ARE/ESP 175: Natural Resource Economics

ARE/ESP 175: Natural Resource Economics

Matt Reimer

University of California, Spring 2021

Course Description

Economics is the analysis of how society allocates scarce resources among competing uses. The field of natural resource economics would then be the study of how society allocates scarce natural resources, such as stocks of fish, stands of trees, fresh water, oil, and other naturally occurring resources. This course provides an introduction to the economics of renewable and nonrenewable natural resources. Topics covered include the economics, management, and regulation of fisheries and forests; extraction and management of nonrenewable resources, such as minerals and energy resources; and natural resource scarcity and sustainability. 

Why do we study natural resource economics separately, and not as just another example in microeconomic or macroeconomic theory? First, a large set of today’s current policy issues concern natural resources, and thus, an understanding of the economic principles behind natural resource use is an invaluable tool to inform discussions of these practical problems. Second, the following features are more prevalent in the study of natural resources than in other economic topics:

1. Natural resource economics emphasizes economic dynamics and decision-making in an intertemporal—as opposed to static—setting.

2. Many natural resources are nonrenewable, in the sense that once the resource is used up, it is gone.

3. Proper institutions are often lacking to facilitate efficient use of natural resources.

Course Objectives

In this class, we will use microeconomic theory and mathematical modeling tools to develop a rigorous understanding of the use and management of natural resources over time, and the role of institutions for achieving efficient outcomes. This class will expose students to models of resource economics and management while emphasizing the concepts and intuition of the models. The economic models covered in this class will be motivated by several real-world examples. By the end of this class, I students will be able to:

1. Approach natural resource policy issues in a systematic way and recognize the important role of institutions for resource management.

2. Extend the economic models covered in class to a wide variety of natural resource policy issues.

3. Discuss natural resource policy issues in a precise and concise manner through the use of words, pictures, and mathematical notation.

4. Write down a simple economic model and apply calculus and numerical methods (in Excel) to derive predictions and policy recommendations.

Course Delivery

Due to the COVID-19 pandemic, and according to campus directive, this course will be conducted entirely online. This course will be taught asyncronously. Lectures and Discussion Sections will be pre-recorded and uploaded to the Canvas course website. Students are expected to complete five modules, each of which are based on a particular topic. Office hours will also be held remotely via Zoom. Read below for additional details.

Course Prerequisites

Students taking this class are expected to have knowledge of microeconomic theory concepts and calculus. 

Prerequisites: ARE 100A C- or better, or ECN 100A C- or better, or ECN 100 C- or better.

Communications

The easiest way to contact me or the TAs is by email or through Canvas messaging. Note that based on the sheer volume of emails that I receive, I may not be able to respond to your email right away. Before sending me or the TAs an email, please visit the Frequently Asked Questions page on Canvas first—there is a good chance that someone else has already asked your question.

Discussion Sections

Teaching Assistants will post pre-recorded Discussion Section videos, which will walk students through solving problems that apply class material to natural resource use problems encountered in the real world. Make sure to watch these videos before office hours so that you can ask any clarifying questions you may have.

Office Hours

My office hours will be held during the regularly scheduled lecture times, so they should not conflict with other classes. The office hours for the TAs will be held during the regularly scheduled discussion sections. Note the office hours listed at the top of this page and the scheduled Zoom office hours in the course calendar. During these times, students can join the Zoom meetings by clicking on the appropriate Zoom link in the course calendar, which will take you straight to the group meeting. To keep office hours manageable and to facilitate discussion, students are highly encouraged to attend the office hours for the discussion section in which they are registered. Please practice common courtesy on the Zoom meetings by having your mic muted when you are not talking.

UCD Student Resources

See this website for answers to questions about academic support, health and wellness, career and internships, or campus community.

Textbook

Natural Resources as Capital, by Larry Karp. MIT Press.

• There is a free version of the textbook available here.

Grading Policy

There are a total of 100 points available in this class. Your letter grade will be determined from your score in the following categories: Quizzes (20 points) Homework Assignments (40 points), and Final exam (40 points).

Quizzes (20 points)

There will be 10 quizzes—two per module. Each quiz will consist of 5 true/false or multiple choice questions and will cover the material presented during that week. The quizzes are designed to make sure that students are following along with the course material. If students watch the lectures and do the reading, they will have no problem answering the quiz questions. Each quiz is worth 2.5 points, and I will take the best 8 of 10 quizzes to calculate you total quiz score. This means you can get full credit for the quizzes if you score 2.5/2.5 on eight quizzes and do not complete two quizzes. This policy gives you the opportunity to make up for a couple of poor quiz scores, or to miss a couple of quizzes because of your schedule. You cannot get greater than 20 points for you quizzes.

Homework Assignments (40 points)

There will be a total of five homework assignments—one at the end of each module. Homework assignments will ask students to solve several problems applied to the material presented in the module. All homework assignments will be submitted through Gradescope. Students are advised to watch the lectures and discussion sections and complete the readings before attempting the homework. Each homework assignment is worth 10 points, and I will take the best 4 of 5 homework assignments to calculate you total homework score. This means you can get full credit for the homework if you score 10/10 on four homework assignments and do not complete one assignment. This policy gives you the opportunity to make up for a couple of poor homework scores, or to miss one homework because of your schedule. You cannot get greater than 40 points for you homework assignments.

Final Exam (40 points)

There will be a final exam that covers all the material covered in the course. The format of the exam will be an open-book “take-home” exam that follows a similar format to the homework assignments.

Due Dates and Late Policy

All quizzes and homework assignments are due on Friday night at 11:59pm PT. I will accept late quizzes and homework assignments until Sunday night at 11:59pm PT. For each day your quiz or assignment is late, 1/3 of your score will be deducted. So, for example, if you submit a homework assignment on Saturday and receive a score of 9/10, you will have 3 points deducted from your score. This would be equal to 6 points being deducted if you submit on Sunday. Quizzes and homework assignments submitted after Sunday night at 11:59pm PT will automatically receive a score of zero. No exceptions.

Late final exams will automatically receive a score of zero. No exceptions.

Calculus Review

This course makes extensive use of calculus. I will not be providing an “in-class” review. If you need a refresher, I suggest that you go through Appendix B of the textbook, which provides a review of all the calculus methods you will need for the course.

Student Code of Conduct

As with all members of the University community, the University requires students to conduct themselves honestly and responsibly, and to respect the rights of others. Conduct that unreasonably interferes with the learning environment or that violates the rights of others is prohibited by the standards and guidelines collectively described as the Student Code of Conduct.

Academic Honesty

Academic integrity is a basic principle, which requires that students take credit only for ideas and efforts that are their own. Cheating, plagiarism, and other forms of academic dishonesty are defined as the submission of materials in assignments, exams, or other academic work that is based on sources prohibited by the faculty member. Plagiarism in written work will result in a class grade of F. Plagiarism includes: (i) stealing or passing off the ideas or words of another as one’s own, (ii) using another’s production without crediting the source, and (iii) to present as new and original an idea derived from an existing source. In addition to any adverse academic action, which may result from engaging in academically dishonest behavior, the university specifically reserves the right to address and sanction the conduct involved through the student judicial review procedures outlined in the Code of Academic Conduct.