Course 2026-2027 a.y.

• Introduction to environmental economics and foundations: welfare economics, externalities, public goods, and common-pool resources
• Property rights and the Coase Theorem
• Pollution-control policy instruments: command-and-control standards, Pigouvian taxes, and tradable permits
  • The EU Emissions Trading System

  • Instrument choice under uncertainty

  • Distributional impacts, incidence, and environmental justice
• Valuing the environment
  • Stated-preference methods
  • Revealed-preference methods
• Climate change
  • The social cost of carbon and integrated assessment models
  • The frontier of empirical climate-damage estimates
• Climate finance, transition risk, and green bonds

• Define and distinguish the principal forms of market failure that give rise to environmental problems
• Explain the Coase theorem and the role of property rights in addressing environmental externalities
• Illustrate how different policy instruments work, and select the appropriate instrument in theory and real-world practice
• Describe the design, evolution, and empirical performance of the EU Emissions Trading System
• Recognize the distributional incidence of environmental policies
• Describe the main methods used by economists to value the environment
• Explain the concept of climate change as a global stock externality and describe the determinants of the social cost of carbon
• Explain how economists measure the economic costs of environmental change
• Describe the main financial instruments and explain how they tell us information about the environment

• Compute and compare the welfare effects of alternative environmental-policy instruments in a specified setting
• Critically assess evaluations of environmental policies
• Construct a reasoned policy recommendation, supported by economic theory and empirical evidence
• Evaluate environmental-policy claims encountered in the media, political discourse, and corporate communications
• Communicate environmental-policy analysis effectively in writing and orally to mixed audiences
• Work collaboratively in interdisciplinary teams to address a real-world environmental-policy problem
• Examine environmental and climate-related risks and opportunities arising in corporate strategy, sustainable finance, and ESG, and apply economic reasoning to evaluate them

• Lectures
• Practical Exercises
• Individual works / Assignments
• Collaborative Works / Assignments
• Interaction/Gamification

Practical Exercises

Students work through problems during class sessions, reinforcing core theoretical concepts in real time. Exercises are completed individually or in small groups and followed by debriefs.

Individual/Collaborative Works 

Students work in groups (or independently depending on class attendance) on a course-long policy design project. Teams choose a real environmental challenge and must deliver both a written report and a final oral presentation. The project requires integrating the theoretical, empirical, and policy dimensions of the course. Intermediate check-ins and final peer review are embedded to support iterative improvement and ensure equitable contribution.

Interaction/Gamification

The course includes interactions and in-person games including an emissions trading simulation. Additional interactive elements include structured brainstorming sessions on policy design trade-offs and short in-class polls used to elicit and aggregate students' prior beliefs before discussing empirical evidence.

As an Attending Student you are assessed through a written policy memo, an oral presentation, a written exam, and active participation. Each component verifies a specific subset of the intended learning outcomes, across knowledge, applied skills and transversal abilities.

Written policy memo (individual/collaborative work) - 30% You write a short, structured policy memo that frames an environmental-economic problem, applies the relevant analytical tools, and recommends a course of action. Depending on class size, this is completed either individually or collaboratively in groups.

→ This verifies that you can construct a reasoned policy recommendation supported by economic theory and empirical evidence; that you can illustrate how policy instruments work and select the appropriate instrument for a real-world setting; that you can communicate environmental-policy analysis effectively in writing to mixed audiences; and --- when completed in groups --- that you can work collaboratively in teams to address a real-world environmental-policy problem.

Oral presentation in class (individual/collaborative work) - 15% You present the memo to the class and instructor and respond to questions. Depending on class size, this is delivered either individually or as a group.

→ This verifies that you can communicate environmental-policy analysis effectively orally to mixed audiences, that you can defend analytical and instrument-selection choices under questioning, and confirms command of the underlying concepts on which the analysis rests.

Written exam - open and/or closed answer questions, general exam - 50% A written individual exam covering the full course, combining closed-answer items that test breadth of knowledge with open-answer questions and exercises that test applied reasoning.

→ This ensures you grasp the foundational knowledge, economic concepts and policy tools of environmental economics, and verifies that you can apply them. 

Active class participation - 5% Assessed through contributions to in-class exercises, discussion of papers, and engagement with the in-class activities and games. 

→ This verifies that you can critically assess evaluations of environmental policies and evaluate environmental-policy claims encountered in the media, political discourse and corporate communications, and that you can apply economic reasoning interactively in simulated decision settings.

Written exam - extended version, open and/or closed answer questions, general exam - 100% Not Attending Students are tested individually through an extended version of the final written exam, which adds further questions and exercises covering the material Attending Students are assessed on through the policy memo, presentation and in-class activities. It mixes closed-answer questions, open-answer questions and exercises.

→ This ensures you grasp the foundational knowledge, economic concepts and policy tools of environmental economics, and verifies that you can apply them. The extended written format assesses, in written form, the same learning outcomes that Attending Students demonstrate through project work and in-class activities. 

Main textbook:

- Charles Kolstad, Environmental Economics, Oxford University Press, 2nd edition (2010)

Recommended (optional):

- Daniel J. Phaneuf & Till Requate, A Course in Environmental Economics: Theory, Policy, and Practice, Cambridge University Press (2016).

- Nathaniel O. Keohane & Sheila M. Olmstead, Markets and the Environment, Princeton University Press, 2nd edition (2016).

- A reading and listening pack (distributed via Blackboard), including research articles, policy documents, podcast episodes, blogs, videos