Course description
Sustainable development issues are receiving a lot of attention, as it is becoming increasingly realized that individuals, firms and governments fail to take into account the full costs and benefits of enjoying the environment and its resources. Economics is one of the major sciences in providing important tools for analyzing the core questions related to the optimal use of natural resources and for developing effective public policies that move us towards a sustainable society. The aim of this course is to present the basic theories and insights that economists rely upon in studying the interactions between economic development and natural resources.
The first part of the course deals with the economics of market allocation. It comprises the discussion of the supply and demand model and relates different types of market structures (perfect competition, monopoly, oligopoly) with markets for different natural resources (coal, natural gas, oil). This part allows students to get familiar with the basic economic tools required to analyze the way markets operate.
The second part deals with natural resources in the economy as a whole. It discusses how natural resources affect economic growth and institutions in different countries, studies the causes and implications of the «resource curse» as well as the main problems of political economy of natural resources. This part enables students to understand the role of natural resources in the economy and their effect in shaping economic structures, societies, and development trajectories.
The third part deals with the interaction between economy and environment in the long run. It studies externalities as a main source of environmental problems, assesses different solutions to the global climate change and other environmental problems (taxes, subsidies, rationing, creation of new markets) and discusses the main difficulties with sustainable management of the environment and its resources. This part helps students to obtain a global and long-term perspective on sustainable economic development.

Learning outcomes
By the end of this course, students should be able to:
•explain changes in markets for natural resources in terms of supply and demand interaction and a suitable market structure;
•understand the development logic of the major trends in oil and gas markets;
•evaluate expected effectiveness of policy response of governments to changes in markets for natural resources;
•explain how natural resources differ from the standard factors of production (capital and labor);
•distinguish between renewable and non-renewable natural resources and explain the differences it makes for the economic theory;
•explain the problem of intertemporal choice in defining the levels of production of natural resources;
•explain the sources of environmental problems (externalities);
•assess pros and cons of different methods of valuing sustainable environment;
•discuss different economic tools for solving environmental problems;
•understand the issue of climate change from the economic point of view;
•discuss the political aspect of the solutions to environmental problems.

Key topics
•Economics of market allocation;
•Supply and demand;
•Market efficiency and market failures;
•Renewable and non-renewable natural resources;
•Natural resources and institutions;
•Resource curse;
•Political economy of natural resources;
•Externalities and environmental problems;
•Cost-benefit analysis and environmental decision-making;
•Climate change;
•Sustainable development;
•Economic and political choices in solving environmental problems.

Prerequisites
This course has no prerequisites. However, some basic mathematics, algebra, and graphing will be used.

Evaluation methods
News presentations and in-class participation: 20%
Presentations: 10%
Home assignments: 20%
Mid-term exam: 20%
Final exam: 30%

Each week students will be assigned to find news related to markets for natural resources and environmental and sustainability issues. Each student should present (within 2-3 3 minutes) a piece of news at the beginning of each class and explain briefly how this piece of news is related to the content of the course. More details on the news coverage will be given during the first class. Students are also expected to be active during the class answering various questions, suggesting approaches for problem solving etc. Each student might be asked to comment, using the material from the previous classes. An active in-class participation is essential. It is important to be ready to answer questions, discuss readings and to provide feedback on other students' comments and reports.
The students will be asked to make one presentation – the topics for presentations and the timing will be finalized during the third week of the course once the exact number of students taking the course is known.
There also will be written home assignments to test the understanding and check the progress of the students. The exact number and timing of assignments will be identified during the second week of the course.
Mid-term exam will contain a number of multiple-choice and open questions covering the studied material in order to check the understanding and progress in the middle of the course (the week before Easter break).
Final exam will consist of several open questions and problems covering the material of the whole course.

Bibliography
Core texts
•Dahl C. (2015). International Energy Markets: Understanding Pricing, Policies and Profits, 2nd ed. PennWell Corporation.
•Goodstein E. S., Polasky S. (2020). Economics and the Environment, 9th ed. Wiley.
•Hackett S. C. (2011). Environmental and Natural Resources Economics: Theory, Policy, and the Sustainable Society, 4th ed. Routledge.
•Mankiw N.G. (2012) Principles of Economics, South-Western, Cengage Learning; 6th ed.

Additional reading
•Tietenberg T., Lewis L. (2018). Environmental and Natural Resource Economics, 11th ed. Routledge, 2018.
•Harris J. M., Roach B. (2017). Environmental and Natural Resource Economics: A Contemporary Approach, 4th ed. Routledge, 2017.
•Managi S., Kuriyama K. (2017). Environmental Economics. Routledge, 2017.
•Classic Papers in Natural Resource Economics. Ed. C. Gopalakrishnan. Palgrave Macmillan, 2000.
•Polterovich V., Popov V., Tonis A. (2010). Resource Abundance: A Curse or Blessing? DESA Working Paper No. 93.
•Rosser A. (2006). The Political Economy of the Resource Curse: A Literature Survey. IDS Working Paper 268.

Further readings will be suggested during classes. Obligatory readings will vary between 50 and 70 pages per week.