Climate change is broadly perceived to be one of mankind’s most important, and urgent, challenges. This course will begin by reviewing the natural-science background carefully, with a focus on quantifying and characterizing how greenhouse-gas emissions lead to climate change, but also covering how climate change in turn affects humans through quantifiable channels.

The conclusion will be that we need to drastically reduce carbon dioxide emissions. The core of the course is concerned with HOW this can be achieved – a question designed for economists, since the answer must be based on an understanding of how carbon emissions take place in markets as a result of decentralized decision making.

The economics of climate-change policy involves the construction of “integrated assessment models” (IAMs), which we will cover in detail. These are quantitative-theory models, to be viewed as an add-on to (simple versions of) the quantitative natural-science models that underly our understanding of how climate change works. The economic models include discussions of natural resources and various facets of technological change, e.g., “green technology”. After having built our IAMs, we then use them to address a range of policy questions.

Course information