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AEM 6510 - Environmental and Resource Economics

Class location: Warren B02

Class time: Tues/Thurs 2:45-4:00

Office hours: Tues 4:00-5:00 Warren 462

Teaching assistant: Weiliang Tan

TA office hours: Mon 4:00-5:00 Warren B02

Textbook: A Course in Environmental Economics by Phaneuf and Requate is required. Causal Inference: The Mixtape by Cunningham is also required and free.

Prerequisites: MATH 1110 or equivalent. Previous experience at the intermediate microeconomic level is highly recommended.

Course description: An introduction to environmental economics. The first half of the class focuses on the core theory, theory of regulation, and theory of welfare analysis. The second half of the course covers empirical topics. We will be learning how to use R for empirical research in environmental economics.

Course requirements: Students are expected to prepare for class, prelims, and complete problem sets outside of class.

Grading and Assignments

Grading

  • Prelims: 30% and 25%
  • Problem sets: 20%
  • Final project paper: 20%
  • Final project presentation: 5%

The grading scale is:

  • A: 92-100; A-: 90-91
  • B+: 88-89; B: 82-87; B-: 80-81
  • C+: 78-79; C: 72-77; C-: 70-71
  • D+: 68-69; D: 62-67; D-: 60-61
  • F: < 60

Prelims

There will be 2 prelims. The theory prelim will be in person, the empirical prelim will be take-home. You have 48 hours for the empirical prelim. The class time during the empirical prelim is reserved for Zoom office hours for any questions. You are expected to complete the prelims on your own, not in groups. Your higher-scoring prelim will be 30% of your grade, your lower-scoring prelim will be 25% of your grade. If you miss a prelim without an acceptable excuse you will receive a zero. If you have an acceptable excuse (these must be brought in beforehand except for sickness, injuries, accidents, etc) an alternative prelim will be scheduled. If you miss a prelim and do not notify me beforehand you must have a valid document (doctor's note, etc) explaining why you missed class and were not able to let me know before the missed prelim. Prelims submitted late will have a 30% deduction.

Problem sets

You will have 4 problem sets. You may work in groups of up to 3 on problem sets and turn in one for your entire group. Problem sets may be turned in late with a penalty of 20% of that homework's grade for each day it is late. Problem sets are due at the start of class on Canvas.

Final project

For your final project you can choose between a literature review or a data dive. Descriptions of both are below and more details will come a few weeks into the semester.

Literature review

You can do a literature review on up to 3 papers on an environmental, resource, or energy economics topic of your choice. Your goal will be to summarise the findings, find common threads, and work yet to be done in the area. In the last two weeks of class you will give a short presentation of your review of the literature. Papers are due after the semi-final period. My approval of your choice of papers is required before you start the literature rev

Data dive

You can find a new dataset that we do not cover in class but appears useful for environmental economics research. Your goal is to describe the data, how you get them, how you use them, and what makes them relevant. You will also need to do some preliminary analysis on the data. In the last two weeks of class you will give a short presentation of the data and your preliminary analysis. Papers are due after the semi-final period. My approval of your choice of dataset is required before you start the literature review.

Readings

Some sections of the course have readings (available on Canvas if not in the book or through the library). The lectures, homeworks and exams will draw from these readings. Lecture notes will be posted online at the end of each section.

Important dates

  • Problem set 1: TBD [link here]
  • Problem set 2: TBD [link here]
  • Problem set 3: TBD [link here]
  • Problem set 4: TBD [link here]
  • Theory prelim: October 14
  • Empirical prelim: November 22-23
  • Final project paper due: December 10
  • Final project presentations: November 30, December 2, December 7

Other things

Attendance: Class attendance is not explicitly required but highly recommended.

Grade appeals: If you wish to appeal your grade on a prelim or problem you must bring it to my attention, in writing, within 24 hours of when the prelim or problem set is returned. Grades brought to my attention after this will not be eligible for a grade appeal. I reserve the right to regrade the entire assignment and the new grade will be final.

Group work: For problem sets, you may consult with me or Diego during office hours, or with other students. Problem sets can done in groups of up to 3. If you work in a group, turn in only one assignment for the group. You must complete prelims without help.

Integrity of credit: I expect every student in this course to abide by the Cornell University Code of Academic Integrity. I strongly encourage collaboration in this course, but each student is responsible for making sure that she or he follows the rules laid out in this syllabus, and with those stated in the Code of Academic Integrity. Any student found to have violated the stated policies on problem sets will receive a zero for that assignment, and any student found to have cheated on a prelim will receive a zero on that prelim. Multiple violations in a semester may result in failure of the course. The Code of Academic Integrity is available for review here: https://cuinfo.cornell.edu/aic.cfm.

Course outline and readings

Aug 26: Micro and math recap

Reading: None

Aug 31: Theory of externalities

Reading: PR Chapter 1

Sep 2, 7: Introduction to the theory of environmental policy

Reading: PR Chapter 3

Sep 7: Imperfect information

Reading: PR Chapter 4.1.1-4.1.2

Sep 9, 14, 16: Competitive output markets

Reading: PR Chapter 5

Sep 21: Non-competitive output markets

Reading: PR Chapter 6

Sep 23: Pre-existing distortions

Reading: PR Chapter 7

Sep 28, 30: Theory of applied welfare economics

Reading: PR Chapter 14

Oct 5: Revealed preference models

Reading: PR Chapter 15

Oct 7: Hedonics

Reading: PR Chapter 18

Oct 14: Theory Prelim

Oct 19: R and the tidyverse, causal inference

Reading:

  • Mixtape: properties of regression, directed acyclical graphs, potential outcomes causal model
  • Greenstone, M. and Gayer, T., 2009. Quasi-experimental and experimental approaches to environmental economics. Journal of Environmental Economics and Management, 57(1), pp.21-44.

We will be using RStudio Cloud for computing.

Oct 21: R and the tidyverse, causal inference, randomized control trials

Reading:

  • Mixtape: properties of regression, directed acyclical graphs, potential outcomes causal model
  • Guiteras, Raymond, James Levinsohn, and Ahmed Mushfiq Mobarak. "Encouraging sanitation investment in the developing world: a cluster-randomized trial." Science 348, no. 6237 (2015): 903-906.

Oct 26: Deforestation, remote sensing/simple features, regression discontinuity

Reading:

  • Mixtape: regression discontinuity
  • Geocomputation with R
  • Burgess, R., Costa, F. and Olken, B.A., 2019. The Brazilian Amazon’s Double Reversal of Fortune.

Oct 28: Hedonics

Reading: Muehlenbachs, Lucija, Elisheba Spiller, and Christopher Timmins. "The housing market impacts of shale gas development." American Economic Review 105, no. 12 (2015): 3633-59.

Nov 2, 4: Environmental health, difference-in-differences, and event studies

Reading:

Nov 9: Climate change science

Reading:

  • Hsiang, S. and Robert Kopp. 2018. An economist's guide to climate change science, Journal of Economic Perspectives, Vol. 32, No. 4, pp. 3-32.
  • Hsiang, S., 2016. Climate econometrics. Annual Review of Resource Economics, 8, pp.43-75.
  • Good resource on doing climate-econ research: ClimateEstimate.net

Nov 11: Climate change and the Ricardian model

Reading:

  • Mendelsohn, R., Nordhaus, W.D. and Shaw, D., 1994. The impact of global warming on agriculture: a Ricardian analysis. The American economic review, pp.753-771.
  • Ortiz‐Bobea, A., 2020. The role of nonfarm influences in Ricardian estimates of climate change impacts on US agriculture. American Journal of Agricultural Economics, 102(3), pp.934-959.

Nov 16: Climate change and two way fixed effects, integrated assessment

Reading:

  • Deschênes, O. and Greenstone, M., 2007. The economic impacts of climate change: evidence from agricultural output and random fluctuations in weather. American Economic Review, 97(1), pp.354-385.
  • Burke, M., Hsiang, S.M. and Miguel, E., 2015. Global non-linear effect of temperature on economic production. Nature, 527(7577), pp.235-239.

Nov 18: Climate change in space

Reading:

  • Desmet, K., Kopp, R.E., Kulp, S.A., Nagy, D.K., Oppenheimer, M., Rossi-Hansberg, E. and Strauss, B.H., 2021. Evaluating the Economic Cost of Coastal Flooding. American Economic Journal: Macroeconomics, 13(2), pp.444-486.
  • Nath, I.B., 2020. The Food Problem and the Aggregate Productivity Consequences of Climate Change (No. w27297). National Bureau of Economic Research.
  • Rudik, I., Lyn, G., Tan, W. and Ortiz-Bobea, A., 2021. Heterogeneity and Market Adaptation to Climate Change in Dynamic-Spatial Equilibrium.

Nov 22, 23: Empirical prelim

Nov 25: Thanksgiving break

Nov 30: Final project presentations

Dec 2: Dr. Ewa Zawojska Guest Lecture: Stated Preferences

Dec 7: Travel Cost / Recreation Demand

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AEM 6510 Masters Environmental and Resource Economics

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