Environmental Economics and Policy

30759 Environmental Economics and Policy, Bocconi University, Fall 2026.

Is there such a thing as too little pollution? How much are the Dolomites worth? Why is it cheaper to fly to Paris than to take the train? What should we be willing to pay to avoid two degrees of global warming? Are “green” bonds really green?

What the course does

Environmental challenges, from climate change to air and water pollution, biodiversity loss and resource depletion, sit at the centre of economic policy, business strategy and political debate. The course gives you the analytical tools economists use to diagnose environmental problems and to design, evaluate and contest the policies aimed at addressing them. It bridges classical environmental economic theory with the frontier of empirical research and the live national and international policy agenda.

By the end you should be able to read an environmental-policy debate with economic rigour, interpret empirical evidence on environmental policies, and produce a reasoned argument about a contested choice.

Suggested background. Basic microeconomics (consumer and producer theory, partial-equilibrium welfare analysis), basic statistics with some regression intuition, basic calculus. Familiarity with academic articles helps and is built up during the course.

How we work

• Lectures. One three-hour topic session per week. Topics and readings are on Blackboard; required readings are done before class.
• Practical exercises. Analytical problems worked through in class, individually or in small groups, followed by a debrief.
• Three games, played on your phone. A Coase bargaining game in Week 5, a two-market permit trading simulation in Week 7 whose data we analyse in Week 8, and a hedonic sorting game in Week 9. Nothing in the games is graded. Rules and join links are on the games page.
• Polls. Short in-class polls on Slido elicit what the room believes before we look at the evidence.
• Group policy project. A course-long project on a real environmental challenge: a written memo and a final presentation. Guidelines and rubric are on Blackboard.

Readings

Main textbook. Charles Kolstad, Environmental Economics, Oxford University Press, 2nd edition (2010). Cited as K in the reading list.

Recommended. Daniel J. Phaneuf and Till Requate, A Course in Environmental Economics: Theory, Policy, and Practice, Cambridge University Press (2016). Nathaniel O. Keohane and Sheila M. Olmstead, Markets and the Environment, Princeton University Press, 2nd edition (2016).

A reading and listening pack on Blackboard holds the research articles, policy documents and podcast episodes, week by week.

Communication and integrity

Questions on course material and logistics go to the Blackboard discussion forum, where everyone benefits from the exchange. Personal matters: office hours.

Cheating of any sort, or facilitating it, means failing the course. Generative AI tools may be used for research and drafting assistance on the written memo only; the submitted text must be substantially your own and any AI-assisted content must be disclosed. AI may not be used during the exam.

Acknowledgments

The course was designed with inspiration from courses taught by Patrick Baylis (University of British Columbia), Tamma Carleton (UC Berkeley), and Ivan Rudik (Cornell University). Any errors are mine, and I am grateful to students who report them.