Aluminum is recyclable, but may not be recycled. Petroleum is depletable, but may never be depleted. The outcomes, the way we use our natural resources and the resulting quality of our environment, are closely linked to our economic system. This course explores these linkages.
Our first job will be to establish criteria for evaluating outcomes. What would be the "right" rate at which to use up some finite resource? What would be the "right" amount of recycling? Such questions make people uncomfortable. And, of course, they are explicitly normative. We can disagree. Still, there are serious ways of thinking about such questions. We will develop the ideas of "dynamic efficiency" and "sustainability" as criteria for judging whether an outcome is in some sense "right."
Then, we'll explore the market conditions which would generate these "right" outcomes. Such conditions - well-defined property rights, perfect resource markets, appropriate social discount rates - are restrictive. Thus, market failures - "wrong" outcomes - should not be surprising. Happily, identifying the source of market failure is often the first step in devising a solution.
Finally, then, we'll be ready to apply these ideas to a range of environmental and resource cases. Some resources are renewable; some are not. Some pollution is toxic; some is not. The details matter. These details can affect our definition of the "right" outcome; they can affect the outcome we should expect; and they can affect our sense of the feasible solutions, if the expected outcome is not the desired one.
Prerequisite: Econ 100
Grades determined by two hourly exams, a final exam, a term paper, and in-class contribution.