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Topic #8: Economics of Climate Change


Bloom's Taxonomy

Learning Objectives

Upon successfully completing this topic’s activities, you will be able to:

  • Be familiar with some fundamental economic concepts such as market forces, equilibrium price, free market and discount rates.
  • Recognize why the economics of climate change does not follow free-market principles.
  • Become familiar with factors that are considered in a cost/benefit analyses of climate change mitigation strategies.
Video Videos

Economics Intro. This video provides an introduction to the economics of climate change.

Monopolies. This video examines monopolies in the electric power sector.

Tragedy of Commons. This video explains the tragedy of the commons..

Cost/Benefits. This video describes the use of cost/benefit analyses.

Intangibles. This video explores how economists handle items of intangible value.

Discount Rate. This video defines the discount rate and its importance to mitigation decisions.




    The Economics of Climate Change: A Primer by the Congressional Budget Office. Click on the PDF Document to the left when you enter the website and wait for it to download. The primer on the economics of climate change is a 50 page report that is meant to provide a framework for how climate change is affecting the world from an economic perspective. It addresses climate change as an economic problem. It examines how public policy options have handled the problem thus far and discusses the pros and cons of international coordination.

    Requiem for Kyoto by Nordhaus & Boyer. Report on the economic costs vs. benefits of the Kyoto Protocol to the United States.

In this week’s Essay 4 you will reduce your GHG emissions by 50% for one day and write about the experience. Based on your carbon footprint calculation from Exercise 4, you will attempt to reduce your footprint by 50% for one day and write about the experience. At the end of Exercise 4 you were asked to make pledges to reduce your carbon footprint by 50%. For this essay assignment, you will try to reduce your personal GHG emissions by 50% for one day. In your essay, describe what actions you took and what the experience was like.