Empirical Environmental Economics

Objective

This course will examine current issues in environmental economics, with a focus on how micro-econometric methods can be used to answer research questions in that field. It will provide students with an overview of the recent literature, the challenges of using applied microeconomics and policy evaluation methods in environmental economics, and some practical tools to overcome these challenges.

We will draw on the recent empirical literature in environmental economics to better understand:
i) what are the key challenges in tackling environmental issues, in particular climate change, from the perspective of both developed and developing countries
ii) what answers the recent environmental economics literature has provided on these issues
iii) how to conduct empirical research on these questions.

Students are expected to have read the compulsory academic papers before each lecture. We will start the lecture with an open discussion of the papers. Negative points will be given to students who evidently didn’t read the papers.
The examination will be based on a group assignment (groups of 2 or 3 students) in which the students will use statistical software to analyze data and answer a research question, based on a list of proposed topics and published papers. The assignment will take the form of a short research paper including a literature review and a data analysis, along with the code used to analyze the data.
The final grade will be made of the grade at the group assignment, plus any negative points from not reading the mandatory papers.
Pre-requisites
The course combines theory and empirics and has a strong applied focus. In particular, it is assumed that students will have followed a course in micro-econometrics and policy
evaluation methods such as the Microeconometric Evaluation of Public Policies course given by Bruno Crépon. Having followed the Introduction to Environmental Economics course given by François Bareille in 2A will help, but is not a pre-requisite.

Intended Learning Outcomes
Upon successful completion of the course, students will:
- have knowledge and understanding of the major debates of environmental economics (including those related to the design of environmental and climate regulation, the valuation of environmental externalities, the interplay between inequalities and the environment and the roles of social norms, behavioral failures and political economy factors in accelerating or slowing down the implementation of environmental policies)
- understand how to use key empirical tools from econometrics and data analytics to critically assess the effectiveness of environmental policies in different settings
- be able to think critically about the available evidence on different policy interventions and use it to formulate nuanced policy recommendations

Planning

Format and Structure
The course will consist of 6 three-hour lectures. The course reading list consists entirely of academic papers and is extensive. It includes two compulsory academic papers per lecture, as well as a list of other readings, which lectures may refer to but which won't go into in detail. Students are strongly encouraged to read at least the abstracts of all these other papers.

The course will cover five topics:
1) Climate change and climate policy (2 lectures): in the first lecture we will examine how micro econometrics tools can be used to estimate the causal impact of climate policies and the magnitude of climate damages, while accounting for adaptation. In the second lecture, we will discuss how to empirically examine different fairness issues related to climate change, and how to account for trade and leakage in the design of climate policies.
2) Local pollution (air, water, soil): while carbon emissions generate a global externality, other environmental pollutants generate local damages. We will examine the empirical challenges related to measuring local pollution and its impacts on individuals and firms, and discuss the empirical strategies commonly used in the literature to circumvent endogeneity issues.
3) Deforestation, ecosystem services and biodiversity: we will cover the recent literature on the causes and solutions to deforestation, with a special focus on the use of satellite data to monitor deforestation outcomes. Then we will discuss recent papers estimating the value of ecosystem services and of biodiversity.
4) Environment and development: we will examine the potential trade-offs and complementarities between environmental conservation and economic development. Then we will review the literature highlighting the challenges of environment regulation and clean technology adoption in developing countries, where enforcement can be low, corruption high, and credit constraints widespread.
5) Political Economy and determinants of Environmental Attitudes: a recent but growing empirical literature studies the political economy, institutional and behavioralfactors hindering the implementation of environmental and climate policies. We will review this literature, with a specific focus on the use innovative empirical methods such as text analysis and information treatments in surveys.
The syllabus will mainly be focused on applied microeconomic topics and leverage students' knowledge of empirical methods from previous training in econometrics.