Prof. Charles D. Kolstad; Class: MW 5-6:15 (Psych 1802)

Office: 3036 North Hall; Office Hours: Tues 3:30-6:00; or by appt.; email ckolstad@bren

TA: Scott Lowe, North Hall 2105; TA Office Hours: M 130-3, Tu 10-12, Th 10-12; email slowe@bren.ucsb.edu

This course involves a wide range of material crammed into one quarter. The pace will be quick and the workload will be heavy. (Expect an average of 8-10 hours of work per week outside of class.) But, on the bright side, it only takes one quarter, not two or more. The purpose of the course is to give you a solid foundation in those aspects of economics, operations management and quantitative policy analysis that are important to environmental and natural resource management and policy. The course will also serve as the foundation in economics for management, economics and policy electives in the Bren School plus be a good foundation for the group project.

The course is organized into four distinct sections. In the first two weeks, we will cover natural resources, including land and water pricing. There are many renewable and exhaustible natural resources we could cover; we focus on fisheries. The second part of the course focuses on how society makes choices about environmental protection -- "public choice." Part of that public choice process is coming up with quantitative measures of the value of preserving environmental resources. This is generally termed "valuation." The fourth part of the course concerns environmental regulation.

There will be readings and homework assignments weekly. Plus there are three "group projects" involving up to two people.

You are assumed to be fluent in multivariate calculus and to have completed a sequence in intermediate microeconomics at the level of Varian, Intermediate Microeconomics. At UCSB, this would be Econ 100AB or ESM 151. If you do not have the prerequisites, see the instructor.

The course requirements are a midterm (20%), a final exam (25%), homework assignments (20%), class projects (20%) and class participation (15%). The midterm is closed book/note (except that you may bring one 8.5" x 11" cheat sheet into the exam); the final will be open book/note. Your worst homework assignment will not be counted. The midterm will be on February 16 and the final, Saturday, March 25, at noon. Any other time for the final exam can be arranged with unanimous consent of all registered students. Just let me know.

Refer to the class page: http://www.bren.ucsb.edu/~kolstad/courses/esm204/ESM_204.html. This will be updated regularly. In particular, pay attention to the following sections of the webpage:

Homework Assignments

Projects

Announcements [Check this at least weekly]

Solutions

Different texts are used for different parts of the course. The following are available from the UCSB bookstore or an outlet like varsitybooks.com.

Charles D. Kolstad, Environmental Economics (Oxford, New York, 2000). [Referred to as Kolstad]

Wallace E. Oates (Ed), The RFF Reader (Resources for the Future, Washington, DC, 1999) [Referred to Oates]

A homemade reader available from Alternative Copy Shop, 6556 Pardall Rd in Isla Vista (968-1055). [Referred to as Reader]

Anthony Brooke, David Kendrick, Alexander Meeraus and Ramesh Raman, "GAMS: A User's Guide," GAMS Development Corporation [Free PDF Version Downloadable]

There is one copy of each of the following books on two-hour reserve in the RBR. If your finances can handle it, you may wish to purchase H&O and/or Boardman.

John M. Hartwick and Nancy D. Olewiler, The Economics of Natural Resource Use (Addison-Wesley, Reading, Mass., 1998), 2^nd Edition. [Referred to as H&O]

Anthony E. Boardman, David H. Greenberg, Aidan R. Vining, and David L. Weimer, Cost-Benefit Analysis: Concepts and Practice (Prentice-Hall, Upper Saddle River, NJ, 1996). [Referred to as Boardman]

Gerald L. Thompson and Sten Thore, Computational Economics (The Scientific Press, San Francisco, 1992) [Referred to as T&T]

Please read the material prior to the beginning of the first class of the week.

Week 1: Rent, Land and Water Pricing

Readings: H&O Ch. 2; Oates Ch 22; Fullerton and Stavins in Reader

Week 2: Math Programming Methods

Readings: T&T Ch 1 & 3

Week 3: Fisheries

Readings: H&O, Ch 3 & 4; Henderson and Tugwell, in Reader

Week 4: Cost-Benefit Analysis

Readings: Boardman, Ch 1-3; Oates, Ch 42; Ando et al in Reader; Rubin et al in Reader.

Week 5: Discounting, Risk and Uncertainty

Readings: Boardman, Ch 4; Oates, Ch 6

Week 6: Benefits Transfer and Household Production

Readings: Kolstad, Ch 15 (Sections I--IV), Ch 17; Oates, Ch 7

MIDTERM: Wednesday, February 16 [ Covers Parts I & II]

Week 7: Hedonics and Constructed Markets

Readings: Kolstad, Ch 16 & 18; Oates, Ch 8

Week 8: Types of regulations; Political Economy

Readings: Kolstad, Ch 2, 7 (sections I & II), 8; Oates, Ch 10

Week 9: Spatial Issues, Asymmetric Information

Readings; Kolstad, Ch 9-11; Oates, Ch 14 & 19

Week 10: Incidence; Macro Effects; Double Dividend

Readings: Kolstad, Ch 14; Oates, Ch 17; Collins in Reader.

Final Exam: Saturday, March 25, 12-3pm.

Updated: January 10, 2000