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363-0537-00L 3 Credits BSC , MSC , NDS D-USYS , D-MTEC , D-MAVT , D-ARCH , D-MATH , D-GESS , D-ITET
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Resource and Environmental Economics

Lecturers & Examiners: Prof. em. Dr. Lucas Bretschger
VVZ CR n/a

Last Updated: 2026-02-05 15:36:33

Abstract

Relationship between economy and environment, market failures, external effects and public goods, contingent valuation, internalisation of externalities, economics of non-renewable resources, economics of renewable resources, environmental cost-benefit analysis, sustainability economics, and international resource and environmental problems.

Objective

A successful completion of the course will enable a thorough understanding of the basic questions and methods of resource and environmental economics and the ability to solve typical problems using appropriate tools consisting of concise verbal explanations, diagrams or mathematical expressions. Concrete goals are first of all the acquisition of knowledge about the main questions of resource and environmental economics and about the foundation of the theory with different normative concepts in terms of efficiency and fairness. Secondly, students should be able to deal with environmental externalities and internalisation through appropriate policies or private negotiations, including knowledge of the available policy instruments and their relative strengths and weaknesses. Thirdly, the course will allow for in-depth economic analysis of renewable and non-renewable resources, including the role of stock constraints, regeneration functions, market power, property rights and the impact of technology. A fourth objective is to successfully use the well-known tool of cost-benefit analysis for environmental policy problems, which requires knowledge of the benefits of an improved natural environment. The last two objectives of the course are the acquisition of sufficient knowledge about the economics of sustainability and the application of environmental economic theory and policy at international level, e.g. to the problem of climate change.

Content

The course covers all the interactions between the economy and the natural environment. It introduces and explains basic welfare concepts and market failure; external effects, public goods, and environmental policy; the measurement of externalities and contingent valuation; the economics of non-renewable resources, renewable resources, cost-benefit-analysis, sustainability concepts; international aspects of resource and environmental problems; selected examples and case studies. After a general introduction to resource and environmental economics, highlighting its importace and the main issues, the course explains the normative basis, utilitarianism, and fairness according to different principles. Pollution externalities are a deep core topic of the lecture. We explain the governmental internalisation of externalities as well as the private internalisation of externalities (Coase theorem). Furthermore, the issues of free rider problems and public goods, efficient levels of pollution, tax vs. permits, and command and control instruments add to a thorough analysis of environmental policy. Turning to resource supply, the lecture first looks at empirical data on non-renewable natural resources and then develops the optimal price development (Hotelling-rule). It deals with the effects of explorations, new technologies, and market power. When treating the renewable resources, we look at biological growth functions, optimal harvesting of renewable resources, and the overuse of open-access resources. A next topic is cost-benefit analysis with the environment, requiring measuring environmental benefits and measuring costs. In the chapter on sustainability, the course covers concepts of sustainability, conflicts with optimality, and indicators of sustainability. In a final chapter, we consider international environmental problems and in particular climate change and climate policy.

Resources

Literature

Perman, R., Ma, Y., McGilvray, J, Common, M.: "Natural Resource & Environmental Economics", 4th edition, 2011, Harlow, UK: Pearson Education

General Information

Language
English
Levels
BSC , MSC , NDS
Frequency
Yearly recurring

Examination

Type
end-of-semester examination
Digital
The exam takes place on devices provided by ETH Zurich.
The exam could take place on computer.

Course Components

Type Title Time & Place Hours
lecture with exercise Resource and Environmental Economics
The lecture takes place ONLINE via Zoom (recorded). The lecturers will communicate the exact lesson times of ONLINE courses.
  • Wed 10:00-12:00 (ON LI NE)
2 h weekly

Offered In