Environmental Economics and Policy
A.Y. 2026/2027
Learning objectives
This course provides an introduction to environmental economics with a strong emphasis on the design, implementation, and evaluation of environmental policies. It examines the interdependence between the economy and the environment, highlighting how economic activity relies on natural systems and how environmental degradation affects economic well-being. The course introduces the concepts of sustainability, environmental ethics, and the limits of economic growth, before developing the microeconomic foundations needed to understand environmental problems as market failures.
Building on welfare economics, students learn how environmental externalities arise and how different policy instruments—including regulation, environmental taxation, tradable permits, property rights, and behavioral interventions—can improve economic efficiency while pursuing broader social objectives. The course also covers methods for valuing environmental goods and ecosystem services, cost-benefit analysis, and empirical approaches to evaluating environmental policies. Throughout the course, theoretical concepts are illustrated through real-world applications and case studies on topics such as air pollution, natural resource management, environmental justice, behavioral economics, and the links between environmental quality and economic development. Particular emphasis is placed on using economic reasoning and scientific evidence to inform policy decisions under efficiency, equity, and sustainability considerations.
Building on welfare economics, students learn how environmental externalities arise and how different policy instruments—including regulation, environmental taxation, tradable permits, property rights, and behavioral interventions—can improve economic efficiency while pursuing broader social objectives. The course also covers methods for valuing environmental goods and ecosystem services, cost-benefit analysis, and empirical approaches to evaluating environmental policies. Throughout the course, theoretical concepts are illustrated through real-world applications and case studies on topics such as air pollution, natural resource management, environmental justice, behavioral economics, and the links between environmental quality and economic development. Particular emphasis is placed on using economic reasoning and scientific evidence to inform policy decisions under efficiency, equity, and sustainability considerations.
Expected learning outcomes
At the end of the course, students will be able to:
· Explain the interactions between economic activity and the environment, and discuss the economic foundations of sustainability, environmental quality, and natural resource management.
· Apply the main concepts of welfare economics and microeconomic theory to analyze environmental problems, identify market failures, and understand the role of public intervention.
· Compare and critically evaluate alternative environmental policy instruments—including regulation, market-based mechanisms, and behavioral approaches—assessing their efficiency, effectiveness, equity implications, and practical limitations.
· Apply methods for valuing environmental goods and ecosystem services and conduct simple cost-benefit analyses to support environmental decision-making.
· Understand the principles of policy evaluation and interpret empirical evidence on the impacts of environmental policies using basic concepts of causal inference and applied economics.
· Analyze real-world environmental challenges by integrating economic theory, empirical evidence, and policy considerations, and communicate policy recommendations effectively using appropriate technical terminology and scientific reasoning.
· Explain the interactions between economic activity and the environment, and discuss the economic foundations of sustainability, environmental quality, and natural resource management.
· Apply the main concepts of welfare economics and microeconomic theory to analyze environmental problems, identify market failures, and understand the role of public intervention.
· Compare and critically evaluate alternative environmental policy instruments—including regulation, market-based mechanisms, and behavioral approaches—assessing their efficiency, effectiveness, equity implications, and practical limitations.
· Apply methods for valuing environmental goods and ecosystem services and conduct simple cost-benefit analyses to support environmental decision-making.
· Understand the principles of policy evaluation and interpret empirical evidence on the impacts of environmental policies using basic concepts of causal inference and applied economics.
· Analyze real-world environmental challenges by integrating economic theory, empirical evidence, and policy considerations, and communicate policy recommendations effectively using appropriate technical terminology and scientific reasoning.
Lesson period: First semester
Assessment methods: Esame
Assessment result: voto verbalizzato in trentesimi
Single course
This course can be attended as a single course.
Course syllabus and organization
Single session
Responsible
Lesson period
First semester
Course syllabus
Students will find on the course Ariel platform the detailed course calendar and the lecture slides, containing all the information on required readings for each lecture.
The course will cover the following topics:
1. Introduction to environmental economics and the economy-environment relationship
2. Environmental ethics, welfare economics, and sustainability
3. Market failures, externalities, and natural resource management
4. Environmental policy instruments
5. Valuation of environmental goods and cost-benefit analysis
6. Evaluation of environmental policies and public intervention
7. Behavioral economics and environmental policy
8. Applications: air pollution, environmental justice, and environment and development
The course will cover the following topics:
1. Introduction to environmental economics and the economy-environment relationship
2. Environmental ethics, welfare economics, and sustainability
3. Market failures, externalities, and natural resource management
4. Environmental policy instruments
5. Valuation of environmental goods and cost-benefit analysis
6. Evaluation of environmental policies and public intervention
7. Behavioral economics and environmental policy
8. Applications: air pollution, environmental justice, and environment and development
Prerequisites for admission
Formally none.
Students without a background in Economics, Statistics, and Quantitative Methods are warmly recommended to attend the Crash courses in Microeconomics, Mathematics, and Statistical Methods
Students without a background in Economics, Statistics, and Quantitative Methods are warmly recommended to attend the Crash courses in Microeconomics, Mathematics, and Statistical Methods
Teaching methods
Face-to-face lectures, in-class exercises, case studies, in-class discussions, group assignments (project work and presentation).
Teaching Resources
Slides and other course materials will be made available regularly by the instructor on the Ariel platform.
Suggested textbooks are:
Goodstein, Wong, Polasky "Economics and the Environment", Wiley, 10th edition, 2025
Turner, R. K., Pearce, D. W., & Bateman, I. (1993). Environmental economics: An introduction.
Suggested textbooks are:
Goodstein, Wong, Polasky "Economics and the Environment", Wiley, 10th edition, 2025
Turner, R. K., Pearce, D. W., & Bateman, I. (1993). Environmental economics: An introduction.
Assessment methods and Criteria
Assessment differs for attending and non-attending students.
Attending students
For attending students, the final grade is based on three components:
- Group Assignment (30%)
Students will work in groups to investigate an environmental problem and a policy designed to address it. The final output is a group presentation delivered in class.
- Written Exam (70%)
The written exam includes a combination of:
-- Multiple-choice questions to assess familiarity with fundamental definitions and concepts in environmental economics.
-- Applied exercises requiring the use of economic tools in specific contexts.
-- Short essay questions designed to evaluate a deeper understanding of the course material, as well as the ability to critically discuss and connect different topics.
- Oral Examination (Integrative)
Following the written exam, students are required to take a short oral examination. The oral exam may include a discussion of the written exam, the group assignment, and broader course topics. Its purpose is to assess students' ability to explain and critically discuss key concepts, integrate knowledge across different parts of the course, and demonstrate individual understanding of the group project. The oral examination does not constitute a separate weighted component; rather, it complements the written exam and group assignment and may lead to an adjustment of the final grade based on the student's overall performance.
Non-Attending Students
For non-attending students, the final grade is based on the written exam (100%), which consists of:
-- Multiple-choice questions to assess familiarity with fundamental definitions and concepts in environmental economics.
-- Applied exercises involving the use of economic tools in specific contexts.
-- Short essay questions designed to evaluate a deeper understanding of course content and the ability to critically discuss and draw connections across topics.
Non-attending students are also invited to a short oral examination to discuss their written exam and verify their understanding of the course material. As for attending students, the oral examination serves to integrate the overall assessment and may result in an adjustment of the final grade.
Attending students
For attending students, the final grade is based on three components:
- Group Assignment (30%)
Students will work in groups to investigate an environmental problem and a policy designed to address it. The final output is a group presentation delivered in class.
- Written Exam (70%)
The written exam includes a combination of:
-- Multiple-choice questions to assess familiarity with fundamental definitions and concepts in environmental economics.
-- Applied exercises requiring the use of economic tools in specific contexts.
-- Short essay questions designed to evaluate a deeper understanding of the course material, as well as the ability to critically discuss and connect different topics.
- Oral Examination (Integrative)
Following the written exam, students are required to take a short oral examination. The oral exam may include a discussion of the written exam, the group assignment, and broader course topics. Its purpose is to assess students' ability to explain and critically discuss key concepts, integrate knowledge across different parts of the course, and demonstrate individual understanding of the group project. The oral examination does not constitute a separate weighted component; rather, it complements the written exam and group assignment and may lead to an adjustment of the final grade based on the student's overall performance.
Non-Attending Students
For non-attending students, the final grade is based on the written exam (100%), which consists of:
-- Multiple-choice questions to assess familiarity with fundamental definitions and concepts in environmental economics.
-- Applied exercises involving the use of economic tools in specific contexts.
-- Short essay questions designed to evaluate a deeper understanding of course content and the ability to critically discuss and draw connections across topics.
Non-attending students are also invited to a short oral examination to discuss their written exam and verify their understanding of the course material. As for attending students, the oral examination serves to integrate the overall assessment and may result in an adjustment of the final grade.
Professor(s)
Reception:
Thursday 16.00 - 17.30
Office - via Celoria 2, first floor or TEAMS (always on appointment)