Industries for which the estimated relationship between FDI and pollution is positive receive as much as
40 percent of total FDI\ and account for as much as 30 percent of manufacturing output. The results are
robust to a number of specification checks on included variables, functional form and the scope of the
sample. Although our results suggest that environmental considerations matter for firms' investment
decisions, we confirm the importance of Mexico's comparative advantage in labor-intensive production
processes, consistent with the previous literature.
Part III. Strategies for Managing the Transition to Sustainable Development
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Session #14 Natural Capitalism: Can Profit-Maximization Be Compatible with Sustainable
Development?
Thursday, March 23
Discussion Format
Assigned Reading:
Lovins, A., L. H. Lovins, et al. (1999). "A Road Map for Natural Capitalism." Harvard Business
Review: 145-158. http://www.colby.edu/economics/faculty/thtieten/ec476/Lovins-Hawken.pdf
Geoffrey Heal, Paul Garret Professor of Public Policy and Corporate Responsibility
Columbia Business School, "Corporate Social Responsibility: An Economic and Financial
Framework" http://www.colby.edu/economics/faculty/thtieten/ec476/Heal.pdf
Optional Reading
Schaltegger, S. and R. Burritt (2005). Corporate Sustainability. The International Yearbook of
Environmental and Resoruce Economics 2005'2006. H. Folmer and T. Tietenberg. Cheltenham,
UK, Edward Elgar: 185-222.
Hay, B. L., R. N. Stavins, et al., Eds. (2005). Environmental Protection and the Social
Responsibility of Firms: Perspectives form Law, Economics, and Business. Washington, DC,
Resources for the Future, Inc.
David Porteous (2005) "Private Development Banking: Managing the Tensions", a paper
presented at The Business of Reaching the Global Poor Conference, Harvard Business School,
Cambridge, MA, December 2005. On-line version at:
http://www.colby.edu/economics/faculty/thtieten/ec476/Porteous.PDF
Some potentially helpful web sites:
http://www.iisd.org/business/
http://www.wri.org/business/
http://www.roberts.mckenna.edu/PSI/ReportList3.asp
Questions
1. The traditional economic story suggests that capitalism in general and the profit motive in particular
are incompatible with either efficiency or sustainability. What is that traditional economics story? On
what assumptions is it based?
2. One of the premises of natural capitalism is that the modern capitalist firm can “do good and do well”
at the same time. In other words it can make a profit while being socially responsible. How is that
possible? Is the conventional wisdom wrong? If so, what is wrong with it? If not, is the natural
capitalism story flawed? If so, how?
3. Geoff Heal's article tries to provide a framework for thinking about the role of corporate social
responsibility (which includes, but is not limited to, environmental concerns). What does he see as the
driving forces? How convincing are his case studies examples? Do the case studies tell us anything
about when environmentally responsible firms might also be profitable? Is this a general phenomenon or
limited to special circumstances? If the answer is special circumstances, what are they?
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4. Could it be that the cases of firms that have found new profit opportunities from acting in an
environmentally responsible way are merely picking the low hanging fruit and that once these are gone
the conventional wisdom will be back? Will only “first movers” benefit?
5. Some firms, such as Interface, have chosen a rather different business model to move toward
sustainability - the use of leased services rather than product sales. How does this work? Why is it a
move toward sustainability? What is in it for the firm? Can "leased services" companies compete a=gains
"product sales" companies? Why or why not?
6. Some of these transitions, such as the move toward organic agriculture, depend on good consumer
information (reliable organic labeling) and on a higher product price. This example raises two questions:
(1) in this case the consumer's health may be affected by the pesticides so moving toward sustainability is
in some sense self- interest. How well dos this work when the outcomes are altruistic (such as buying
"green tags to reduce greenhouse gases)? and (2) Does this only work for products that appeal to
consumers who have sufficient disposable income?
Session #15 First Two Corporate Sustainability Case Studies
Tuesday, April 4th
Student Presentation Format
Session #16 Two Remaining Corporate Sustainability Case Studies
Thursday, April 6th
Student Presentation Format
Session #17 Efficiency Standards for Automobiles: What is the Evidence?
Tuesday, April 11
Discussion Format
Assigned Reading:
Greene, D. L. (1998). "Why CAFE Worked." Energy Policy 26(8): 595-613.
http://www.colby.edu/economics/faculty/thtieten/ec476/CAFE.pdf
Austin, d. and T. Dinan (2005) "Clearing the Air: The Costs and Consequences of Higher CAFE
Standards and Increased Gasoline Taxes" Journal of Environmental Economics and
Management: 562-582 http://www.colby.edu/economics/faculty/thtieten/ec476/Austin.pdf
Questions
1. What are the CAFE standards? What was their objective? What do they attempt to control? How do
they attempt to control it?
2. How well have the standards accomplished their objectives? Does your answer depend on the time
period being investigated? Why? What evidence would you consider to answer this question? What are
the complications in getting a definitive answer?
3. This is a traditional “command-and-control” regulatory approach. “Command-and-control” approaches
are traditionally condemned in the economics literature. In particular the model would suggest that the
government-imposed rules would simply set in motion a new set of consumer and manufacturer
behaviors that would maximize welfare, given the regulatory constraint.. Is there any evidence of that
here? What form does that evidence take? Is there any evidence of “rent-seeking” behavior discussed by
Yandle earlier?
18
4. One argument is that CAFE standards would not have worked as well as a tax on gasoline. What is the
argument that a gas tax would have worked better?
5. What is the “rebound effect”? How does it affect the analysis of the effectiveness of CAFE Standards?
6. The question of whether CAFE standards worked or not depends on “relative to what”. What is the
benchmark against which it is measured? On the one hand it is compared to an efficient policy. One the
other hand it is compared to what would have happened in the absence of the policy. Is one benchmark
better than the other? Why?
7. On argument against the CAFE standards is that it has created a bias against the domestic industry and
for foreign producers. What is the nature of that argument? What evidence does Greene present?
8. Fuel efficiency seems like a concept that auto purchasers should be capable of valuing. Can any case
be made for transferring this decision to the government? Greene seems to feel the problem is one of a
lack of information, uncertainty (collective risk aversion) and a pollution externality (particularly global
warming) rather than an externality associated with potential supply disruptions of imported oil. Is that
fact that imported oil increases the risk of a supply disruption an externality? Is the effect likely to be
large?
Additional Sources:
Agras, J. and D. Chapman (1999). "The Kyoto Protocol, Cafe Standards, and Gasoline Taxes."
Contemporary Economic policy 17(3): 296-308.
Comeau, J. and D. Chapman (2002). "Gasoline taxes, CAFE and the Kyoto Protocol." Ecological
Economics 40(3): 317-320.
Dowlatabadi, H., L. B. Lave, et al. (1996). "A free lunch at higher CAFE? A review of economic,
environmental and social benefits." Energy Policy 24(3): 253-264.
Grennfelt, P. and O. Hov (2005). "Regional Air Pollution at a Turning Point." Ambio 34(1): 2-10.
Kleit, A. N. (2002). "CAFE Changes, by the Numbers." Regulation 25(3): 32-35.
Krupnick, A. J., M. A. Walls, et al. (1993). "Global Warming and Urban Smog: Cost-Effectiveness of
CAFE Standards and Alternative Fuels." Energy Journal 14(4): 75-97.
Mendelsohn, R. and K. Sipes (2002). "Gasoline taxes, CAFE and the Kyoto Protocol - Reply."
Ecological Economics 40(3): 321-322.
Teotia, A., A. Vyas, et al. (1999). "CAFE compliance by light trucks: economic impacts of clean diesel
engine." Energy Policy 27(15): 889-900.
Session #18 Property Right Strategies-I: Fisheries
Thursday, April 13th
Faculty Presentation Format
Assigned Reading:
R. Quentin Grafton, “Experiences with Individual Transferable Quotas: An Overview” The Canadian
Journal of Economics, Vol. 29, Special Issue: Part 1. (Apr., 1996): pp. S135-S138. Stable URL:
http://links.jstor.org/sici?sici=00084085%28199604%2929%3CS135%3AEWITQA%3E2.0.CO%3B2-O
Some Questions to Consider
19
1. Lots of evidence suggests that many fisheries around the world are overfished. Why? What are the
economic and environmental consequences of this overfishing?
2. Several decades ago the government asserted jurisdiction over waters within 200 miles of our coast.
What affect did this have on the overfishing problem?
3. One approach to controlling fishing involves the imposition of a total allowable catch limit. Once this
limit is reached, fishing activity is stopped for the season. Does this provide an efficient resolution to the
overfishing problem?
4. One approach to controlling the problem involves the imposition of individual transferable quotas.
How does it work? What are its economic and environmental properties?
5. Afew years ago Congress placed a moratorium on new ITQ systems. Why would they do that? What
are the sources of controversy associated with ITQs?
Session #19 Property Right Strategies-II: Tradable Permits for Pollution Control
Tuesday, April 18th
Faculty Presentation Format
Assigned Reading
Tom Tietenberg "Introduction" Emissions Trading; Principles and Practice (Washington, DC: Resources
for the Future, Inc, 2006) http://www.colby.edu/economics/faculty/thtieten/ec476/TT_Ch1.doc
International Experiences With Economic Incentives For Protecting The Environment (Washington:
EPA-236-R-04-001) November 2004: 27-30.
http://www.colby.edu/economics/faculty/thtieten/ec476/Intern_Incent.pdf
Some Questions to Consider
1. What is the economic theory associated with the use of tradable permits?
2. How do tradable permits work? What have been the economic and environmental consequences?
3. How have tradable permit systems been used to control pollution?
4. What have we learned from the empirical work and the implementation experience about when they
work and when they don’t?
5. Is it immoral to buy the right to pollute? Why or why not?
Session #20 Price-Based Strategies for Pollution Control
Monday, April 20th
Discussion Format
Assigned Reading
20
Thomas A. Barthold, “Issues in the Design of Environmental Excise Taxes” The Journal of Economic
Perspectives, Vol. 8, No. 1. (Winter, 1994), pp. 133-151.
Stable URL: http://links.jstor.org/sici?sici=0895-3309(199424)8:1<133:IITDOE>2.0.CO;2-4
Foreign Experience with Economic Incentives for Protecting the Environment: 7-22
http://www.colby.edu/economics/faculty/thtieten/ec476/Intern_Incent.pdf
Domestic Experience with Economic Incentives for Protecting the Environment by Robert Anderson ,
Pollution Charges, Fees and Taxes
Optional Reading
Barde, J.-P. and O. Honkatukia (2004). Environmentally Harmful Subsidies. The International Yearbook
of Environmental and Resource Economics 2004/2005. T. Tietenberg and H. Folmer. Cheltenham, UK,
Edward Elgar: 254-288.
For a web site devoted to the issue of harmful subsides see
http://earthtrack.net/earthtrack/index.asp?page_id-111&catid=66
Some Questions to Consider
1. What are the chief differences between controlling pollution by environmental taxes and by tradable
permits?
2. The reading for today on “Foreign Experience” suggested that pricing is used a lot in other countries.
What are some examples of circumstances where pricing is used?
3. Suppose we were using environmental taxation to control pollution. How can efficient taxes be
determined? What are the information requirements? Suppose that monitoring emissions is difficult
or impossible. What can be done? Is the taxation of inputs a good alternative? Why or why not?
4. Environmental taxation raises the possibility that revenue can be raised. Is the tax rate that raises the
most revenue the same tax rate that produces efficient incentives? What role does the distribution of
that revenue play in the desirability of environmental taxation?
5. Sweden’s NOx tax is particularly interesting because it is rather different. What are its
characteristics? Is this a good idea or a bad idea? Why?
6. For the sale of a resource such as timber, water, minerals or energy will market prices normally be
efficient or not? Why or why not? Can you identify some specific examples?
Sessions #21 Environmental Pricing and Taxation: Solid Waste
Tuesday, April 25
Discussion Format
Assigned Reading
Kinnaman, T. C. and D. Fullerton (2000). The Economics of Residential Solid Waste Management. The
International Yearbook of Environmental and Resource Economics 2000/2001. T. Tietenberg and H.
Folmer. Cheltenham, UK, Edward Elgar: 100-147.
21
The United States Experience with Economic Incentives for Protecting the Environment by Robert
Anderson Chapter 5: Deposit-Refund Sustems
Some Questions to Consider
1. Can the market be relied upon to provide the appropriate efficient choices among the solid waste
disposal options? Why or why not? If there are sources of market failure, what are they?
2. What should the government role be in solid waste disposal? Why? Should solid waste disposal be a
federal, state or local concern? Why? Can we formulate an economics theory to explain the appropriate
level of government to solve particular environment problems? What would be the main elements of that
theory? How does solid waste fit into this theory?
3. A key aspect of the transition to recycling involves the behavior of the markets for recycled materials.
These markets seem more unstable than other markets. Can economic analysis suggest any reasons why
that may be so? Suppose that we wanted to reduce this instability. Is this a self-correcting problem or
does the government have a role? Why? What kind of role?
4. Several policy instruments exist to promote efficiency in solid waste disposal. These include:
Mandatory recycling content laws
Taxes on virgin material
Taxes on packaging
Disposal bans on designated recyclable materials
Product bans
Plastics coding
Volume pricing of disposal
Procurement policies
What can economic analysis contribute to our understanding of the consequences of various policy
choices?
5. In terms of their economic incentive effects how do deposit refund systems differ from volume pricing
schemes?
6. The extended producer responsibility approach that began in Germany (and Japan), but has now spread
to the entire EU, system takes a very different approach. It requires manufactures to take back packaging
(and recently used products). Can economic analysis help us understand the how the consequences of this
system might differ from the consequences of a system based purely on pricing?
7. What are performance bonds? How do they work? Where are they used? What incentive effects do
they have?
Session #22 Land Use Control
Monday, April 27
Discussion Format
Assigned Reading
Dominic P. Parker, "Conservation Easements: A Closer Look At Federal Tax Policy" PERC Policy
Series Issue Number Ps-34 (October 2005)
http://www.colby.edu/economics/faculty/thtieten/ec476/Easements.pdf
Additional Reading
22
Fleming, W., et al. “Transfer of Development Rights As an Option for Land Preservation in a Historic
New Mexico Community: La Cienega Valley, Santa Fe County, New Mexico”. Natural Resource
Journal., Spring 2001, 41(2), pp. 427–43.
Johnson, M. P. "Environmental Impacts of Urban Sprawl: A Survey of the Literature and Proposed
Research Agenda". Environment and Planning A, April 2001, 33(4), pp. 717–35.
Some Questions to Consider
1. The general proposition is that the analysis of a particular commodity is affected by its
characteristics. What are the characteristics of land that differentiate it from other commodities? How
are the prices of land determined relative to uses?
2.
One of the hot topics in the environmental field is “smart growth”. As the name implies, this
approach suggests that the traditional approaches lead to “dumb growth”. In particular the movement
suggests that traditional approaches have created a very inefficient pattern of urban sprawl. Does the
market present an efficient process for allocating land among the various land uses? Why or why not?
What role might transportation policy play in your answer?
3.
What should the role of the government be in controlling land use? What level of government
should be involved (federal, state, local)? What instruments does the government have at its disposal? ?
How do they work? Can we differentiate among these policy instruments in terms of their economic
effects? In what sorts of circumstances might one instrument be preferred?
4.
What is the “Takings Issue”? And how does it affect policy to control land use? Should
landowners be compensated for regulations that lower their value? Why or why not?
5.
Does the private sector have a role? How about organizations such as Nature Conservancy? Can
they replace government?
6.
In addition to organizations that perform a conservation role (such as trusts) it is possible for
private individuals to get involved. One device for implementing a private solution is a conservation
easement. How does it work? Why would any landowner want a conservation easement? What are the
advantages and disadvantages?.
7.
Another hot area in land use control involves the use of land swaps. In these arrangements the
government (usually the federal government) swaps a piece of land it owns for a piece of land a private
holder owns that it wants. What might be the advantages and disadvantages of land swaps?
8.
A number of subsidies have been designed to enhance the environment. What might be the
advantages or disadvantages of using subsidies in this context?
Session #23 Environmental Pricing and Taxation: Liability and Penalty Structures
Monday, May 2
Discussion Format
Assigned Reading
The United States Experience with Economic Incentives for Protecting the Environment by Robert
Anderson Chapter 8: Liability Approaches
23
Some Questions to Consider
1. How does liability law work to provide efficient incentives? What kinds of environmental problems
has it been applied to?
2. Two liability doctrines are strict liability and negligence. How do they differ from each other? Can
anything be said about the efficiency properties of one verses the other?
3. The joint and several liability doctrine is used in the Superfund program. How does it work? How
efficient is it?
4. Liability law is frequently complemented by criminal law. Can an efficiency case be made for adding
criminal law to the policy mix?
Part III. Student Presentations of Project Reports
Sessions #24 First Student Session
Thursday, May 4
Student Presentation Format
Session #25 Second Student Session
Tuesday, May 9th
Student Presentation Format
Session #26 Wrap Up and Course Evaluation
Possible Conceptual Paper Topics
The topics listed here are not designed to limit your possibilities, but rather to indicate the range of
possible topics. You can choose from this list or come up with a topic on your own. Each topic should be
addressed by only one seminar participant.
*******
Mathematical Models of Sustainable Development: What Can We Learn from Their Evolution?
Modifying National Income Accounts to Account for Resource Degradation: What is the State of the
Art?
Modifying National Income Accounts to Account for Environmental Degradation: What is the State of
the Art?
Measuring Sustainable Development Using Noneconomic Approaches: What is the State of the Art?
The “Tragedy of the Commons” Revisited: What Have We Learned?
The Environmental Kuznets Curve: A Solution to the Poverty/Environment Connection?
Population as a Source of Environmental Degradation: What is the Evidence?
Co-Management as a Strategy for Governing Common-pool Resources: What is the Evidence?
Micro Lending: How Effective Is It?
24
Investing in Women’s Education: What is the Payoff?
Transferable Development Rights: Effective Means of Protecting Land from Development?
The Takings Issue: Should Landowners Who Suffer Diminution of Value from Environmental
Regulations Get Compensation?
Pricing Solid Waste Disposal: What is the Evidence?
Pricing Water: What Have We Learned?
Pricing Transportation: Getting a Handle on Mobile Source Pollution.
The Economics of Sustainable Agriculture
The Economics of Marine Reserves
Mitigation Banking and the Protection of Wetlands
Industrial Ecology: What are the Lessons for Economics?
The Role for Discounting in Project Selection for Controlling Global Warming
The “Pollution Havens” Hypothesis: How Does It Stand Up?
The “Porter Hypothesis”: Is Environmental Regulation Good for the Economy?
Does the Regulation of International Trade to Protect Endangered Species Do More Harm than Good?
The Case of CITIES.
Trade and the Environment: the Case of NAFTA
The Costs of Controlling Climate Change: What Do the Models Show?
International Environmental Agreements: What Can Game Theory Models Tell Us?
Environmental Capitalism: Can Acting Sustainably be Profitable for Firms?
Environmental Taxation and the “Double Dividend”
Subsidies and the Environment (Choose a particular subsidy such as Energy, Agriculture, Transport, etc)
Electricity Deregulation: What have been the Economic and Environmental Impacts?
Strategies for Protecting Endangered Species: Approaches and Results
Master Schedule for EC 476
February 14th
Environmental Valuation Case Study Proposal Due
February 16th
Individual Research Conferences During Normal Class time
February 23rd
First Two Oral Presentations on Valuation Case Studies (Executive Summary Due in
one week)
February 27th
Second Two Oral Presentations on Valuation Case Studies (Executive Summary Due
in one week)
March 2nd
Trade and Environment and Corporate Sustainability Case Study Proposals Due
March 6th
Concept/Campus Sustainability Proposal Due
25
March 7th
Individual Research Conferences During Normal Class time
March 14th
First Two Trade and Environment Case Study Oral Presentations (Executive Summary
Due in one week)
March 16h
First Two Trade and Environment Case Study Oral Presentations (Executive Summary
Due in one week)
March 24th
Internet Project Proposal Due
April 4th
First Two Corporate Sustainability Case Studies (Executive Summary Due in one
week)
April 6th
Second Two Corporate Sustainability Case Studies (Executive Summary Due in one
week)
April 21st
Optional First draft of Concept/Campus Sustainability Due
May 4th
First Two Concept/Campus Sustainability Oral Presentations
May 9th
Second Two Concept/Campus Sustainability Oral Presentations
May 12th
Final version of Concept/Campus Sustainability Due
Internet Project Executive Summary Due