| AEM 4510

Each section is approximately 1-2 days of class. KO denotes readings from the Keohane and Olmstead book. Any readings without links can be obtained through the Cornell library website. Required readings for students enrolled at the 5000 level are in italics.

Introduction to environmental economics

Lecture notes
KO Chapters 1 and 4
Fullerton, Don, and Robert Stavins. “How economists see the environment.” Nature 395, no. 6701 (1998): 433-434.
Krutilla, John V. “Conservation reconsidered.” The American Economic Review 57, no. 4 (1967): 777-786.

Market failures: Public goods and externalities

Lecture notes
KO Chapter 5

Coase theorem

Lecture notes
Coase, Ronald. “The problem of social cost.” The Journal of Law and Economics 3 (1960): 1-44.

In class Coasean bargaining game

Policy: Standards

Lecture notes
KO Chapters 8 and 9

Taxes and Subsidies

Lecture notes
KO Chapters 8 and 9

Tradable permits

Lecture notes
Resources Radio: A Status Report on Global Emissions Trading, with Stephanie La Hoz Theuer
KO Chapters 8 and 9, 10
Muller, Nicholas Z., and Robert Mendelsohn. “Efficient pollution regulation: getting the prices right.” American Economic Review 99, no. 5 (2009): 1714-39.

In class emissions trading game

Policy under uncertainty

Lecture notes
KO Chapters 8

Distortions and second-best policies

Lecture notes
Holland, Stephen P., Jonathan E. Hughes, and Christopher R. Knittel. “Greenhouse gas reductions under low carbon fuel standards?.” American Economic Journal: Economic Policy 1, no. 1 (2009): 106-46.

Climate Policy and Trade: Carbon Tariffs

Lecture notes
Brunel, Claire, and Arik Levinson. “Carbon Tariffs 101.” NBER Working Paper No. 33024 (2024).

Econometrics review

Discounting

Lecture notes
Giglio, Stefano, Matteo Maggiori, and Johannes Stroebel. “Very long-run discount rates.” The Quarterly Journal of Economics 130, no. 1 (2015): 1-53.” The Review of Financial Studies 34, no. 8 (2021): 3527-3571.

Non-market valuation: Travel cost

Non-market valuation: Contingent valuation

Lecture notes
Krupnick, Alan J., and Juha Siikamäki. “How people value what nature provides.” Resources 50 (2007): 1-14.

In class hedonics game

The environment and real estate markets

Lecture notes
Greenstone, Michael, and Justin Gallagher. “Does hazardous waste matter? Evidence from the housing market and the superfund program.” The Quarterly Journal of Economics 123, no. 3 (2008): 951-1003.
Bernstein, Asaf, Matthew T. Gustafson, and Ryan Lewis. “Disaster on the horizon: The price effect of sea level rise.” Journal of Financial Economics 134, no. 2 (2019): 253-272.

Offset markets

Lecture notes
Aldy, Joseph E., and Zachery Halem. “The Evolving Role of Greenhouse Gas Emission Offsets in Combating Climate Change.” (2022).
Calel, Raphael, Jonathan Colmer, Antoine Dechezleprêtre, and Matthieu Glachant. “Do carbon offsets offset carbon?” (2021).

Climate risk and financial instruments

Lecture notes
Resources Radio: Pricing Climate Risk in the Markets, with Robert Litterman
Schlenker, Wolfram, and Charles A. Taylor. “Market expectations of a warming climate.” Journal of Financial Economics 142, no. 2 (2021): 627-640.
Painter, Marcus. “An inconvenient cost: The effects of climate change on municipal bonds.” Journal of Financial Economics 135, no. 2 (2020): 468-482.

Green instruments

Lecture notes
Flammer, Caroline. “Green bonds: effectiveness and implications for public policy.” Environmental and Energy Policy and the Economy 1, no. 1 (2020): 95-128.
Baker, Malcolm, Daniel Bergstresser, George Serafeim, and Jeffrey Wurgler. “Financing the response to climate change: The pricing and ownership of US green bonds.” (2018).

Policymaking Under Uncertainty

Overview This lecture answers: What role does uncertainty play in economic analysis of the environment? What are the implications of uncertainty for policy choice and welfare? Slides Slides are below. The HTML slides will open in your browser and you might need to install the Lato font for it to look like it does in class. If you use the HTML slides you can navigate with the left and right arrows. Pressing 'o' lets you see all the slides.

Distortions and Second-Best Policy

Overview This lecture answers: What happens when we have another distortion like market power? What happens when we introduce other issues like fixed costs? How do second-best policies like intensity standards work? Slides Slides are below. The HTML slides will open in your browser and you might need to install the Lato font for it to look like it does in class. If you use the HTML slides you can navigate with the left and right arrows. Pressing 'o' lets you see all the slides.

Carbon Tariffs

Overview This lecture: What are carbon tariffs? Basic trade theory: supply, demand, and tariffs Adding pollution externalities to trade Unilateral carbon taxes and leakage Carbon tariffs to prevent leakage Carbon tariffs alone World carbon taxes Different pollution intensities across countries Slides Slides are below. The HTML slides will open in your browser and you might need to install the Lato font for it to look like it does in class. If you use the HTML slides you can navigate with the left and right arrows. Pressing 'o' lets you see all the slides.

Tradable Permits

Overview This lecture answers: How do tradable permit systems work in theory and in the real world? What happens under a tradable permit system? Slides Slides are below. The HTML slides will open in your browser and you might need to install the Lato font for it to look like it does in class. If you use the HTML slides you can navigate with the left and right arrows. Pressing ‘o’ lets you see all the slides.

Econometrics

Overview This lecture: Econometrics review Slides Slides are below. The HTML slides will open in your browser and you might need to install the Lato font for it to look like it does in class. If you use the HTML slides you can navigate with the left and right arrows. Pressing ‘o’ lets you see all the slides.

Discounting

Overview This lecture answers: What is discounting? What determines the discount rate? What are the implications of discounting on computing the costs and benefits of policies? Slides Slides are below. The HTML slides will open in your browser and you might need to install the Lato font for it to look like it does in class. If you use the HTML slides you can navigate with the left and right arrows. Pressing ‘o’ lets you see all the slides.

Travel Cost Method

Overview This lecture: How do we estimate the value of recreational goods? Slides Slides are below. The HTML slides will open in your browser and you might need to install the Lato font for it to look like it does in class. If you use the HTML slides you can navigate with the left and right arrows. Pressing ‘o’ lets you see all the slides.

Contingent Valuation Method

Overview This lecture: How do stated preference methods differ from revealed preference methods? How do we do contingent valuation? Slides Slides are below. The HTML slides will open in your browser and you might need to install the Lato font for it to look like it does in class. If you use the HTML slides you can navigate with the left and right arrows. Pressing ‘o’ lets you see all the slides.

Hedonics and Real Estate Markets

Overview This lecture: What can we use to infer the demand for environmental goods? What do housing prices tell us? When do changes in house prices give us welfare measures Slides Slides are below. The HTML slides will open in your browser and you might need to install the Lato font for it to look like it does in class. If you use the HTML slides you can navigate with the left and right arrows. Pressing ‘o’ lets you see all the slides.

Carbon Accounting and Offset Markets

Overview This lecture: What are offsets? What issues might they have? How do they work in practice? Slides Slides are below. The HTML slides will open in your browser and you might need to install the Lato font for it to look like it does in class. If you use the HTML slides you can navigate with the left and right arrows. Pressing ‘o’ lets you see all the slides.