The Economics of Climate Change

Course content

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.


MSc Programme in Climate Change

MSc Programme in Environmental Science
MSc Programme in Forest and Nature Management


Learning outcome

The aim of the course is to provide a good understanding of the economic aspects of climate change and the economics of policy measures to control climate change. After completing the course the student should be able to:


  • Describe the basic concepts of market equilibrium, market failure, (global) externalities and the rationale for public intervention to control externalities.
  • Describe basic principles of methods used to obtain information about consumers’ preferences.
  • Describe the relevant instruments to control the emission of GHG.
  • Explain the economic principles and problems associated with global climate change agreements.
  • Summarise the magnitudes of global costs and benefits associate with the control of climate change.
  • Summarise the existing international climate change agreements and the instruments applied.
  • Reflect on the ethical aspects of environmental justice and burden sharing in international climate policy.



  • Identify relevant approaches to economic analysis of GHG emissions and climate change.
  • Select relevant instruments to control GHG emissions.
  • Identify economic obstacles to global climate change agreements.
  • Identify economic approaches to remove obstacles to global climate agreement.


  • Incorporate economic considerations in scientific and political analyses of climate change issues.
  • Evaluate the different policy instruments available to control GHG emissions.
  • Explain the relevance and limitations of economic approaches to the control of climate change.
  • Assess the economic aspects of (current) climate policy negotiations and the relevance of the policy instruments suggested to realise the targets.

Teaching comprises lectures and exercises including written course assignments where the students analyse the economic aspects of specific climate change issues. The assignments are organized as group work.

It is recommended that students have acquired basic competences in micro economics (e.g. LOJB10259 or similar courses).

Academic qualifications equivalent to a BSc degree is recommended.

Peer feedback (Students give each other feedback)
7,5 ECTS
Type of assessment
On-site written exam, 4 hours under invigilation
Type of assessment details
The written exam is in the course literature specified as "Curriculum for exam".
Exam registration requirements

Active participation in group assignment work and hand-in of a group assignment report. The report must be approved to allow participation in the final exam.

All aids allowed
Marking scale
7-point grading scale
Censorship form
External censorship

Identical to ordinary exemination. If 10 or fewer register for the re-examination the examination form will be oral. The oral exam lasts 20 - 25 minutes with no time for preparation and no aids allowed.

If the student did not get the group project report approved, then the project must be carried out individually and it must be handed in three weeks prior to the  re-exam. It must be approved before the exam.

Criteria for exam assessment

Please refer to course description and learning goals

Single subject courses (day)

  • Category
  • Hours
  • Lectures
  • 42
  • Preparation
  • 136
  • Exercises
  • 24
  • Exam
  • 4
  • English
  • 206


Course number
7,5 ECTS
Programme level
Full Degree Master

1 block

Block 3
No limitation – unless you register in the late-registration period (BSc and MSc) or as a credit or single subject student.
Study Board of Geosciences and Management
Contracting department
  • Department of Food and Resource Economics
Contracting faculty
  • Faculty of Science
Course Coordinators
  • Max Nielsen   (3-72667d456e6b777433707a336970)
  • Sigrid Denver   (2-7768446d6a7673326f7932686f)
Saved on the 14-02-2024

Are you BA- or KA-student?

Are you bachelor- or kandidat-student, then find the course in the course catalog for students:

Courseinformation of students