This course will take an in depth look at different policy instruments that can be used to regulate activities that cause environmental degradation and explore criteria that guide regulators in the choice of policy instruments. We will also study a number of existing environmental regulations and analyze their effectiveness from an economic point of view. The course will give students a solid grounding in the different types of environmental regulation and their economic analysis, and will cover major applications of these principles.
Topics that will be covered are command and control approaches of regulation vs. market based environmental regulation (i.e. taxes and permit markets), price vs. quantity based instruments when the regulator has incomplete information, price vs. quantity based instruments for pollutants that accumulate over time (stock pollutants), stationary vs. non-stationary pollution sources, new source regulation, interaction effects with other policies (double dividendÂ) and non-convex pollution problems. Some of the exemplary applications we will study are the CAFE standards, the SO2 pollution market in the US and the CO2 pollution market in the EU and others.
Students must have taken NRE 570 or equivalent before they can enroll in this class.