School of Social Sciences University of Texas at Dallas

Spring 2006

ECO 4396 Resource Economics

Class time: MW 9-10:15am Class room: CB 1.108

Instructor: Wenhua Di TA: Hong Chao
Office: GR 3.308 Office: GR 2.816
Office hours: M 2-4 Office hours: F 10-12
Email: wenhua.di@utdallas.edu Email: hxc045100@utdallas.edu
Phone: 972-883-4961 Phone: 972-883-4914

Course description:

This is an undergraduate course on selected topics in natural resources and environmental

economics. The first third of the course will be a review of basic theory and methods for
economics analysis of resource and environmental problems. For example, the concepts
of efficiency and sustainability, the causes of misuse of natural resources and pollution
problems; the mechanism of policy instruments in dealing with these problems, and
criteria for comparing the instruments. The second third of the course will apply the
concepts to natural resources management. We will cover topics from non-renewable to
renewable natural resources. As an extension, the final third of this course will be
discussions of environmental pollution problems, which include pollution in difference
media (water, air, etc.) and at different scales (local, regional, and global).

Textbooks and references:

Required Textbook: Tietenberg, Tom. Environmental and Natural Resource Economics,

Seventh Edition. (Addison Wesley, Inc., 2006) You may find less expensive copies of
the sixth edition from online bookstores. A copy of the sixth edition has been put on
reserve at the library as well.

Non-required Collection of Primary Literature in Environmental Economics: Robert. N.

Stavins, Economics of the Environment: Selected Readings, 5th ed., (Norton, New York,
London, 2005). Electronic versions of most articles in this book can also be downloaded
at the website of UTD library.

Updated Syllabus and other course information will be placed on WebCT at the URL:
(webct.utdallas.edu), you need your Net ID and password to get access to it.

Prerequisites:

This course is intended primarily for undergraduate students in economics, public policy,
political economy, or related fields with interests in applications in natural resources and
environmental area. Students should have taken Principles of Microeconomics for
preparation, and be familiar with basic economic concepts, such as: supply and demand
functions, consumers’ surplus, opportunity cost, marginal analysis, and time discounting.
It may be helpful to review a microeconomics textbook before taking this course. A
highly recommended textbook for review is: Principles of Microeconomics by Mankiw,
N. Gregory (Fort Worth, TX: Harcourt College Publishers). Any edition of the book will
suffice.

Course Requirements and Grading:

Students are required to do problem sets or write short memos (1-3 pages) assigned in
classes. Doing problem set questions helps review materials learned in class; writing
short memos prepares for future class discussions. Assignments will be graded with a
check, a check plus or a check minus, which is equivalent to 4 points, 5 points and 3
points respectively. Only six out of seven highest assignment grades will be accounted
for the final grade.

There will be three exams for this class. The final grade will be calculated based on the
following allocation:
Exam I: 20%
Exam II: 20%
Exam III: 20%
Problem sets and memos: 30%
Class participation: 10% (This is a participatory class; while in class, you will frequently
be asked during class discussions to offer your opinions and draw on your personal
experience to offer insight into certain topics. These responsibilities are much easier to
meet if you have done the reading ahead of time.)

Academic Integrity:

You are expected and required to adhere to the highest standards of academic integrity.
With particular reference to the assignments you will complete for this course:

1. You are permitted and encouraged to work on problem sets in groups (up to three
students). However, each student must turn in her/his own problem set – direct use of a
group’s work or another person’s work, either through copying by hand or by
photocopying, is not permitted.

2. Any written materials that you turn in for course credit, including qualitative essay
questions on problem sets and the short memos, must be properly cited. Failure to
acknowledge ideas and phrases used in an essay or report that were gained from another
writer, including the Internet, will be considered plagiarism. Note that this includes
concepts taken from another source, even if you express them in your own words.

3. All exams are close-book, and it is not allowed to discuss with other students during
the exams.
Tentative Course Outline:
Topics
Part I: Basic Economics Theory for Resource and Environmental Problems
Introduction
Economic Perspective;
Efficiency;
Sustainability: first visit
Market Failure and Role
of Government
Cost-Benefit Analysis
Exam I
Part II: Natural Resource Economics
Categories of Resources
Depletable Resources:
Energy
Lecture Dates Readings
Jan 9 Syllabus
Tietenberg, Chapter 1—Visions of the
Future
Jan 11, Tietenberg, Chapter 2—Valuing the
Jan 18, Environment: Concepts
Jan 23 Fullerton and Stavins, “How
Economists See the Environment,”
Nature (395): 433-434, 1988
Tietenberg, Chapter 5—Sustainable
Development, Defining the Concept.
Tietenberg, Chapter 7—The Allocation
of Depletable and Renewable Resources
(page 133-149)
Jan 25, Tietenberg, Chapter 4—Property
Jan 30, Rights, Externalities, and
Feb 1 Environmental Problems
Optional: Coase, Ronald. “The Problem
of Social Cost.” The Journal of Law
and Economics 3: 1-44. 1960.
Feb 6, Tietenberg, Chapter 3—Valuing the
Feb 8, Environment: Methods
Feb 13, Arrow et al. “Is There a Role for
Feb 15 Benefit-Cost Analysis in
Environmental, Health, and Safety
Regulation?” Science, 14; 272: 1569-
1573 1996.
Feb 20
Feb 22 Tietenberg, Chapter 7—The Allocation
of Depletable and Renewable Resources
(page 128-133)
Feb 27, Tietenberg, Chapter 8—Depletable,
Mar 1 Nonrecyclable Energy Resources: Oil,
Gas, Coal, and Uranium
 Water Mar 13 Tietenberg, Chapter 10— Replenishable
But Depletable Resources: Water
Renewable Resources
Forests Mar 15 Tietenberg, Chapter 12—Storable,
Renewable Resources: Forests
Fishery and other Mar 20, Tietenberg, Chapter 13—Renewable
species Mar 22 Common-Property Resources: Fisheries
and Other Species

Exam II Mar 27

Part II: Environmental Economics

Categories of pollutants; Mar 29, Apr Tietenberg, Chapter 15⎯Economics of
Pollution Control Policy 3, Apr 5 Pollution Control: An Overview.
Instruments;
Choosing among
Policies
Stationary Source Apr 10 Tietenberg, Chapter 16—Stationary-
Pollution Source Local Air Pollution
Regional and Global Apr 12 Tietenberg, Chapter 17—Regional and
Pollution Global Air Pollutants
Mobile Sources Apr 17 Tietenberg, Chapter 18—Mobile-Source
Air Pollution
Water Pollution Apr 19 Tietenberg, Chapter 19—Water Pollution

Exam III Apr 24