SUS 7400C Economics of Sustainability

Spring 2019. Subject to refinement/updating.

Instructor: Charles Taylor
Schedule: Tuesday 5:00 p.m. to 7:40 p.m.
Location: NAC 6-106
3 credits 3 hours/week


Charles Taylor


Economics is used to study the incentives and tradeoffs associated with environmental protection. Government's possible and actual role in protecting the environment is explored. Are the goals of economic development and sustainability at odds with one another? This course introduces students to the major theories and applications in environmental economics.


  • Be able to explain the key economic arguments for and against choices of policy instruments
  • Be able to apply quantitative analysis to answer real-world environmental policy questions
  • Be well-versed in the conceptual linkages between the environment, the micro- and macro- economy, and globalization

Course Requirements

Course Policies:

  • You may appeal your grade to a graded component of the course up to one week after it has been returned to you. You must submit, in writing, a detailed explanation why you should have been awarded credit for your answers, along with your original work. The Instructor reserves the right to review the entire graded component and the outcome of your appeal could be either no change, grade increase, or grade decrease.
  • In general, no make-up exams will be held and no extensions will be provided. If you have religious observances during the scheduled grading events of this course, please let the Instructor know during the first week of class. In case of a medical or personal emergency you are asked to alert the Instructor as soon as conveniently possible and provide proof. Exceptions are provided on a case-by-case basis.

In-Class Assignments and Participation:

  • Regular attendance is essential and expected. Since we meet weekly, missing one session would be equivalent to missing several lectures' worth of content. You have one unexcused absence for the course; each subsequent absence will affect your participation grade.
  • During each class, you will be asked to participate in in-class assignments, discussions, debates, and other activities.

Group Project Presentation and Paper: We will be discussing a variety of environmental problems. You are to use economic tools we learn in this course to analyze an environmental policy issue; groups will be formed or assigned based on mutual interest. Your work will culminate in the Group Presentation and the Group Paper. In the final paper, you will refine your work based on comments received from the Group Presentation. This hopefully will help you think about your Capstone Project.

Required Reading

There is no required course textbook.

Suggested Readings

R. Preston McAfee, Introduction to Economic Analysis, 2006 (available online)
Openstax, Principles of Economics, Rice University, 2017 (available online)
Robert N. Stavins, Ed., Economics of the Environment, 6th. ed., WW Norton, 2012.
David A. Anderson, Environmental Economics and Natural Resource Management, 4th ed., Routledge, 2013.
Richard Heinberg and Daniel Lerch (eds.), The Post Carbon Reader, Watershed, 2010.
Herman E. Daly, Ecological Economics and Sustainable Development, Edward Elgar, 2007.
Geoffrey Heal, Endangered Economies, Columbia University Press, 2016.
Jeffrey Sachs, Age of Sustainable Development, Columbia University Press, 2015.


You will be evaluated based on the following course components. No extra credit will be provided.

10% - In-Class Assignments and Participation
20% - Group Project Presentation
20% - Group Project Paper
20% - Exam I, covering material up to and including March 6's lecture
30% - Exam II, cumulative

Course Outline

Important Dates:

Group Project Idea NoteMarch 10, 2019
Exam IMarch 19, 2019
Academic Paper ResponseApril 30, 2019
Exam IIMay 21, 2019
Group PresentationMay 14, 2019
Group Project Paper dueMay 26, 2019

Tentative Course Outline (subject to change):

1/29 - Introductions

  • Course overview
  • Introduction to Sustainable Development
  • Introduction to Economics

For next class:

McAfee Ch 1, 2

Stavins Ch 1, 28

Daly, Economics in a Full World, 2005 (article)

2/5 - Microeconomic Basics - I

  • What is Microeconomics
  • Supply and Demand
  • Markets and Competitive Equilibrium
  • Elasticity I

For next class:

Principles of Economics, Openstax, Ch 6, 7, 8

McAfee Ch 5.1

Note: if you have little background in Economics, I’d suggest that you use the next two weeks to really read as much background material as possible.


2/19 – Group Project Time in Class – NO LECTURE

2/26 - Microeconomic Basics - II

  • Elasticity II
  • Consumer Theory

For next class:

McAfee Ch 6.1, 6.2, 6.3, 6.4

Heal Ch 1-2

3/5 - Microeconomic Basics - III

  • Producer Theory         

3/10 – Group Project Idea Note due on Blackboard

For next class:

Ensure you have done past readings and lecture slides

3/12 - Market Failures

  • Market Interventions
  • Externalities and Public Goods

3/19 - EXAM I

For next class:

Anderson Ch 3, 6

Stavins Ch 16-18

Heal Ch 1-2 (in case you didn’t read it before)

3/26 - Abatement and the Equimarginal Principle

  • Coase Theorem
  • Equimarginal Principle
  • Policy Instruments: Command and Control, Taxes, and Market Permits

For next class (reading response due on 4/9):

Heal Ch 3-5

Stavins Ch 24

IPCC Climate Change Synthesis Report, 2014

4/2 - Climate Change I, Econometrics

  • Climate Change Science
  • Climate Change Economics Introduction
  • Intro to Regression Analysis

For next class

Burke et al. 2009 (conflict paper)

Kelley et al., 2015 (conflict paper)

Heal Ch 3-5 (same as last class):

Stavins Ch 24 (same as last class):

IPCC Climate Change Synthesis Report, 2014 (same as last class):

Short reading response due on Blackboard before 4/9 class: Describe something from (Heal Ch 3-5; Stavins Ch 24; IPCC Climate Change Synthesis Report) that: 1. you didn't know before, and 2. changed the way you think about climate change or another environmental issue? Why?

4/9 - Climate Change II, Growth Models

  • Conflict
  • Discounting
  • Social Cost of Carbon
  • Game Theory and International Cooperation
  • Growth models

For next class:

Vitousek et al, Human Domination of Earth's Ecosystems, 1997

Steffen et al, Planetary Boundaries, 2015

Daly, Economics in a Full World, 2005

4/16 - Economic Growth, Climate Change and Planetary Boundaries

  • Macro models and game theory (recap)
  • Planetary Boundaries
  • Limits to Growth
  • Energy

4/23 – Spring Break – NO LECTURE

Academic Paper Response due on Blackboard before 4/30 class

4/30 – Land use and land cover

  • Midterm review
  • Soils
  • Deserts and drylands
  • Forests
  • Invasive species

For next class:


5/7 – Land use, Conflict, Applied Research

  • Groundwater
  • Examples of Applied Research: Wetlands and Flooding

5/14 - Group Presentations

5/21 - Exam II

5/26 - Group Project Final Paper due on Blackboard