The Economics of Inequality and the Environment

Abstract

This course examines the links between economic inequality and environmental change. It covers how environmental benefits and policy costs are distributed, how redistribution shapes environmental outcomes, and how these dimensions affect policy appraisal. Students gain modelling and empirical tools to assess the role of equity in environmental policy and engage with frontier research.

Objective

The course aims to provide students with a rigorous understanding of how economic inequality and environmental challenges interact. It introduces core economic frameworks for environmental policy evaluation, showing how environmental improvements, policy costs, and redistribution shape both welfare and inequality. Building on this foundation, the course develops two focus areas in greater depth. The first examines how equity considerations influence the valuation of climate damages and the social cost of carbon using integrated assessment modelling. The second explores empirical approaches to studying distributional effects of environmental policies, with a hands-on focus on quasi-experimental methods. In the final part, students critically assess recent research articles, present their findings, and propose ways to extend or improve them. By combining theoretical foundations, applied methods, and research practice, the course equips students to engage in debates on environmental justice and the economics of policy design. After completing the course, students will be able to: - Analyse core frameworks linking inequality, welfare, and environmental policy. - Apply concepts of equity weighting to climate policy evaluation. - Use empirical strategies to identify the distributional effects of environmental policy. - Critically evaluate and present recent research in environmental inequality. - Integrate normative and empirical perspectives in assessing environmental justice.

Content

This course examines the links between economic inequality and environmental change and explores their implications for environmental policy design. The course is structured in three parts. The first, lecture-style block introduces core concepts and thematic areas: how environmental improvements are distributed across households, how policy costs fall on different groups, and how redistribution measures shape outcomes. The second block deepens two focus and methodological areas: (i) the role of equity weighting in estimating the social cost of carbon and optimal carbon prices, with emphasis on welfare-economic foundations and climate policy appraisal using integrated assessment models; and (ii) empirical approaches to mapping distributional effects of environmental policies, focusing on quasi-experimental methods and recent applications. Tutorials and problem sets accompany each these two areas to consolidate analytical and empirical skills. The final block is more research-oriented: students present and discuss recent journal articles on the economics of inequality and the environment, critically assess their contributions, and write a report suggesting improvements or extensions. This combination of theory, methods, and student-led inquiry prepares participants to engage with cutting-edge debates on environmental inequality and policy design.

Resources