We will examine 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 and 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 lecture and there are links to slides in the syllabus. Some of these give mathematical formulas, derivations and models to be used in the course. I suggest that you review the appropriate slides before lecture and print them and bring them to class to assist in taking notes. The slides are integral to the course and cover some topics not treated in the readings. Much of this material will be included on exams.

Exams, Homework Problems and Grading:

Exams. Exam dates and weights used in grading are listed above. Both exams will consist of objective questions and problems (e.g., T/F, multiple choice, solve a problem and fill in the blank, etc.). Old exams with sample answers are available on line as study aids (links follow). Unlike the exams for this quarter, these sample exams require written explanations. (Midterm Exam Winter 2008, 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 exams and home work problems and these correspond to letter grades. 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 15% 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 #2 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, 7th Ed.
Chapters 2 and 4. (Tietenberg Chaps 2 & 4) Note: For further depth, review relevant sections of your intermediate microeconomics text, e.g., H. Varian, Intermediate Microeconomics.

III. Non-renewable Resources

(NRResources slides)

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

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

IV. Biodiversity and Species Extinction

(Biodiversity Slides, Noah’s Ark)

Barry Field, 2005. “The Economics of Biodiversity Preservation.” Chapter 19 in Barry Field, Natural Resource Economics, Waveland Press.

MIDTERM EXAM

V. Forest Resources

(Forest 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.

A. Berry, "Two Forests Under the Big Sky," PERC Policy Series: PS-45, 2009.

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

DROPPED: ~~A. Pfaff, et al, “Policy Impacts on Deforestation: Lessons Learned from Past Experiences …” Nicholas Institute, Duke Univ., 2010 (Executive Summary).~~

VI. Fisheries

(Fisheries slides)

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

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

VII. Concluding comments

(Concluding slides)