STUDENTS: Katharine N. Farrell
Introduction to Environmental Economics, 2009/2010/2011/2012
Aims of the Course:
This course is designed to provide students with a basic knowledge of the general fields of
Ecological and Environmental Economics, with a focus on their contribution to design and
implementation of environmental policy. The teaching for this course is divided into three
learning steps: (1) Basic Principles of Economic Analysis; (2) Environmental Economics and
Decision Making; and (3) Values and Valuation of the Economic Worth of the Environment.
Overall Learning Objectives for the Course:
(1) a basic understanding of the general principles of economic analysis;
(2) an appreciation for how these basic principles are related to specific topic areas of
environmental and ecological economics and
(3) an ability to read and assess the quality of ecological and environmental economics
analyses and associated policy recommendations.
N.B. Students who have previously completed coursework in both microeconomics and
environmental economics are encouraged to use this course to develop their abilities to carry
out and assess the quality of environmental economic analyses. Depending on the experience and
aspirations of the student, exemptions from selected lectures (see below) may be granted and
the teaching time replaced with customised alternative reading plans and assignments developed
with the course convener, on a case by case basis, upon request.
Central European University, Budapest, Hungary
1. Brief Description of an Environmental Economics Situation / Issue / Problem
20% of course grade 1-3 pages (plus tables, images and references)
Describe a concrete, real world environmental economics situation, issue or
problem and explain what are the special characteristics of the situation, issue or
problem that qualify it as both environmental and economic in character.
2. Potential and Limitations of Cost-Benefit Analysis
20% of course grade 1-3 pages (plus tables, images and references)
Summarize the potential and limitations of Cost-Benefit Analysis (CBA) as a tool to
support environmental economics related policy decisions, with respect to a specific
Unless there is a good reason not to do so, the situation, issue or problem described in
Assignment 1 should be used in Assignment 2, this time with consideration of how CBA
can or can not be applied to making policy decisions about how to deal with the selected
situation, issue or problem.
3. Examination Essay:
What if ? Opening Up Discussion of an Environmental Economics Issue
40% of course grade min.2-max.3 pages (plus tables, images and references)
Here students are asked to move from assessment to visioning - taking, ideally, the case
discussed in Assignment 1 and 2, in the Examination Essay you are asked to explore
possible futures for how the situation might develop going forward (utopias, distopias
and practical possibilities are all valid avenues of exploration).
The objective of this essay is to demonstrate: 1. that you understand why and how the
case relates to environmental economics; 2. that you have a grasp of how economic
activities are, or can be regulated by policy and 3. that you can project out, into the
future, what are the likely expected to arise from one or another policy designed to
address the situation, issue or problem outlined in this chosen case.
- Bein, Peter and Rintoul, Donald (1999), 'Shadow Pricing Greenhouse Gases', Third Biennial
Conference of the Canadian Society for Ecological Economics: Nature, Wealth and the Human
Economy in the Next Millennium.
- Boulding, Kenneth E. (1994), 'The Economics of the Coming Spaceship Earth', in Herman Daly
and Kenneth Townsend (eds.), Valuing the Earth, Economics, Ecology, Ethics (Cambridge, MA:
The MIT Press), 297-310.
- Clark, Judy, Burgess, Jaquelin, and Harrison, Carolyn M. (2000), '"I struggled with this money
business": respondents' perspectives on contingent valuation', Ecological Economics, 33 (2000),
45 - 62.
- Costanza, Robert, et al. (1997), 'The value of the world's ecosystem services and natural
capital', Nature, 387, 253 - 60.
- De Marchi, Bruna and Ravetz, Jerome R. (1999), 'Risk management and governance: a post-
normal scinece approach', Futures, 31 (1999), 743 - 57.
- Farrell, Katharine N (2007), 'Living with Living Systems: the co-evolution of values and
valuation', The International Journal of Sustainable Development and World Ecology, 14 (1), 14-
- Georgescu-Roegen, Nicholas (1973), 'The Entropy Law and the Economic Problem', in Herman E
Daly (ed.), Toward a steady-state economy (W. H. Freeman), 37-49.
- Goodwin, Neva, et al. (2009), Microeconomics in Context, Second Edition (Armonk, NY: M.E.
- Hardin, Garret (1977 ), 'The Tragedy of the Commons', in Garret Hardin and John Baden
(eds.), Managing the Commons (San Francisco: W.H. Freeman and Co.).
- Heinzerling, Lisa and Ackerman, Frank (2002), 'Pricing the Priceless: Cost-Benefit Analysis of
Environmental Protection', (Washington, DC: Georgetown Environmental Law and Policy
Institute: Georgetown University Law Center).
- Howarth, Richard B. and Farber, Stephen (2002), 'Accounting for the value of ecosystem
services', Ecological Economics, 41, 421-29.
- Kapp, K. William (1977), 'Environment and Technology: New Frontiers for the Social and
Natural Sciences', Journal of Economic Issues, 11 (3), 527-40.
- Leontief, Wassily (1986), Input Output Economics (2nd Edition edn.; Oxforf: Oxford
- Marshall, Alfred (1920), Principles of Economics (8 edn.; London: Macmillan and Co).
- Martinez-Alier, Joan, Munda, Guiseppe, and O'Neill, John (1998), 'Weak comparibility of values
as a foundation for ecological economics', Ecological Economics, 26 (1998), 277 - 86.
- Munda, Guiseppe (1996), 'Cost-benefit analysis in integrated environmental assessment: some
methological issues', Ecological Economics, 19, 157-68.
- Munda, G. (2004), 'Social Multi-Criteria Evaluatin (SMCE): Methodological Foundations and
Operational Consequences', European Journal of Operational Research, 158 (3), 662-77.
- Ness, Barry, et al. (2007), 'Categorising tools for sustainability assessment', Ecological
Economics, 60, 498-508.
- O’Connor, Martin (2006), 'The ‘‘Four Spheres’’ framework for sustainability', Ecological
Complexity, 3, 285-92.
- O’Doherty, Richard (1993), 'The Contingent Valuation Method: CSERGE Working Paper PA 93-
01', (Centre for Social and Economic Research on the Global Environment (CSERGE), University
of East Anglia).
- Pearce, David (2002), 'An Intellectual History of Environmental Economics', Annu. Rev. Energy
Environ 27, 57-81.
- Pearce, David, Atkinson, Giles, and Mourato, Susana (2006), 'Cost-Benefit Analysis and the
Environment: Recent Developments', (Paris: Organisation for Economic Co-operation and
- Røpke, Inge (1999), 'Prices are not worth much', Ecological Economics, 29 (1999), 45 - 46.
- Simon, Herbert A. (1955), 'A Behavioural Model of Rational Choice', The Quarterly Journal of
Economics, LXIX, 99-118.
- --- (1979), 'Rational Decision Making in Business Organizations', The American Economic
Review, 69 (4), 493-513.
- Spash, Clive L. (1999), 'The Development of Environmental Thinking in Economics',
Environmental Values, 8, 413-35.
- Vatn, Arild and Bromley, Daniel W (1994), 'Choices without Prices without Apologies', Journal
of Environmental Economics and Management 26, 129–48.