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EC138: Introduction to Environmental Economics

15 CATS - Department of Economics

Principal Aims

Environmental economics studies how economic activity and policy may affect the environment in which we live. This course provides students with theoretical and methodological tools that allow them to apply principles of economics to study how natural resources are (or should be) evaluated and managed. Contemporary environmental problems, such as climate change, sustainable development and transboundary pollution are discussed in light of the concepts introduced in the first part of the course.

Principal Learning Outcomes

By the end of the module the students should be able to:

Apply fundamental concepts, such as market failure, household behaviour, transaction costs and willingness to pay to the study of environmental economics

Understand key concepts used by environmental economists, (as well as political scientists) such as public goods (and “bads”), use and non-use value, the tragedy of the commons, irreversibility and the precautionary principle

Be acquainted with the main tools used to value environmental goods and services

Approach environmental problems from an analytical perspective

Use economic arguments to discuss environmental policy proposals

Understand the interdisciplinary nature of environmental economics


The core topics in the syllabus will typically include:

1. Introduction to the key concepts from environmental economics: markets; market failures; government regulation; Cost Benefit Analysis; the environment as a social asset

2. Strategic interactions: Coase Theorem; Tragedy of the Commons; Transactions costs and institutions

3. Valuing the environment: Welfare economics; efficiency and optimality in allocation; approaches to environmental evaluation; environmental ethics; sustainable development

4. Environmental policy instruments and implementation: common and control policies in different areas e.g. water; policy design and implementation; biodiversity; trade

5. Applications: deforestation; tropical deforestation and poverty; preservation and conservation; climate change; carbon trading; international co-operation; Kyoto Protocol


This module is available to first-year students on Economics-based degrees, plus first year students on GL11, V7ML, L1L8, LA99 and Joint Economics and Modern Languages.
Part-year Availability for Visiting Students
Available in the Spring term only (1 x assignment, presentation + proposal 15 CATS)


Assessment Method
100% assessment
Coursework Details
Group presentation (10%), Individual Project Proposal (20%), Individual Final Project (70%)
Exam Timing

Exam Rubric


Previous exam papers can be found in the University’s past papers archive. Please note that previous exam papers may not have operated under the same exam rubric or assessment weightings as those for the current academic year. The content of past papers may also be different.

Reading Lists