Course 2017-2018 a.y.



Department of Economics

Course taught in English

Go to class group/s: 31
CLEAM (6 credits - II sem. - OP  |  SECS-P/01) - CLEF (6 credits - II sem. - OP  |  SECS-P/01) - CLEACC (6 credits - II sem. - OP  |  SECS-P/01) - BESS-CLES (6 credits - II sem. - OP  |  SECS-P/01) - WBB (6 credits - II sem. - OP  |  SECS-P/01) - BIEF (6 credits - II sem. - OP  |  SECS-P/01) - BIEM (6 credits - II sem. - OP  |  SECS-P/01) - BIG (6 credits - II sem. - OP  |  SECS-P/01)
Course Director:

Classes: 31 (II sem.)

Course Objectives

Climate change is by and large an economic problem. It is a global, intertemporal externality and it represents a major challenge for economists. This course examines the key role of economic activities as a driver of climate change and how economic tools can be used to investigate this problem and to design climate policies. In order to deal with the problem of climate change the student has to rethink some key economic concepts like efficiency, externality, intertemporal decision making under uncertainty and welfare aggregation, from a new and more applied perspective.
The student also familiarizes with key tools for climate change and long term energy policy making: integrated assessment models. The general mechanism of these tools are learned through applications like the role of innovation in the energy sector, game theory and the (in)stability of international climate agreements, and how the inclusion of uncertainty affects optimal policies and investment decisions.

Course Content Summary

  • Introduction to the Climate Change challenge.
  • Integrated Assessment models.
  • Making Decisions about the Environment (Cost Benefit and Cost Effective Analysis).
  • Who is the social planner? (Inter-temporal and social aggregation issues).
  • Modeling Technological Change (The Innovation Externality and Assessing the Costs).
  • Valuation Methods (Valuing the Market and non-Market Benefits).
  • Environmental Policy Making.
  • International Environmental Agreements.

Detailed Description of Assessment Methods

  • Voluntary Assignment 1 (Short Memo) 40%.
  • Voluntary Assignment 2 (Video) 30%.
  • Final exam 30%.
  • Final exam 100%.
Class Active Participation Prize (1 point) to the top 5 Students.
The Final Exam is written.

All above requirements expire within the Academic year. If you do the voluntary assignments you have to stick to that option throughout.

Optional Video Assignment. Each of you has to produce a one-two minutes video explaining a key concept that we covered during the course. You may work on a team of two people if you wish and only one of you need be on camera (only one video needed from a two person team, although you can decide to appear both on camera).
Detailed information and examples are provided during class.

You are graded on
  • Effectiveness of your presentation.
  • Correctness and completeness of your presentation.
  • The overall pedagogic effectiveness of your video.
  • Complexity of the concept you decided to present.
The maximum length of time (excluding title and credits) is two minutes.
You don’t need any special equipment you can use your cell phone for this if you wish.
Deadline: the last day of class (no exceptions).

Optional Memo Assignments. A project is assigned to you. You may work on a team of up to two people if you wish. You hand in a manuscript to me and present your work during one of the last classes.
Detailed information and examples are provided during class.
Deadline: the last day of class (no exceptions).


  • C.D. Kolstad, Environmental Economics , 2010, 2nd edition.
  • IPCC, 2013, Summary for Policymakers. In T.F. STOCKER, D. QIN, G.K. PLATTNER, et al. (editors), Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge, United Kingdom and New York, NY, USA, Cambridge University Press.
  • W. Nordhaus, Why the Global Warming Skeptics Are Wrong, The New York Review of Books from the March 22, 2012 issue.
  • D. Fullerton, R.N. Stavins, How Economists see the Environment, Nature, 1998, 395:433-434.
  • W. Nordhaus, Integrated Economic and Climate Modeling, 2011.
  • T. Schelling, Intergenerational discounting, Energy Policy 23, 1995, 395-401.
  • R.S.J. Tol, The Damage Costs of Climate Change Toward More Comprehensive Calculations, Environmental and Resource Economics 5, 1995, 353-374.
  • N. Stern, The Economics of Climate Change: The Stern Review, Cambridge University Press, Cambridge, 2007.
  • D. Popp, Induced innovation and energy prices, American Economic Review 92, 2002, 160-180.
  • M.L. WeitzmanFat-tailed uncertainty in the economics of catastrophic climate change. Review of Environmental Economics and Policy, 5(2), 2011, pagg.275-292.
Exam textbooks & Online Articles (check availability at the Library)



Last change 23/03/2017 10:40