Climate Change Economics

ECON30021 Climate Change Economics 10 Semester 1 Undergraduate Level 3 1 FHEQ level (Framework for Higher Education Qualifications) ' Last part of a Bachelors ' European Credit Transfer & Accumulation System Rating : 5.0 Lecture topics: Climate dynamics (including history of our understanding); Inter-temporal efficient climate change policy (role of discounting, capital, income growth); Complications in Cost-Benefit Analysis I: static (e.g. double dividend); Complications in Cost-Benefit Analysis II: dynamic (e.g. technological change); Intergenerational equity (sustainability); International cooperation (free rider problem, carbon leakage, oil rents); Energy (alternative energy sources and limitations) Lecture topics: Climate dynamics (including history of our understanding); Inter-temporal efficient climate change policy (role of discounting, capital, income growth); Complications in Cost-Benefit Analysis I: static (e.g. double dividend); Complications in Cost-Benefit Analysis II: dynamic (e.g. technological change); Intergenerational equity (sustainability); International cooperation (free rider problem, carbon leakage, oil rents); Energy (alternative energy sources and limitations) **NOT RUNNING 09/10** The course unit aims to increase the student's understanding of the processes underlying human-induced climate change, costs and benefits of expected climate change, and costs and benefits of emission reduction measures. The focus will be on the balancing of costs of climate change with costs of emission reductions. After this course, students should be able to understand the various arguments used in the (scientific and popular) press on climate change policy. On completion of this unit successful students will be able to demonstrate a proper understanding of (i) the physical mechanisms and people's role in global climate change, (ii) the inter-temporal efficiency of climate change mitigation measures, (iii) the issue of sustainability in connection to climate change, (iv) the international distribution of responsibility for climate change mitigating measures, and (v) the role of energy in climate change policy. A major problem faced by climate change economists is that they try to find a balance between costs and benefits of climate policies whereas these policies affect different people in different ways, living at different time and at different place. Emission reduction policies will (probably) reduce the income of contemporary consumers; they will benefit future generations, but these benefits are for an important part uncertain, less tangible and hard to express in money-term equivalents. Given these differences in context, what discount factor should we use for costs and benefits of climate change measures when we try to balance these to find an efficient and equitable policy? Students should have formed their own opinion, while knowing all problems involved. Another dimension considers the international burden sharing. After this course, the students will be able to contribute to discussions whether the citizen in the developed countries (those are the countries responsible for most of historic emissions) should carry the burden of emission reductions, or the citizen in the developing countries, since in the developing countries production processes are inefficient and relatively more polluting. Alternatively, international burden sharing might be based on a more practical basis, searching for a scheme that provides the best option for international cooperation. Finally, the students will have an understanding of the portfolio of emission reduction measures and policy instruments and the special role of energy and energy security in climate change policy. Ten two-hour lectures using pdf+beamer plus 8 one-hour tutorials (starting in week 3) where per tutorial 4 students present and discuss a specific topic on the basis of their own reading of the literature. Students have to hand in the list of literature used, consisting of at least 5 papers, and have to refer to these papers during their discussion. Presentations take 15 minutes, including 5 minutes for comments by other students. 20% of the marking is based on these presentations and students' attendance and contribution during other student's presentations. 0 Other 100% For information about feedback please follow this link: http://www.campus.manchester.ac.uk/tlso/map/teachinglearningassessment/assessment/sectionb-thepracticeofassessment/policyonfeedbacktostudents/ (20%) Presentation during tutorial. Mark will only be received when present during other's presentations (80%) There will be one end-of-term exam (1.5 hrs) with two parts: 12 or 15 multiple choice questions plus One out of two essay type questions ECON10041 Pre-Requisite Compulsory ECON10081 Pre-Requisite Compulsory ECON20351 Pre-Requisite Compulsory ECON10061 Introductory Mathematics Pre-Requisite Compulsory ECON10001 Pre-Requisite Compulsory ECON10071 Advanced Mathematics Pre-Requisite Compulsory ECON10062 Introductory Statistics for Economists Pre-Requisite Compulsory ECON20292 Pre-Requisite Compulsory ECON10072 Advanced Statistics Pre-Requisite Compulsory Pre-Requisites: (ECON10041 or ECON10081) AND EITHER (ECON10061 & ECON10062) or (ECON10001 & ECON20292) or (ECON10071 & ECON10072) & ECON20351 Y THERE IS NO TEXT BOOK. The reading list consists of a series of papers published in international journals. In principle, students can download these papers through the university license system. They will also receive a reader with papers that the publisher has allowed to distribute. 2 Anderson, D., 2007. 'The Stern Review and the Costs of Climate Mitigation', in World Economics 8(1): 211-219. 1 Arnell, N, R. Warren, and R. Nicholls, 2007. 'Response to a dual critique', in World Economis 8(1): 229-231. 2,4 Azar C. and K.Schneider, 2002, Are the economic costs of stabilising the atmosphere prohibitive?, Ecological Economics 42, 73-80. 5 Barret S., 1994, Self-Enforcing International Environmental Agreements, Oxford Economic Papers 46, 878-894. 5 Barret S., 1998, On the Theory and Diplomacy of Environmental Treaty-Making, Environmental and Resource Economics 11, 317-333. 3 Burtraw D, A. Krupnick, K. Palmer, A. Paul, M. Toman, C. Bloyd. 2003. 'Ancillary benefits of reduced air pollution in the US from moderate greenhouse gas mitigation policies in the electricity sector', in Journal of Environmental Economics and Management 45:650-673. 2 Byatt I. Et al. 2006, 'The Stern Review: a dual critique, Part II Economic Aspects', in World Economics 7: 199-232. 1 Carter et al., 2006. 'The Stern Review: a Dual Critique, Part I: the Science', in World Economics 7(4): 165-198. 1 Friis-Christensen E. and K.Lassen, 1991, Length of the solar cycle: an indicator of solar activity closely associated with climate change, Science 254, 298-700. 2,4 Gerlagh, R. 2007. 'The Ramsey rule and climate change policy under limited commitment', mimeo. 2,4 Gerlagh R. and E.Papyrakis, 2003, Are the economic costs of (non-)stabilising the atmosphere prohibitive? A comment, Ecological Economics 46: 325-327. 3 Gerlagh R. and B.C.C.v.d.Zwaan, 2004, A sensitivity analysis on timing and costs of greenhouse gas abatement, calculations with DEMETER, Climatic Change 65, 39-71. 1 Glikson, A., 2007. 'Climate Change: a response to A dual critique', in World Economics 8(1):233-238. 5 * Grubb M., 1995, Seeking Fair Weather: Ethics and the International Debate on Climate Change, International Affairs 71: 463-496. (most interesting part after page 483) 3 Ha-Duong M., M.J.Grubb, and J.C.Hourcade, 1997, Influence of socioeconomic inertia and uncertainty on optimal CO2-emission abatement, Nature 390, 270-273. 1 Hansen J., L.Nazarenko, R.Ruedy et al., 2005, Earth's Energy Imbalance: Confirmation and Implications, Science 308, 1431-1435. 6 Hoffert M.I., K.Caldeira, A.K.Jain et al., 1998, Energy implications of future stabilization of atmospheric CO2 content, Nature 395, 881-884. 4 * Howarth R.B. and R.B.Norgaard, 1992, Environmental valuation under sustainable development, American Economic Review 82, 473-477. 5 * Kuik O.J. and R.Gerlagh, 2003, Trade Liberalization and Carbon Leakage, The Energy Journal 24, 97-120. 2 Lise W. and R.S.J.Tol, 2002, Impact of climate on tourist demand, Climatic Change 55, 429-449. 1 Mann M.E., R.S.Bradley, and M.K.Hughes, 1998, Global-scale temperature patterns and climate forcing over the past six centuries, Nature 392, 779-787. 1 Mitchell et al., 2007. 'Climate Change: response to Carter et al.', in World Economics 8(1):221-228. 2 * Nordhaus W.D., 1993, Optimal greenhouse-gas reductions and tax policy in the "DICE" model, American Economic Review 83, 313-317. 4 Nordhaus W.D., 1997, Discounting in economics and climate change, Climatic Change 37, 315-328. 6 Pacala S. and R. Socolow, 2004, Stabilization wedges: solving the climate problem for the next 50 years with current technologies. Science 305: 968-972. 5 Ringius, L., A. Torvanger, and A. Underdal, 2002, Burden sharing and fairness principles in international climate policy, in International Environmental Agreements: Politics, Law and Economics 2:1-22. 2 * Schelling T.C., 1992, Some economics of global war 0 0 0 Information Pre-requisites: (ECON10041 or ECON10081) AND EITHER (ECON10061 & ECON10062) or (ECON10001 & ECON20292) or (ECON10071 & ECON10072) AND ECON20351 THERE IS A QUOTA ON THIS COURSE - first come first serve basis THIS COURSE NEEDS MUCH INDEPENDENT WORK, reading of tough papers, and has STRICT DEADLINES FOR ESSAYS - Past students considered this course very challenging.Timetable Lecture: Thursday 12-2pm (room to be confirmed) Tutorials: To be confirmedURL https://blackboard.manchester.ac.uk