Environmental Economics

ENE423 Environmental Economics

Spring 2019

  • Topics

    Environmental problems and environmental policies affect businesses and individuals, and these linkages are the main focus of ENE 423: Businesses will have to respond as environmental challenges arise, either with environmentally friendly solutions, in other ways to live with environmental change, or to influence environmental policies.

    In environmental economics we deal with those social goals that are broadly termed 'environmental', and in this course we try to equip ourselves both with method, knowledge, examples and discussion. Also, we try to cover both normative aspects - theories and perspectives on how things should be done - and positive aspects: how policies and solutions come about.

    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.

    The course is concerned with the impact of the economy on the environment, the significance of the environment to the economy, and how the 'regulation' of economic activity is balanced among environmental, economic, and other social goals.

    For most goods and services in a modern society, we rely on markets to match producer costs with consumer demands and thus to govern consumption and production. A result from human activity are demands on environmental public goods, as with the damages from pollution. Markets - if left alone - do not ensure an appropriate pollution reduction effort, and thus may fail to give sufficient stimulus in environmental protection, whether behavioral or technological.

    This illustrates the breadth of problems that need answers: What are the incentives that generate pollution? What are the means and the costs of cleaning it up? How does government influence business and how toes business and citizens influence government. Through an understanding of the societal gains from pollution control, what regulatory or other mechanisms can be designed, what defines a balance between costs and gains? Sometimes these issues are straightforward; other times they are exceedingly complex. Quite typically, it does not take much in terms of rigor or experience to have learned a lot in terms of what is good business, good policy, and a good understanding of a broad set of policy issues.

    Building blocks in the course

    1. Environmental issues and public goods
    2. Stakeholders and the role of government
    3. Ethical dimensions, political economy and institutions
    4. Valuation and prioritization
    5. Policy instruments, policy analysis and policy reform
    6. More on government and policy instruments: Natural resources: forestry, fisheries and exhaustibles.

  • Learning outcome


    Upon successful completion, the student

    • Can identify ethical dimensions in environmental protection as relating to endowments or distribution and efficiency
    • Is able to connect the challenge of managing the environment to characteristics of
      • the physical environment,
      • the stakeholders, such as individuals and firms, their endowments and preferences
      • institutions
    • Can place a human-centered approach in a context of potential broader obligations
    • Is able to identify environmental issues using the basic notion of public goods


    Upon successful completion, the student

    • Understands how market failure is often associated with an environmental problem and can point out the role of government intervention as well as voluntary action and private regulation
    • Is able to analyse
      • how the firm and a sector is affected both by environmental change and by environmental policies, and - through - this
      • 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

    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.

  • 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.

    The course is recommended prior to ENE426 Economics of Climate Change.

  • Requirements for course approval

    The student has to have two home assignments in English submitted and approved, two pages / 600 words each, group of up to 4 allowed once, but the other assignment should be done individually. The assignments are graded approved/rejected. Having both assignments approved is necessary prior to submitting the term paper.

  • Assessment

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

  • Grading Scale


  • Computer tools


  • Literature

    Charles Kolstad book (intermediate) Environmental Economics, plus supporting articles.


ECTS Credits
Teaching language

Autumn. Offered autumn 2019.

The course description for the autumn semester of 2019 is under revision and will be published as soon as it has been approved.

Course responsible

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