Environmental Economics
Code
5254
Academic unit
Faculdade de Ciências e Tecnologia
Department
Departamento de Ciências e Engenharia do Ambiente
Credits
6.5
Teacher in charge
Rui Jorge Fernandes Ferreira Santos
Weekly hours
5
Total hours
84
Teaching language
Português
Objectives
The Environmental Economics course introduces students to the application of the principles of economics to the study of the interrelationships between environmental and economic systems. The fundamental aspects of market structure and behaviour are addressed, including consumer and production theories, as well as the consequences of the "market failures" underlying environmental problems. The course presents the essential concepts (e.g. economic efficiency, market, externalities) and methodologies (e.g. cost-benefit analysis, cost-effectiveness analysis) to address environmental problems. This course also focus on the role of the economic approach in designing and implementing environmental policy instruments, determining the economic value of environmental resources and analyzing investment projects in the economic sector. Students are expected to know, understand and be able to discuss the foundations, potentialities and limitations of the application of economics to the study of environmental problems. The expected learning outcomes include the competence and capability of a) integrating the economic approach in the identification, formulation, analysis and solution of environmental problems; b) designing, applying and evaluating environmental policy measures and instruments; applying economic analysis methodologies and interpreting results; developing work in multidisciplinary teams; and e) undertaking further research with a high degree of autonomy.
Prerequisites
Attendance of the majority of previous courses in the degree programme is recommended, in particular Mathematical Analysis I to III.
Subject matter
1. Economics and the Environment: economic system; economics as a science; interrelationships between economic and environmental systems. Economic approach to environmental problem identification and solving.
2. Introduction to microeconomics: consumer's behaviour and the demand curve; firms' behaviour and the supply curve; markets of goods and services. Perfect competition. Fundamentals of general equilibrium: efficiency and social welfare.
3. Market failures and the environment: externalities; open access, public good,..; environmental consequences.
4. Economic approach to pollution control: negative externalities, efficient level of control; cost-effectiveness analysis; need of market intervention; property rights approach - Coase Theorem;
5. Environmental Policy Instruments: command and control, economic or market-based, information, voluntary and decentralized policies - approaches and evaluation/selection criteria.
6. Appraisal of Investment Projects: definition and typology of investments; selection and evaluation criteria: payback period, net present value, internal rate of return, benefit-cost ratios. ..
Bibliography
Chemical Engineers HandBook – McGraw-Hill, 7ª ed, 2000 Solar Living Source Book, John Schaeffer 12th edition 2005, New Society Publishers Política Energética Europeia - Green Paper - An Energy Policy for Europe,Communication from the Commision to the European Council.COM(2007)1final.Brussels10.01.2007 Renewable Energy Road Map. Renewable energies in the 21th Century.Commisssion of the European Communities. COM(2006)848 final Action Plan for Energy Efficiency.Commission of the European Communities,COM(2006)545final
Teaching method
Evaluation method
Assessment methodology consists of 3 individual assignments on course subjects (market failures, environmental policy instruments and cost-benefit analysis), which represent 50% of the final grade. The remaining 50% are attributed to a final exam at the end of the semester.