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The Economics of Climate Change

The Economics of Climate Change

The Economics of Climate Change is an introductory course into the economic assessment of climate change impacts and optimal mitigation and adaptation response. Welfare-economic concepts such as cost-benefit analysis, (inter-generational) discounting, non-market valuation, and different concepts of social welfare are applied to understand the impact of climate change and climate change mitigation on long-term welfare and growth. Since these concepts can be applied to many public policy problems, the course is also an introduction into intertemporal welfare theory and public economics.

The Economics of Climate Change is taught in the summer semester. In the winter semester, there is a complementary course on The Economics of Climate Policy. That course takes a decentralized policy perspective, discussing incentives, policy instruments, and game theory.

Lecture and tutorial: The course consists of a lecture and a tutorial. The lecture provides reasoning, theory, and the narrative. The tutorial provides analytical concepts, formal models, and mathematical techniques. Lecture and tutorial are complementary, and most students prefer to take both. However, for students that are not interested in formal approaches, there is also the option to attend only the lecture. Hence we offer two modules:

  • “The Economics of Climate Change”: lecture and tutorial, 6 ECTS, module number 60431.
  • “The Economics of Climate Change – lecture only”: 3 ECTS, module number 60772.

Grading: Students will be graded based on weekly problem sets (homework assignments) and a mid-term exam; there is no final exam. Make sure you attend the course from the beginning on, as we start with assignments immediately. Ph.D. students will be asked to take an oral exam in addition to the assignments and the mid-term exam.

Prerequisites: The course is an advanced Master-level and PhD-level course. At least basic knowledge of micro- and macroeconomics is expected, as well as good command of standard mathematical techniques including taking derivatives, integration and the concept of differential equation. Taking a class in environmental economics prior to this course is recommended. Students without a background in economics are asked to become familiar with these concepts prior to the semester.

Registration: No registration is required prior to the start of the course. We also welcome students from HU, FU, Potsdam, and Gasthörer. There is no restriction on Wahlfach- or Zusatzmodul-students. Please submit your contact details here to receive relevant information: Registration

Course material: Course material, such as slides and assignments, will be provided via the ISIS-course. The course requires a password for Non-TU-Students, please contact us via mail. Assignments can be submitted electronically or handed in in class.

Time and date: The lecture takes place Fridays 14 – 16; the tutorial Mondays 10 – 12. Dates and venues: LSF (Vorlesungsverzeichnis). Due to time constraints, lecture and tutorials might switch. Please find the latest schedule on ISIS.

Wahlpflicht: You can always attend the class as “freies Wahlfach” or as “Zusatzmodul”. The following programs accept the course as “Wahlpflichtfach” (not all programs accept the 3 ECTS-version of the course):

Topics: starting from the perspective of a social planner, we provide a systematic overview of the relevant issues in climate change policy. This includes, inter alia:

  • Physics of climate change: global warming, radiative forcing, greenhouse gases, feedbacks, carbon cycle, uncertainties and projections
  • Climate change impacts on biological and human systems, vulnerability, adaptive capacity, tipping points
  • Social cost-benefit analysis: market and non-market valuation of impacts, discounting and its ethical implications for inter-generational equity, treatment of fundamental uncertainty
  • Stock pollutants: the atmosphere as a limited disposal space for greenhouse gases
  • Social welfare: concepts of social welfare, equity and fairness, social welfare functions, approaches to measure welfare in a broader sense
  • Growth: the interrelation between, climate change and economic development and growth, theories of economic growth, Hotelling’s rule for optimal resource extraction
  • Mitigation options in different sectors, including land and bioenergy, cities and transport, power generation and geoengineering

Obligatory readings (along with the course)

  • Stern Review, part I – III.
  • IPCC AR5 WG III, chapters 2-12
  • Perman et al.: Natural Resource and Environmental Economics, Pearson.
  • A number of specific articles will be distributed during the semester. Students are expected to read about one paper per week.

Recommended readings (to prepare for the course)

  • Endres: Umweltökonomie, Kohlhammer.
  • Sohmen: Allokationstheorie und Wirtschaftspolitik, Siehbeck.
  • Dixit: Optimization in Economic Theory, Oxford University Press. google books
  • Chiang: Fundamental Methods of Mathematical Economics, McGraw Hill. (Deutsch: Mathematik für Ökonomen)

If you have questions, please contact Janis Bergmann ().

 

Shortlink to this page: www.bit.do/climatecon

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