This is an archived course. A more recent version may be available at


Course Meeting Times

Lectures: 2 sessions / week, 1.5 hours/ session

Recitations: 1 session / week, 1 hour / session


This course explores the proper role of government in the regulation of the environment. It will help students develop the tools to estimate the costs and benefits of environmental regulations. These tools will be used to evaluate a series of current policy questions, including: Should air and water pollution regulations be tightened or loosened? What are the costs of climate change in the U.S. and abroad? Is there a "Race to the Bottom" in environmental regulation? Students will help design and execute a cutting edge research project that tests whether air pollution causes infant mortality. To gain real world experience, the course will include a guest lecture from a former EPA plant inspector and is tentatively scheduled to include a visit to a local polluting plant.

Recommended Readings

I strongly recommend the purchase of these books:

Amazon logo Kolstad, Charles D. Environmental Economics. 1st ed. New York, NY: Oxford University Press, 2000. ISBN: 0195119541.

Amazon logo Stavins, Robert N., ed. Economics of the Environment: Selected Readings. 4th ed. New York, NY: W. W. Norton, 2000. ISBN: 0393975231.

The syllabus is intended to serve as a guide to the literature and it is not expected that you will read every article. The chapters from the Kolstad textbook are required, and I will highlight the required articles from each section during lecture. Two less advanced textbooks that may be useful for gaining intuition are:

Amazon logo Tietenberg, Thomas H. Environmental and Natural Resource Economics. 5th ed. Reading, MA: Addison-Wesley, 2000. ISBN: 0321031288.

Amazon logo Chapman, Duane. Environmental Economics: Theory, Application, and Policy. New York, NY: Longman Press, 2000. ISBN: 0321014359.

Finally, students that are interested in the current state of U.S. environmental policies are directed to: Amazon logo Portney, Paul, and Robert N. Stavins, eds. Public Policies for Environmental Protection. 2nd ed. Washington, DC: Resources for the Future, 2000. ISBN: 1891853031.


The tentative grading scheme is as follows:

Class Participation 10%
Problem Sets 30%
Midterm Exam 20%
Final Exam 40%



Problem Sets

There will be 4 or 5 problem sets. Each assignment will be placed on the MIT server as early as possible. Answer keys will be posted on the MIT server the day that the problem set is due. Late problem sets will not be accepted. Students are encouraged to work together in solving the problem sets, but individual assignments are required from each student for grading.

At least one of the problem sets will involve a statistical exercise to be conducted with STATA®. This problem set will involve you in cutting edge research that aims to test whether or not air pollution causes infant mortality. Any software can be used for these problem sets, but answer keys will be written with STATA® code. Most computer labs on campus have STATA® on their desktops. Some TA sessions will be devoted to STATA® tutorials.


A midterm exam will be given in class before spring break. The midterm will cover all material presented in lecture prior to the exam and will count for 20% of the final course grade.


A final exam will be given during the final examination period. The final exam will be comprehensive, covering all material presented in lecture, but it will emphasize the material presented after spring break.