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PAI 777The Economics of Environmental PolicySpring 2021David Popp426 Eggers Halloffice ph: [email protected] Hours (via Zoom):Monday 10:00-11:30Tuesday 10:00-noonor by appointment***** PLEASE NOTE THAT ALL PLANS FOR THE COURSE ARE TENTATIVE AND MAYCHANAGE AS CONDITIONS WARRANT *****Course Description: This course provides an introduction into the principles of environmentaleconomics, with a focus on policy applications. The principal problem in any economics courseis how to best allocate scarce resources. This holds true for environmental economics as well.However, environmental resources differ from other goods that economists study in that there isusually no market for them. Thus, government policies are needed to maintain and improveenvironmental quality.We begin by examining how economic incentives lead to environmental problems, and discussingvarious policies that address these problems. Because economic analysis requires informationon both costs and benefits, we next discuss methods for valuing the benefits of environmentalamenities. The course continues with applications to various policy issues, including energyresources and the environment in developing countries. We conclude with a discussion of thepolitical economy of environmental issues.Goals of the course: The main objective of this course is for you to learn how to think criticallyabout issues relating to environmental economics. Upon completion of this course, you should beable to explain the economic rationale for government involvement in environmental issues, andbe able to discuss what the impact of such involvement will be. In particular, it is hoped that theclass will provide you with a better understanding of current issues relating to the environment.Accomplishing these goals requires not only a mastery of the theory of environmental economics,but also an ability to apply these theories to real world issues. As such, much of the content ofthe course will apply the basic tools of environmental economics to current event issues.Learning to apply economics to the real world takes practice. The assignments for this class aredesigned to get you thinking and writing using economic analysis. In addition, classroomdiscussion plays an important role in developing the skills to apply economic theory to the realworld. Active participation in discussions, both in class and via e-mail (discussed below) is vitalto success in this course. Don’t be afraid to participate because you feel what you have to sayisn’t important or may not be correct. Many of the things we will discuss in this class have no rightanswers. Your opinions matter! In addition to in-class discussion, I will occasionally use the listto post follow-up questions to topics discussed in class. Please use this as another opportunityto express your opinions.Prerequisites: The prerequisite for this course is PAI 723, Economics for Public Decisions, oran equivalent course in microeconomics. If you have any questions about whether or not youhave taken an appropriate course, please see me as soon as possible.

Environmental Economicsp. 2 of 19Class Home Page: The home page for this class is: can also connect to the home page through my personal home page, which can be found at:https://dcpopp.expressions.syr.eduThe web site includes information about assignments and links to other useful economic sites.These links may be particularly useful as you work on your research paper.E-mail: All students in the class are required to have an e-mail account and to check e-mailregularly. An e-mail discussion list will be set up for the class, to which you should subscribe.Information on how to subscribe is included below. Participation in a class e-mail discussion listmakes up part of your class participation grade. In addition, I will occasionally makeannouncements about assignments and class material via the discussion list. Not subscribing isnot an appropriate excuse for missing these announcements.E-mail discussion group: I have set up an e-mail discussion group for the class. All studentsare expected to subscribe to the mailing list. You may use this list for any class related activities,such as asking questions, continuing discussions from class, and instigating new discussions. Iwill use the list to keep you informed about assignments, answer questions, and instigatediscussion. When messages are sent to the list, all students subscribed to the list will get themessage.I have already subscribed students who pre-registered for the course. If you have not yet beensubscribed, please send an e-mail to [email protected] with the following message:SUB EnviEcon Jan SmithNote that this is all that need be in the body of the message, and that it must be typed in exactlyas written, except, of course, that you should replace your name for Jan Smith. When you signup, you will receive a message with detailed instructions for participating in the mailing list. Thismessage will ask that you reply, so as to confirm that you intended to join the list. It isimportant that you remember to reply, or else you will not be added to the list!A couple of technical notes: E-mails sent to the list are sent to EVERYONE who subscribes tothe list. If you want to send a personal e-mail to a specific class member (or to me), use their email address, not the list's address. The list is a good place to ask questions about class materials,because everyone can see the answer. It is not the way to let me know that you are going tomiss class on Monday. For that you should send an e-mail to me personally. Also, I amconsidered the owner of this list. If you experience any problems, please e-mail me directly. Mye-mail address is [email protected]

Environmental Economicsp. 3 of 19Reading: One book i required for this class:Environmental Economics: An Introduction, 7th edition, by Barry C. Field & Martha K. FieldA second book is optional:Economics of the Environment: Selected Readings, seventh edition, edited by Robert N.Stavins.Both texts are available at the Orange Bookstore. The Stavins book is a compilation of readingsfrom various journals, many of which appear on the syllabus. I include links to the original journalarticles on the class web site, so purchasing this book is not required. However, you are welcometo purchase it if you find having the articles convenient.Older editions of either text are fine. Note that older editions of the Stavins text may not have allthe articles used in class that appear in the latest edition.In addition to the text, there are several additional articles intended to supplement the text. Theclass web site includes links to these articles. When possible, direct links to the articles areprovided. The remainder are available through the course reserve system at the SyracuseUniversity library – a link to Blackboard, where these items can be found, is included for thesearticles.These supplemental readings have two purposes: to expose you to influential work inenvironmental economics and to highlight the relevance of environmental economics to currentevents. The first goal is accomplished through journal articles written by professional economists.At times, these articles may get quite technical. When that occurs, you are encouraged to focuson the main arguments and conclusions of the paper, and to simply browse through the technicalparts. The second goal is met be several shorter articles taken from current events publications.Articles in the Review of Environmental Economics and Policy and Journal of EconomicPerspectives are particularly useful, as they fall under both categories. These articles usuallyprovide summaries of work done by professional economists on current events issues. You mayalso find it helpful to consult other articles in these journals for your own research. In addition, Iwould be happy to help any student find the appropriate readings to fit their interests.In addition to required readings, the syllabus also includes optional articles. These are markedwith an asterisk (*). They are not included on the on-line reading list, but should be available atthe library, usually in electronic form. Optional articles provide more detail on selected topics,and may be helpful for your research papers. In particular, Ph.D. students should find the optionalarticles a useful way to increase their exposure to the economic literature in the field.

Environmental Economicsp. 4 of 19Grading: Masters’ Students: Your grade in this course will be based on four take-home quizzes(16.5% each), and a policy brief (34%). The first three take home quizzes will be handed out inclass. Both the dates they are handed out and due are stated on the syllabus. These quizzeswill focus on applications of the material discussed in class, and will be in the form of shortproblems or essay questions. The final take-home quiz will be available as a take-home quizduring the final exam period.Ph.D. Students: Ph.D. students may choose to complete the assignments for masters’ studentslisted above, or to instead complete the following assignments designed to get you thinking aboutthe research process. Ph.D. students should come talk to me as soon as possible to discusswhich option is appropriate for them. Students choosing the Ph.D. option will not take the exams.Instead, these Ph.D. students will complete a referee report of a working paper in the field. Thiswill be due by the end of the final exam period, on Friday, May 21. In addition, the requirementfor the research paper will be different, and will be divided into two parts: First, PhD students will complete a critical literature review (approximately 10 pages)on a topic of their interest related to the course. Students should meet with me todiscuss both possible topics and to generate a list of relevant papers. The goal of theliterature review is to get you thinking about potential research topics. This literaturereview is due on Wednesday, March 24.Second, the final paper for Ph.D. students will be a research proposal. That is, inaddition to identifying an interesting question, you should think about how you wouldgo about answering the question. Note that, given the time constraints of a onesemester course, it is not necessary that you carry out the research. This will be dueat our last class meeting on Wednesday, May 12.The grading for Ph.D. students choosing this option will be: the referee report (25%), the literaturereview (25%) and the research proposal (50%)Finally, note that if you miss a class, it is your responsibility to find out if you missed anyassignments or handouts. Not being present when an assignment was given out is not anacceptable excuse for missed or late work!Policy Brief: The major assignment for this class is to prepare a policy brief on a current issue inenvironmental policy. The goal of the policy brief is to help a lay audience understand the issuessurrounding current debates in environmental policy. The policy brief is a semester-longassignment and will be due on the last day of class. It should be roughly 10 and 15 pages inlength, single-spaced (about 5,000 to 7,500 words). You may work in groups of up to threestudents on each brief.I will hand out more details on the policy brief, including potential policy topics, later in thesemester. The policy brief will apply the materials of the course to a public policy question. Itshould include a summary of the relevant theory that applies to your topic, and apply the theoryto the problem to reach a conclusion. The policy brief will be due at our last class meeting onWednesday, May 12. To check each group’s progress, a 1-2 page outline of each policy briefwill be due on Wednesday, April 7.

Environmental Economicsp. 5 of 19Academic Honesty: Syracuse University’s Academic Integrity Policy reflects the high value thatwe, as a university community, place on honesty in academic work. The policy defines ourexpectations for academic honesty and holds students accountable for the integrity of all workthey submit. Students should understand that it is their responsibility to learn about coursespecific expectations, as well as about university-wide academic integrity expectations. The policygoverns appropriate citation and use of sources, the integrity of work submitted in exams andassignments, and the veracity of signatures on attendance sheets and other verification ofparticipation in class activities. The policy also prohibits students from submitting the same workin more than one class without receiving written authorization in advance from both instructors.Under the policy, students found in violation are subject to grade sanctions determined by thecourse instructor and non-grade sanctions determined by the School or College where the courseis offered as described in the Violation and Sanction Classification Rubric. SU students arerequired to read an online summary of the University’s academic integrity expectations andprovide an electronic signature agreeing to abide by them twice a year during pre-term check-inon MySlice. For more information about the policy, see The Violation and Sanction Classification Rubric establishes recommendedguidelines for the determination of grade penalties by faculty and instructors, while also givingthem discretion to select the grade penalty they believe most suitable, including course failure,regardless of violation level. Any established violation in this course may result in course failureregardless of violation level.Of particular importance in this class, while you are free to cite the views of others in your work,the final product must be in your own words, and any references to the works of others, whetherdirectly quoted or merely paraphrased, must be cited.Original class materials (handouts, assignments, tests, etc.) and recordings of class sessions arethe intellectual property of the course instructor. It is important that everyone feel free to participatein class and not worry about recordings being distributed further. Thus, while you may downloadthese materials for your use in this class, you may not provide these materials to other parties(e.g., web sites, social media, other students) without permission. Doing so is a violation ofintellectual property law and of the student code of conduct.Religious holidays: SU’s religious observances policy, found at s.html, recognizes the diversity of faiths represented among the campuscommunity and protects the rights of students, faculty, and staff to observe religious holy daysaccording to their tradition. Under the policy, students are provided an opportunity to make up anyexamination, study, or work requirements that may be missed due to a religious observanceprovided they notify their instructors before the end of the second week of classes. For fall andspring semesters, an online notification process is available through MySlice/StudentServices/Enrollment/My Religious Observances from the first day of class until the end of thesecond week of class.If you believe that you need accommodations for a disability, please contact the Office of DisabilityServices(ODS),, located in Room 309 of 804 University Avenue,or call (315) 443-4498 for an appointment to discuss your needs and the process for requestingaccommodations. ODS is responsible for coordinating disability-related accommodations and willissue students with documented disabilities Accommodation Authorization Letters, asappropriate. Since accommodations may require early planning and generally are not providedretroactively, please contact ODS as soon as possible.

Environmental Economicsp. 6 of 19Stay Safe Pledge: Syracuse University’s Stay Safe Pledge reflects the high value that we, as auniversity community, place on the well-being of our community members. This pledge definesnorms for behavior that will promote community health and wellbeing. Classroom expectationsinclude the following: wearing a mask that covers the nose and mouth at all times, maintaining adistance of six feet from others, and staying away from class if you feel unwell. Students who donot follow these norms will not be allowed to continue in face-to-face classes; repeated violationswill be treated as violations of the Code of Student Conduct and may result in disciplinary action.Mental health and overall well-being are significant predictors of academic success. As such it isessential that during your college experience you develop the skills and resources effectively tonavigate stress, anxiety, depression, and other mental health concerns. Please familiarizeyourself with the range of resources the Barnes Center provides ( andseek out support for mental health concerns as needed. Counseling services are available 24/7,365 days, at 315-443-8000.

Environmental Economicsp. 7 of 19Course OutlineI. IntroductionFebruary 8 – What is Environmental Economics?Reading: Field, Chapters 1 & 2“The ethics gap,” The Economist, December 2, 2000, p. 78.Fullerton, Don and Robert N. Stavins, (1998) “How Economists Seethe Environment,” Nature, 395, 433-434, reprinted in Readings.Vascellaro, Jessica E., “Green Groups See Potent Tool inEconomics,” The Wall Street Journal, August 23, 2005.II. Tools of Economic AnalysisFebruary 10 – Market FailuresReading: Field, Chapter 3 (review: optional)Field, Chapter 4Ostrom, Elinor (2009), “A General Framework for AnalyzingSustainability of Social-Ecological Systems,” Science,325(5939), 419-422, reprinted in Readings.Turkewitz, Julie, “This Land Is Your Land, and Yours, and Yours .,”The New York Times, September 29, 2017, A10.“All the fish in the sea,” The Economist, May 27, 2017, 22-24.“A rising tide,” The Economist, September 20, 2008, 97-98.“Common sense,” The Economist, September 14, 2019, 72.*Frischman, Brett M., Alain Marciano, and Giovanni Battista Ramello(2019), “Tragedy of the Commons after 50 Years,” Journal ofEconomic Perspectives, 33(4), 211-228.*Stavins, Robert N. (2011), “The Problem of the Commons: StillUnsettled After 100 Years,” American Economic Review, 101(1),81-108, reprinted in Readings.February 15 – Modeling PollutionReading: Field, Chapter 5Eder, Steve, “One Apple Orchard. 5,000 Government Rules,” TheNew York Times, December 28, 2017, A1.Muller, Nicholas Z. and Robert Mendelsohn (2010), “Weighing theValue of a Ton of Pollution,” Regulation, 33(2), 20-24.Wald, Matthew L., “Fossil Fuels’ Hidden Cost Is in Billions, StudySays,” The New York Times, October 20, 2009, p. A16.

Environmental Economicsp. 8 of 19III. Government Intervention in Environmental PolicyFebruary 17 – Should the Government Intervene?Reading: Field, Chapters 9 & 10Coase, Ronald (1960), “The Problem of Social Cost,” The Journal ofLaw and Economics, 3, 1-44, reprinted in Readings.Fowlie, Meredith (2019), “Only Who Should Prevent Forest Fires?”Energy Institute at Hass blog, November 13, /only-whoshould-prevent-forest-fires/.Breeden, Aurelien, “Rooster’s Noise Lawsuit a Win for France’sBarnyard Bellowers,” The New York Times, January 25, 2021,A11.Fuller, Thomas and Ivan Penn, “No Fires Yet, But California Is PayingNow,” The New York Times, July 22, 2019, A1, A13.“Building in Wildland-Urban Interface Areas Boosts Wildfire Costs,”NBER Digest, March 2020.*Banzhaf, H. Spencer, Timothy Fitzgerald, and Kurt Schneir (2013),“Nonregulatory Approaches to the Environment: Coasean andPigouvian Perspectives,” Review of Environmental Economicsand Policy, 7(2), 238-258.February 22 – Command and Control Policies for the EnvironmentReading: Field, Chapter 11Aldy, Joseph E. and William A. Pizer (2016), “Alternative Metrics forComparing Domestic Climate Change Mitigation Efforts and theEmerging Internatio

the articles used in class that appear in the latest edition. In addition to thetext, there are several additional articles intended to supplement the text. The class web site includes links to these articles. When possible, links to the articles are direct provided. The remainder are available through the course reserve system at the Syracuse