MLI26C707 - Environmental Economics, Lectures, 27.6.2022-15.7.2022

Topic outline

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

  • Social Benefit Cost Analysis
  • Intergeneration Benefit Cost Analysis
  • Criteria for Policy Evaluation

  1. Efficiency
  2. Cost-Effectiveness
  3. Fairness
  4. Enforceability
  5. Flexibility
  6. Incentives for Innovation
  7. Moral Considerations

  Guidance on reading the short stories

  I have two short stories for you to read. Each tells us something about intergenerational differences in preferences. Read both stories and for each story, consider the questions below. Before you do that, consider why you are being asked to read science fiction.

  Science fiction is a peculiar literary genre. One does not get far into a story before realizing the story is science fiction. In science fiction, some aspect of life is fictionalized. It may be science. It may be social science. I may be a law that changes the way life is lived. It may be some magical power. Our interest as economists is in how the fictionalized aspect of life changes behavior.

  • What decisions are being made by the main character?
  • What is “fictionalized” in the story making this situation different from reality?
  • What is the catalyst for the story?
  • Is the main character's intended effect on future generation positive, negative, neutral?
  • What creates conflict between the main character's intent and the result?
  • Is the future generation being treated as important as the current generation?
  • How do differences in preferences or knowledge across generations come into play?
  • What are the warnings these stories have for us about the way we make environmental decisions for future generations? 
  • What does this tell us about the appropriate discount rate for intergenerational cost benefit analysis?

  Readings

  • Barnett, Barbara, The perfect coordinates to raise a child, Daily Science Fiction, October 8, 2013
  • Daily Science Fiction :: The Perfect Coordinates to Raise a Child by Barbara A. Barnett
  • Sheckley, Robert, The cost of living, Galaxy Science Fiction, December 1952, http://www.gutenberg.org/ebooks/29458
  • Field & Field Ch 9

  
  

  • Select activity Slide Deck for this Session

    

    Slide Deck for this Session Folder

    This folder contains the slide deck for Session 5. There are three topics: benefit cost analysis with mathematical examples (CH 6 continued), intergenerational discounting discussion using science fiction, and the criteria for environmental policy evaluation (CH 9). Many of the benefit cost slides are a summary of chapters 7 and 8 that I am not requiring you to read. We will take a general treatment of these topics to the extent necessary for chapters 10-13. I may skips some slides and topics.