For next offering:

  • Add to forestry lecture and readings:
    • Sections on ‘conservation forestry’ and carbon sequestration in forestry; press releases in Ec122 course folder.
    • Review A. Berry paper PERC, on forests in montana
  • Fisheries
    • West coast trawl fishery rationalization

Announcements:

 

Natural Resource Economics

Economics 122/Env. Studies 179

 

Robert Deacon                                                                                               Winter 2009

 

TA office hours:      ***, North Hall 30**.

 

Sections:                 M 4:00- 4:50 WEBB 1100

                              M 5:00- 5:50 SH

                              M 6:00- 6:50 PHELP 3505

                             

Lectures:                  MW 12:30-1:45, Isla Vista Theater 2

My office hours:       ; 3040 North Hall, deacon@econ.ucsb.edu.

Exams:                    Midterm: Monday, Feb. 8 (40%)
                    Final: Wed., March 17, 1:00-3:00 (40%)
                    (Homework problems count for the other 20%)
                    See the lecture schedule below for times of exam review sessions.

Course Description:

We will examine the operation of markets for natural resources, including minerals, fossil fuels, forest resources, and fisheries. We will also examine economic issues related to biodiversity and deforestation. Natural resource abundance is determined by physical processes and a general understanding of these processes is necessary for correct economic analysis. For this reason the study materials present biological models for fisheries and forests and incorporate geological concepts in examining minerals. Ownership rights to natural resources often are not clearly defined. In these cases the interests of some potential resource users will not be reflected in market outcomes and the scramble to acquire these un-owned assets may be wasteful. Finally, the use of natural resources is ultimately linked to the release of waste products into the environment, so there are considerations of environmental degradation. These themes appear at various points in the course.

Pre-requisites:

Intermediate microeconomics (Econ. 100A & B or Econ. 104A & B) is required. Two sets of concepts are used repeatedly: welfare economics (concepts of Pareto efficiency, externalities, and property rights) and intertemporal choice (interest rates, investment decisions, present value). These concepts will be reviewed briefly in class and in Section II of the readings, but the time spent will be minimal. Students who completed their intermediate microeconomics courses some time ago should review as needed.

Readings and Other Study Materials:

Readings for this course are available online, with links provided in this syllabus. It is important to read the material for a given section of the course prior to lecture. I have prepared .pdf files with the slides I use in lectures. Some of these give mathematical formulas, derivations, and models to be used in the course. Links to these materials also appear in the syllabus. I recommend that you print these materials and bring them to class to help you follow the lecture material and to assist in taking notes. These slides are considered part of the reading material for this course and cover some topics not treated in the readings, such as the Forestry section slides on ‘below cost’ timber sales. This material may be included on exams. Please read these materials before the corresponding lecture.

Exams, Homework Problems and Grading:

Exams. Exam dates and weights used in grading are listed above. Both exams will consist primarily of short essay/problem questions. Old exams, with sample answers, are available on line as study aids. (Midterm Exam Winter 2007, Final Exam Winter 2008.). No make-up exams will be given.  Students who miss the midterm may substitute a term paper in its place. Please see me for term paper guidelines if you choose this option. 

Numerical grades will be assigned to your answers to exam questions and these correspond to letter grades. Here is an example of how it works. For a 15-point question, numerical grades of 13-15 correspond to letter grades of A- to A, numerical grades of 10-12 correspond to letter grades of B- to B+, and so forth. This correspondence between numerical and letter grades also applies to homework problems. Here is the grading scale used.

Homework problems. Homework problems are available online (homework problems) and will be collected and graded during the quarter. These are mandatory and performance on them constitutes 20% of the course grade. Homework problems will also give you practice answering the types of questions you will find on exams. If homework problems are submitted late, 5 points (out of 20) will be deducted for each day late including weekend days. I will drop your lowest homework grade when computing your grade for the course. Here is file containing some data for Homework problem #3 that will be useful.                                                                       

 

TOPIC OUTLINE, READINGS AND SLIDES

(Approximate schedule of lectures.)

I. Basic Facts and Concepts

(Introductory Slides)

Balsdon, E., and R. Deacon, "Economics of Exhaustible Resources,” International Encyclopedia of the Social and Behavioral Sciences, Orley Ashenfelter (editor for economics,) Elsevier Sciences Ltd., 2002.

A.V. Kneese, et al., "Economics of the Environment: A Materials Balance Approach", in Enthoven and Freeman, Pollution, Resources, and the Environment, Norton, 1973.

 

II. Welfare Economics, Benefit Cost Analysis and Intertemporal Choice

(Review slides)

T. Tietenberg, Environmental and Natural Resource Economics, 4th Ed.
Chapters 2, 3. (Tietenberg Chap. 2, Tietenberg Chap. 3)   Note: For further depth, review relevant sections of your intermediate microeconomics text, e.g., H. Varian, Intermediate Microeconomics 6th Ed., Chapters 10, 11, 32, 33.

 

III. Forest Resources

(Forest slides Deforestation slides)

R.T. Deacon, "The Simple Analytics of Forest Economics", in R.T. Deacon and M.B. Johnson, eds., Forestlands, Public and Private, Ballinger, 1986.

D. R. Leal, "Turning a Profit on Public Forests," PERC Policy Series: PS-4, Sept. 1995.

Sedjo, Roger A., and Daniel Botkin, 1997. "Using Forest Plantations to Spare Natural Forests." Environment Vol. 39, no. 10 (December), pp. 14-20.

P. E. Kauppi, et al “Returning forests analyzed with the forest identity” Proceedings of the National Academy of Sciences, Nov. 14, 2006. 17574-17579.

 

IV. Biodiversity and Species Extinction

(Biodiversity Slides, Noah’s Ark)

Barry Field, 2005. “The Economics of Biodiversity Preservation.” Chapter 9 in Barry Field, Natural Resource Economics, Waveland Press.

R. T. Deacon and Paul Murphy, "The Structure of an Environmental Transaction: The Debt for Nature Swap

 

V. Fisheries

(Fisheries slides)

Tietenberg andf Lewis, Environmental and Natural Resource Economics, 8th Edition, Chapter 14, “Common-Pool Resources: Fisheries …” and Other Species.”

Robert T. Deacon. “Creating Marine Assets: Property Rights in Ocean Fisheries,” PERC Policy Series No. 43, Property and Environment Research Center, Bozeman, MT.

 

VI. Non-renewable Resources

(NRResources slides)

J.W. Griffin and H.B. Steele, Energy Economics and Policy, Chapter 3. "Criteria for Efficient Dynamic Resource Allocation."

Ian W. H. Parry and J. W. Anderson, 2005. “Petroleum: Energy Independence is Unrealistic,” Resources, Winter 2005, Resources for the Future.

Severen Borenstein, 2005. “ANWR Oil and the Price of Gasoline,”  Energy Notes, Vol. 3, Issue 2, June 2005, University of California Energy Institute.

 

VIII. Concluding comments

(Concluding slides)