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Environmental Economics and Climate Change

  • Teacher(s)
    Gerard van der Meijden, Rick van der Ploeg, Steven Poelhekke, Florian Wagener
  • Research field
    Spatial Economics
  • Dates
    Period 1 - Sep 04, 2023 to Oct 27, 2023
  • Course type
  • Program year
  • Credits

Course description

Short Subject Description:

This course focuses on climate change: one of the greatest challenges of our time. What can the science of economics teach us about its causes and potential solutions? What are the damages and benefits of climate change? Its impact on poverty? Should we tax carbon, cap-and-trade emission rights, or subsidize solar and wind power? Does the answer depend on how we value the future? Why/when should we discount the distant future less than the proximate future? What is the impact of risk and true uncertainty (ambiguity) on the discount rate? Can a tradeoff between growth and the environment be avoided, and if so with what sort of policies? Does trade harm the environment? Will our industry move abroad if we take a leading role and 'go it alone'? Can well-intended climate policies actually accelerate global warming? What are good second-best climate policies? How to deal with climate tipping points? What is the international incidence of climate change and of the climate policies needed to combat it? Why is it so difficult to negotiate international agreements?

Course literature

Acemoglu, D., Philippe Aghion, Leonardo Bursztyn and David Hemous (2012). The Environment and directed technical change, American Economic review, 102, 1, February, 131-166(36)

Aichele, R. and G. Felbermayr (2015). Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade. Review of Economics and Statistics, March, 97, 1, 104-115

Auffhammer, M. (2018). Quantifying economic damages from climate change. Journal of Economic Perspectives 32 (4), 33–52.

Barrett, S. (1994). Self-enforcing international environmental agreements. Oxford Economic Papers 46, 878–894.

Barrett, S. (2013). Climate treaties and approaching catastrophes. Journal of Environmental Economics and Management 66, 235-250.

Barrett, S. (2016). Coordination vs. voluntarism and enforcement in sustaining international environmental cooperation, PNAS, 113, 51, 14515-14522.

Barrett, S. and A. Dannenberg (2017). Tipping versus cooperating to supply a public good, Journal of the European Economic Association, 15, 4, 910-941.

Burke, M., S. Hsiang and E. Miguel (2015). Global-non-linear-effect-of-temperature-on-economic-production, Nature, 527, 7577.

Cai, Y., T.M. Lenton, T.S. Lontzek (2016): Risk of multiple climate tipping points should trigger a rapid reduction in CO2 emissions. Nature Climate Change. https://doi.org/10.1038/nclimate2964

Carleton, T. A. and S. M. Hsiang (2016). Social and economic impacts of climate. Science 353 (6304), aad9837

Cavalcanti, T., H. Zeina and C. Santos, “Climate Change Mitigation Policies: Aggregate and Distributional Effects”, CEPR DP no 15419

Copeland, B.R. and M.S. Taylor (2004). "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.

Dechezlepretre, A. and M. Sato (2017). The impacts of environmental regulations on competitiveness, Review of Environmental Economics and Policy. https://academic.oup.com/reep/article/11/2/183/404...

Dinkelman, T. (2017). Long-Run Health Repercussions of Drought Shocks: Evidence from South African Homelands. The Economic Journal 127 (604), 1906–1939.

Fingado, N., & Poelhekke, S. (2023). Droughts and Malnutrition in Africa. ( CESifo Working Paper Series; No. 10385). https://www.cesifo.org/DocDL/cesifo1_wp10385.pdf

Fischer, C. and A. K. Fox (2012). Comparing policies to combat emissions leakage: border tax adjustments versus rebates, Journal of Environmental Economics and Management. 64 (2): 199–216 (September). doi:10.1016/j.jeem.2012.01.005

Hart, R. (2019). To everything there is a season: Carbon pricing, research subsidies, and the transition to fossil-free energy. Journal of the Association of Environmental and Resource Economists, 6(2), 349–389. https://doi.org/10.1086/701805

Hémous, D. (2016). The dynamic impact of unilateral environmental policies. Journal of International Economics, 103, 80–95.

Hsiang, Solomon, and Robert E. Kopp (2018). "An Economist's Guide to Climate Change Science." Journal of Economic Perspectives, 32 (4): 3-32.

Martin, Ralf, Mirabelle Muûls, Laure B. de Preux, and Ulrich J. Wagner (2014). Industry compensation under relocation risk: a firm-level analysis of the EU Emissions Trading Scheme, American Economic Review, 104(8): 2482-2508.

Martin, R., M. Muûls en U.J. Wagner (2016). The impact of the European Union emissions trading scheme on regulated firms: what is the evidence after ten years? Review of Environmental Economics and Policy 10(1) 129-148.

Gerlagh, R., & Kuik, O. (2014). Spill or leak? Carbon leakage with international technology spillovers: A CGE analysis. Energy Economics, 45, 381–388. https://doi.org/10.1016/j.eneco.2014.07.017

Karp, L. and L. Simon (2013). Participation games and international environmental agreements: A non-parametric model. Journal of Environmental Economics and Management 65, 326-344

Keller, W. and A. Levinson (2002). “Pollution Abatement Costs and Foreign Direct Investment Inflows to U.S. States”, The Review of Economics and Statistics, vol. 84, issue 4, pages 691-703.

Levinson, Arik. 2009. "Technology, International Trade, and Pollution from US Manufacturing." American Economic Review, 99(5): 2177-92.

Van der Meijden, G., & Smulders, S. (2017). Carbon Lock-In: The Role of Expectations. International Economic Review, 58(4), 1371–1415. https://doi.org/10.1111/iere.12255

Nordhaus, W. (2015), “Climate Clubs: Overcoming Free Riding in International Climate Policy”, AER 2015, 105(4)

Richard Tol, Climate Economics: Economic Analysis of Climate, Climate Change and Climate Policy, Edward Elgar Publishing, Third Edition, 2023.

Van der Ploeg, F. (2013). “Cumulative carbon emissions and the green paradox”. Annual Review of Resource Economics, 5:281-300.


Van der Ploeg, F. and A.J. Venables (2023). Radical climate policies, World Bank. https://openknowledge.worldbank.org/entities/publication/5f23bc3b-c83a-5b00-9371-323490fff8d0

Wagener, F. and A. de Zeeuw (2021). Stable partial cooperation in managing systems with tipping points. Journal of Environmental Economics and Management 109, 102499

Way, R., Ives, M. C., Mealy, P., & Farmer, J. D. (2022). Empirically grounded technology forecasts and the energy transition. Joule, 6(9), 2057–2082. https://doi.org/10.1016/j.joule.2022.08.009

Zhou, S., & Smulders, S. (2022). Self-Fulfilling Prophecies in the Transition to Clean Energy. Mimeo. https://sophielianzhou.com/wp-content/uploads/2022/10/SmuldersZhou_SFP2022.pdf