Assignment for Monday Feb. 9

I. Robert D.Atkinson and Darrene Hackler, Economic Doctrines and Approaches to Climate Change Policy, October 2010

Atkinson-etal-2010-econ-climate-change_theories

Read pages 1-12 (here the authors explain how various economic assumption that are at the heart of different climate change policies (Neoclassical economics; Keynesian economics; Innovation Economics). Then take a look at the following pages from the article: Pgs. 20 – 22; 25 – 29 and 30 – 31; Be prepared for a class discussion on the following questions:

1. What do neoclassical economists believe are the central issues to resolve in addressing the challenges of climate change?
2. Which of the economic concepts (reviewed in last week’s class) are important to the neoclassical view? What are the assumptions of the neoclassical perspective?
3. What is your assessment of the neoclassical perspective? Are the assumptions about human economic behavior and about how to address environmental problems workable in the real world economy? Explain your reasoning.
4. Describe specifically (two or three ways) in which the neo-Keynesian perspective differs from the neoclassical perspective?
5. What do neo-Keynesian economists view as important in addressing the challenges of climate change? Explain
6. What are the principal problems the authors have with both the neoclassical and neo-Keynesian policy proposals for addressing climate change? What are the three arguments the authors cite as to why neither the neoclassical nor the neo-Keynesian views offer an suitable policy framework for addressing the climate challenges of the 21^st century?
7. The authors discuss what they call “Innovation Economics.” What do Atkinson and Hackler mean by innovation economics? Describe their perspective.

II. Read the two short articles by the IETA and Henry Paulson.

Why Emissions Trading is More Effective Than a Carbon Tax_IETA

The Coming Climate Crash_H Paulson

1. What policy does Henry Paulson advocate for addressing climate change? What is a carbon tax? Why does Paulson believe this policy is workable?
2. What policy does the International Emissions Trading Association advocate for addressing climate change? Why does the IETA believe this policy is workable? What is “Cap and trade”?

III. Overview of the carbon tax vs. “cap and trade” (tradable emissions permits.

IV. GROUP PROJECT in class Mon. Feb. 9

   1.What do you believe are the most important issues with respect to current environmental challenges?

2. Would a carbon tax – proposed by Henry Paulson – be an efficient and adequate policy to reduce the carbon emissions that contribute to climate change? Explain your reasoning.
3. Consider the other proposals discussed by Paul Krugman, such as a “cap and trade” system, government subsidies for development of clean energy, and a utility buy-back of unused electricity from consumers’ solar panels. Would any of these (or some combination of these proposals), be efficient in reducing carbon emissions? Explain your reasoning.
4. Which economic theory does the carbon tax proposal seem to best reflect? Explain why. Which economic theory do the proposals for cap and trade and government subsidies for clean energy development seem to most closely reflect? Explain your reasoning.
5. What kind of policy do you believe the so-called “innovation economics” theory would advocate and why?
6. Given the three policy perspectives discussed in the reading, describe what you believe to be the most efficient policy for addressing climate change? (This might be any combination of the policies reviewed). Would your policy include anything suggested by the so-called “innovation economics” perspective? Are there other actions that are not included in the readings that would be efficient?

Be sure to clearly explain your reasoning.

V. Discuss and submit top two choices for semester research project