Economics of Climate Change (GRAB002)

Climate change presents some of the biggest challenges facing modern society. Economics can provide a powerful intellectual foundation for understanding and analysing many of these challenges. This course employs insights and tools from economics to study problems around climate change impacts, the design of mitigation and adaptation policies, and the consequences of these policies. The course builds on key concepts from environmental and natural resource economics but also draws from other fields in economics.

This course explores the economic characteristics of the climate change problem, assesses national and international policy design and current implementation issues, and surveys the economic tools necessary to evaluate climate change policies. The objectives of the course are to understand how the costs and benefits of mitigation are measured, to understand the economics of carbon pricing and other regulatory policies and key design questions; to understand the current landscape of domestic and international policy planning and implementation.

Climate change has a unique set of attributes that make standard economic analysis very difficult to apply. It is a global problem requiring unprecedented international cooperation. It is pervaded by uncertainty in every step of the process of translating global emissions into local damages. The costs and benefits of its mitigation are highly mismatched geographically as well as temporally. And its damages are largely irreversible. This class is about breaking down the many challenges of climate change and seeing what economics research has done to address them. The course will discuss what is known (and what is not known) about the economic damages of climate change; will study theoretical models that clarify the policy problem; and will examine existing and potential climate policies and their relative strengths and weaknesses.

The course is discussion oriented and will require a high degree of participation by students in the classroom. Each class will generally consist of a half-hour discussion of a single assigned academic article, followed by lecture to prepare students for the next assigned reading.

Students will, at the end of this course, know significantly more about the economics of climate change and also be equipped to begin carrying out research on this all-important topic.

• To understand economic characteristics and outcomes of the climate change.
• To assess national and international climate policy design and their implementation issues.
• To understand what are the costs and benefits and how the costs and benefits of mitigation are measured.
• To learn how to plan strategic development of a company with environmentalist mindset.
• To learn make better-informed environmental policy related decision, all while distinguishing between positive analyses and normative judgements.
• To sharpen critical analysis and communication abilities, especially in the context of complex and systemic climate change issues, and apply systems thinking to real-world business problems.
• To expand general understanding of the complex decisions faced by managers in business, government, and non-profit organizations.
• To be challenged to clarify your own values and opinions on issues related to sustainability and climate change.
• To develop critical thinking and problem-solving skills.