Economics of the Environment and Climate

ENE423 Economics of the Environment and Climate

Autumn 2021

  • Topics

    This is a masters level course in environmental challenges and how they affect the firm, with some emphasis on climate change. It is about sustainability, or sustainable development. It goes beyond FOR15 Introduction to Environmental Economics in being more advanced, and part of this is an emphasis on climate change. Climate change is special amongst environmental problems in being global, intergenerational, and involving new science.

    Advancements take the following shapes, all led from a practical angle of how this affects and is relevant from the viewpoint of firms, and through markets. Apart from the special emphasis on the economics of cooperation using game theory, and the intergenerational cost benefit analysis, advancements are in the direction of modern theory: incentives, and in the directions of political economy and institutions. Policy instruments play a prominent role in this course, as in FOR15. 

    An ethical dimension: say individuals or groups or concerns that are poorly represented, endowed or otherwise marginalized (unborn, say) is an important part of this study. Also: do firms and individuals, or should firms and individuals, care about such aspects of their decisions as sustainability, or carbon footprint? If so: how? consequences? 

    Literature is partly from Kolstad's book Environmental Economics, partly from Scott Barrett's book Environmental Statecraft, and also journal articles. 

  • Learning outcome


    Upon successful completion, the student

    • Can identify ethical dimensions in the problem of environmental policy, climate policy, and treaties, especially as these relate to distribution, efficiency and decisions
    • Is able to connect the challenge of managing the environment to characteristics of
      • the physical environment, 
      • the stakeholders, such as individuals, firms and states, their endowments and preferences
      • institutions
    • Can place the firm, its owners and other stakeholders in their various roles, including from perspectives such as political economy and institutions.


    Upon successful completion, the student

    • Understands how market failure - such as pollution problems - require different logic, policies and engagement when they are transnational,
    • Is able to analyse
      • how the firm and a sector is affected both by environmental / global change and by policies and treaties
      • how the firm and a sector is likely to engage to influence policy
      • the strengths and weaknesses of government policy instruments, pollution taxes, regulation, tradable permits, within the framework of a benevolent planner;
    • Knows the basic methodological challenges and methods used in prioritizing environmental problems and protection
    • Understand the institutions and political economy of environmental issues, including the basic notions of property rights and liability, as well as international treaties

    General Competence:

    Upon successful completion, the student is able

    • to use these concepts and techniques in an applied setting and to communicate insights and results;
    • to analyse an environmental management issue in the light stakeholder interests, institutions, and their evolution.

  • Teaching

    Lectures, about 20, including guest lectures. Group presentations and discussion. The course is delivered two-way both in auditorium M46 and virtually. We hope auditorium is used by all who can, with good experience for everyone. Welcome!

  • Recommended prerequisites

    Students are recommended to have covered a program equivalent of the Bachelor program at NHH, and in particular to master intermediate economics (microeconomics in particular), and corresponding analytical tools.

    Bachelor course in Introductory Environmental Economics, FOR15 Introduction to Environmental Economics, or equivalent, is advantageous, not required.

  • Credit reduction due to overlap


  • Requirements for course approval

    The student delivers, individually, one home assignment (in English) submitted and approved: two pages / 600 words. The assignment is graded approved/try again/rejected. Having the assignment approved is necessary prior to submitting the term paper.

    The student is also required to deliver a group presentation, in groups of approximately 6, on an assigned topic. The presentation is approved/try again/rejected. Having the presentation is necessary prior to submitting the term paper.

  • Assessment

    The assessment is based on a term paper (duration approx. 14 days, in November) of approx. six pages/ 2500 words, delivered alone.

  • Grading Scale

    A - F.

  • Computer tools


  • Literature

    Charles Kolstad book (intermediate) Environmental Economics, some chapters from William Nordhaus: Climate Casino, Scott Barrett: Statecraft, some supporting articles. Most distributed by lecturer. 


ECTS Credits
Teaching language

Autumn. Offered Autumn 2021.

Course responsible

Professor Gunnar S. Eskeland, Department of Business and Management Science.