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This module is an introduction to the field of environmental and resource economics, focusing on how economic activity and policy affect the environment in which we live. In particular, this module addresses the main contemporary environmental and natural resource problems, such as climate change, sustainable development and pollution.

We will start introducing the key concepts from environmental economics: markets; market failures; government regulation; Cost-Benefit Analysis and the environment as a social asset. Next, we will focus on how strategic interactions can be analysed in this field: through the Coase theorem, the tragedy of the Commons, transaction costs and institutions. The following set of topics will assess instruments used in environmental policy (command and control policies, environmental taxes, trading systems and liability) in relation to their design and implementation. The module will conclude by assessing several applications of the concepts above related to deforestation, tropical deforestation and poverty, preservation and conservation, climate change; carbon trading, international cooperation and the Kyoto Protocol.

The aims of the module are to:

• Provide students with the analytical tools to evaluate how natural resources are managed and the effects of environmental policy.
• Develop an understanding of contemporary issues in environmental economics and public policy concerning sustainability issues (e.g. climate change and resource extraction, economic growth and environmental regulation; economics of non-renewable resources and renewable resources).

By the end of the module students should be able to:

• Recognize the ways in which individual decisions, market forces and government policies can affect the natural environment.
• Evaluate public policies for the regulation of environmental quality and natural resource depletion.
• Show a good understanding of the key issues relating to the environment and the extraction of renewable and non-renewable natural resources.
• Use economic arguments to discuss environmental problems.