POSTGRADUATE INSTITUTE OF AGRICULTURE UNIVERSITY OF PERADENIYA, SRI LANKA Second Semester 2005/06 EC 6203: Resource and Environmental Economics II (2) Prof.S.Thiruchelvam & Dr.Ranjith Bandara. Course focuses mainly on the economic principles of natural resources & environment. Included are:
POSTGRADUATE INSTITUTE OF AGRICULTUREUNIVERSITY OF PERADENIYA, SRI LANKASecond Semester 2005/06EC 6203: Resource and Environmental Economics II (2)Prof.S.Thiruchelvam & Dr.Ranjith Bandara
Course focuses mainly on the economic principles
of natural resources & environment. Included are:
Adv. analysis on externalities.
Allocation of natural resources to max. HW.
Market failure, reasons & guidance to correct MF.
Core social science knowledge on managing env.
1.Overview of environmental policies.
2. Quantity control and price controls.
3. Command and control methods. Quiz 1. 5%
4. Pigouvian taxes and charges Subsidies.
5. Tradable permits.
6 Liability rules;non-compliance fees, bond, & D funds
Mid-term 25% (1 ½ hours).
7.Criteria for policy selection .
8. General equilibrium effects & double dividend.
Quiz 2. 5%
9 - 14. Special Assignments Presentations 15%
15. End-term 50% ( 2 hours)
(Natural) Resource Economics NRE
EarlierNRE was concerned mainly with pricing natural resource inputs & identifying optimal rates of depletion (mineral, ag., forestry economics etc)
logic = just a special case of other normal factors of production (inputs);
focus on the “free” resources provided by nature)
EE more comprehensive integration of NRE and EE
because of realisation that environmental resources are the media of waste/pollution eg. acid rain affects forestry; resource degradation = depletion ie. damage from pollution affects value / supplies of environmental resources.
EE addresses these unpriced effects and usually
attempts to extend the market to cover them
ENV EC attempts to convert the unpriced effects of
waste and pollution, & resource loss, into market
situations (the “internalisation” of Es into a M FW)
Internalise: To provide incentives so that externalities are taken into account internally by firms or consumers.
If nobody owns the fish in the sea, the fish in the
sea has no value to the fisherman until it is caught.
If nobody owns the fresh air, no-one can complain
when it is polluted
What we do. Standard mode of operations.
We calculate how e economy works in e absence of regulations (or in the presence of stupid egulations.)
We calculate what the economy should look like.
Then we see what kind of policy instruments we
can use to make the two solutions coincide