Topic outline

  • Session 4: General Model of Pollution Control and Framework of Cost Benefit Analysis

    This module introduces our first economic model that is specific to environmental economics. Much like the demand and supply chapter in principles of microeconomics, this model will be the foundation for the analyses we do in the rest of the course. First we will learn the model itself, then, using marginal damage functions and marginal abatement cost functions we will be able to analyze market outcomes and evaluate policy options.  

    Learning Objectives

    • Understand the trade-off between environmental damages and pollution abatement costs
    • Illustrate and explain the notion of marginal damage functions and marginal abatement functions and their use
    • Illustrate and evaluate the socially efficient level of emissions
    • Apply the equi-marginal principle to pollution control
    • Structure of Benefit-Cost Analysis
    • Private Benefit Cost Analysis


    Read Field & Field Chs. 5, 6

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Session 5: Benefit Cost Analysis and Criteria for Environmental Policy Evaluation