The course introduces environmental economics as a sub discipline of economics focusing on the inter-relationships between the environment and the economy. It explains how the concept of economic efficiency in the allocation of scarce resources underpins cost-benefit analysis and decision making in environmental management. Welfare economics is also introduced and looking at the optimal allocation of resources and how that allocation affects social welfare. Understanding the failure of markets involves the key concept of the property rights regime. Much of environmental economics is concerned with identifying when and under what circumstances, failure in property rights are likely to occur and how best to correct them.

Building on this initial understanding of concepts the course proceeds to the theory and economics of pollution as the leading example of environmental degradation. It introduces core models for understanding how governments might intervene to control pollution and goes to examine and evaluate the instruments of environmental policy from command-and-control instruments to economic or incentive-based instruments often advocated by economists. It deals with the implementation of policy instruments, including the important issues of how to target and enforce environmental policy. Reading material with the module will refer to political decision-making processes and how these affect the outcome of environmental policy. Political factors may cause policies to diverge from those advocated on the grounds of economic efficiency. Public participation can also play a role in policy making and effective and genuine participation can lead to more effective and fairer policies. The module also explains how environmental economics affect poverty, health and natural resources.

In order to set the concepts and theories introduced in the context of current concerns relating to sustainable development the course examines the relationship between environmental policy making and the concept of sustainable development. It introduces core concepts of ‘sustainability’ and considers the implications of applying these.

Specifically, the course will cover the following topics: Introduction to Environmental Economics, Welfare Economics and the Environment, Externalities and Property Rights, Environmental Problems, Evaluation of Environmental Quality, Market failure, The Economics of Environmental Quality, Pollution, The Economics of Natural Resources, Environmental Policy Analysis, The Environment, Poverty, Health and Development