The Economics of Climate Change

This course investigates the economic aspects of climate change and the economics of climate policy in a global perspective.

The course starts with a brief introduction of the key economic concepts, which are useful to analyze the climate change problem (e.g. market equilibrium, efficiency and optimality, externalities and public goods, property rights, market failure).

The course then discusses the issues around international environmental problems from a game theory perspective. It analyzes several pollution control instruments, with a particular focus on the use of tax incentives and marketable permits to control emissions of greenhouse gases. As our private consumption of e.g. food is related to substantial emissions of greenhouse gases, the course also discusses how knowledge about consumers’ preferences can be obtained and how policy instruments can be applied to improve the sustainability of our consumption habits.    

The final part of the course addresses the mitigation/adaptation problem, specific issues such as the role of energy prices, the transition to renewable energy and the situation and role of developing countries. The latter includes ethical principles underlying equity and environmental justice considerations in a North-South perspective.

The economic understanding and analysis of the transition to a sustainable and carbon neutral future is core to the course. Focus is on how to achieve sustainable and efficient regulation of GHG emission reductions and to identify costs and benefits of carbon reducing initiatives. The course treat the United Nations World sustainable development goals no. 7. Affordable and clean energy, 11. Sustainable cities and communities, 12. Responsible production and consumption and 13. Climate action.