The course introduces the concept of ecosystem services (ES), their value for society, the causes of their degradation and potential policies to reduce degradation, from an environmental economics perspective. The main focus is thus on policy options for addressing ecosystems' degradation. The strengths and weaknesses of alternative policies are analyzed and illustrated with examples.
The objective is to draw on insights from environmental economics for explaining human-induced ecosystem change and for assessing the potential of policies and economic incentives as strategies to reduce ecosystem services degradation. Students understand the relevance of environmental economics in application to the sustainable provision of ecosystem services (ES). They can define different categories of ecosystem services and understand underlying sources of market failure that lead to suboptimal human decisions regarding ES provision. They understand the importance of policy choice and policy design. This incorporates both established and newer policy approaches that can be used to address market failure and move towards better outcomes from a societal point of view. They can assess strengths and weaknesses of alternative policy approaches and instruments and understand the basis for selecting among alternative instruments to address ecosystems' degradation. Students have an improved understanding of the political economy underlying the making of environmental policy. They know a variety of real-world applications of different policy approaches related to land use choices and ES in developing and developed countries. Finally, they understand approaches for assessing policy impacts.
The Millennium Ecosystem Assessment found that 60% of the world's ecosystem services (ES) are being degraded or used unsustainably. The UN report on 'The Economics of Ecosystems Services and Biodiversity' highlighted the impacts on human well-being and the role of policy in addressing ecosystems' degradation. Evaluating changes in ES from a societal perspective first requires an assessment of the societal value of different ES and the tradeoffs between them. Second, we need to understand the drivers of human decision-making affecting ES. Examples will be provided on resource use choices in developed and developing countries. Third, an assessment of the causes of excessive ES degradation is needed. Potential causes include the presence of externalities, improperly designed property rights systems, divergence of private and social discount rates, and lack of information and knowledge. Understanding the causes helps to design policies for more sustainable outcomes. Policies include command-and-control, economic incentives (for example, eco-taxes, tradable permits, government payments for ecosystem services), and decentralized approaches (for example, voluntary agreements, eco-labeling, participatory management). Choosing an appropriate policy instrument (or a combination thereof) requires an understanding of the relative strengths and weaknesses of alternative instruments, their preconditions for success and the political economy of their implementation. Finally, assessing the actual impacts of policy once implemented requires a careful assessment of appropriate baselines.
Lecture notes, homework exercises and readings for each class will be made available on OLAT.
There is no single textbook for this class. Instead, a number of articles and book chapters will be suggested for each of the topics addressed during the lecture.
Prerequisites / Notice
The course consists of a combination of lectures, homework assignments on real world case studies, a computer exercise, and an exam. A prerequisite for this course is a bachelor-level course in Environmental Economics (e.g. 751-1551-00). In particular, students are expected to be familiar with basic environmental economics' concepts such as externality, public good, market failure, opportunity cost, social optimum and market equilibrium, among others. Students with no background in environmental economics can be provided with readings but will be expected to come up to the required standards on their own, prior to starting the class. Please contact Dr. Andrade de Sá (email@example.com) for these.