Economics of the Environment, Natural Resources and Climate Change

Course content

The course introduces the basic economic concepts relevant for analyzing problems and policies relating to the environment, natural resources and climate change, using theories and analytical tools from microeconomics and macroeconomics.


MSc programme in Economics – elective course

Bacheloruddannelsen i økonomi – Prioriteret valgfag på 3. år

The Danish BSc programme in Economics - prioritized elective at the 3rd year

FAGET ERSTATTER Miljø-, ressource- og klimaøkonomi (AØKK08094U). Grundet pensum overlab er det ikke tilladt at deltage på AØKA08227U - Economics of the Environment, Natural Resources and Climate Change, hvis Miljø-, ressource- og klimaøkonomi (AØKK08094U) er bestået.


Learning outcome

After completing the course, the student should be able to:

Knowledge: account for..

  • The central economic services provided by the environment

  • The basic theory of optimal management of natural resources

  • The economic definitions and applicability of the concepts of “Green Growth” and “Sustainable development”

  • The distinction between “weak” and “strong” sustainability

  • The key issues in the debate on the choice of discount rate in the evaluation of environmental and climate policies

  • The principles for valuation of environmental goods and services

  • The theory of the environment as a public good

  • The basic theory of optimal environmental policy and regulation, including the distinction between first-best and second-best policy

  • The advantages and disadvantages of alternative instruments of environmental policy

  • The theory of optimal environmental taxation and the debate on the “double dividend” from a “green” tax reform

  • The assumptions underlying standard Integrated Assessment Models of climate change

  • The issues involved in the debate on the valuation of damages from climate change

  • The concepts of the Social Cost of Carbon and the Strategic Social Cost of Carbon

  • The basic theory of optimal climate policy, including guidelines for a rational climate policy under fundamental uncertainty

  • The basic economic issues and incentives relating to international negotiations on climate policy

  • The theory of the “Green Paradox” in climate policy and the critique of this theory


  • Apply the standard mathematical method for static optimization subject to constraints to analyze environmental policy problems such as the determination of the optimal level of pollution abatement and the optimal environmental tax rates

  • Apply optimal control theory to solve dynamic optimization problems subject to constraintssuch as the determination of the optimal extraction of natural resources and the optimal pace of reduction of greenhouse gas emissions


  • Explain and present central parts of economic theories and models of the environment, natural resources and climate change in a clear and correct language

  • Undertake a critical evaluation of the strengths and weaknesses of the theories and models presented in the course

  • Present and evaluate key parts of the theory of environmental regulation and discuss the role of the state and the market in the implementation of environmental policy goals

  • Apply the theoretical and empirical insights from the course in a critical analysis and discussion of important real-world problems of environmental and climate policy


As a complement to the ordinary lectures, the course includes guest lectures by Danish experts who will present examples of practical applications of the theories presented in the course. The course also includes a half-day seminar on Environmental Economics where leading representatives of the Danish Environmental Economic Council and the Danish Council on Climate Change will present their most recent analyses and policy recommendations for discussion by invited expert commentators.
Before the end of the first month of teaching students must hand in a mandatory exercise involving the application of optimal control theory to the solution of an environmental policy problem. During the course students will be invited to solve additional exam-relevant exercises on a voluntary basis.

The Syllabus consists of a selection of scientific papers by leading authors in the field plus lecture notes by Peter Birch Sørensen. A detailed list of the syllabus is posted in Absalon.


Knowledge of microeconomic and macroeconomic theory corresponding to the requirements in the first two years of the Bachelor programme in the Department of Economics.

FAGET ERSTATTER Miljø-, ressource- og klimaøkonomi (AØKK08094U). Grundet pensum overlab er det ikke tilladt at deltage på AØKA08227U - Economics of the Environment, Natural Resources and Climate Change, hvis Miljø-, ressource- og klimaøkonomi (AØKK08094U) er bestået.

2 hours lectures 1 to 2 times a week from week 36 to 50 (except week 42).

The overall schema for the BA 3rd year can be seen at https:/​/​​polit_ba/​undervisning/​Lektionsplan-E17/​skemaer/​Sider/​default.aspx

or the Master at https:/​/​​economics_ma/​courses/​CourseCatalogue-E17/​Courseschema/​Pages/​default.aspx

Timetable and venue:
To see the time and location of lectures and exercise classes please press the link/links under "Se skema" (See schedule) at the right side of this page. E means Autumn. The lectures is shown in each link.

You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E17; [Name of course]””
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5”
Press: “ View Timetable”

7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
individual exam at the computers of Copenhagen University.
The exam assignment is in English and must be answered in English.
Without aids
Marking scale
7-point grading scale
Censorship form
External censorship
if chosen by the Head of Studies.
Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the course.

To receive the top grade, the student must be able to demonstrate in an excellent manner that he or she has acquired and can make use of the knowledge, skills and competencies listed in the learning outcomes.

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 42
  • Class Instruction
  • 28
  • Exam
  • 3
  • Preparation
  • 133
  • English
  • 206