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56945-01 - Lecture: Dynamic Optimization in Environmental Economics 3 CP

Semester spring semester 2021
Course frequency Every spring sem.
Lecturers Prudence Dato (, Assessor)
Content This course addresses topics from current research in environmental and resources economics together with growth theory. The focus is on studying interactions between economic growth dynamics, environmental dynamics and natural resources dynamics to tackle energy transition issues. The course will cover two important aspects of connecting growth to natural resources and to the environment:

1) Growth and Natural Resources: the objective of this chapter is to explore the possibility of an indefinite positive growth path under natural resources availability constraints. It will start with a basic framework from Dasgupta and Heal (1974) to discuss Hotelling rules and optimal conditions. We will then focus on a specific case of a pure exhaustion problem, the so-called "cake-eating problem". The last section of this chapter will be devoted to study the sustainability problem with the Solow model, Hartwick rule, inter-generational justice.

2) Growth and the Environment: This chapter intends to basically study interactions between economic growth dynamics and environmental dynamics. It will commence with a basic framework that discusses optimal paths and efficiency. We will then study the "Environmental Kuznets curves (EKC) in a simple polluting growth model where outputs generates pollution. In addition, two complex model dynamics would be introduced by considering scale effect in terms of pollution abatement with respect to output. The last section will focus on a more complex model in which some natural resource are source of pollution instead of assuming that output is polluting. This will address issues related to the optimal energy transition.
Learning objectives
The course will provide an overview over important topics in environmental economics connecting economic growth, the environment and natural resources use. It will cover dynamics optimization methods that are required to design optimal solutions for a sustainable economy. In addition, necessary tools to understand current research papers on optimal natural resource use, energy transition, environmental pollution, etc., will be studied.
Bibliography We provide the following selected references. An exhaustive bibliography will be provided during the lectures.

Amigues, J. P., Le Kama, A. A., & Moreaux, M. (2015). Equilibrium transitions from non-renewable energy to renewable energy under capacity constraints. Journal of Economic Dynamics and Control, 55, 89-112.

Boucekkine, R., Pommeret, A., & Prieur, F. (2012). Technological vs. ecological switch and the environmental Kuznets Curve. American Journal of Agricultural Economics, 95(2), 252-260.

Dasgupta P, Heal G (1979) Economic theory and exhaustible resources. Cambridge Uni- versity Press, Cambridge
Dasgupta, P., & Heal, G. (1974). The Optimal Depletion of Exhaustible Resources. The Review of Economic Studies, 41, 3-28.

Dato, P. (2017). Energy transition under irreversibility: a two-sector approach. Environmental and resource economics, 68(3), 797-820.

Dixit, A., P. Hammond & M. Hoel (1980), ‘On Hartwick’s Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion’, Review of Economic Studies 47, 551-556.

Hartwick, J. (1977). Intergenerational Equity and the Investing of Rents from Exhaustible Resources. The American Economic Review, 67(5), 972-974.

Tahvonen, O., & Withagen, C. (1996). Optimality of irreversible pollution accumulation. Journal of Economic Dynamics and Control, 20(9-10), 1775-1795.

Tsur, Y., & Zemel, A. (2003). Optimal transition to backstop substitutes for nonrenewable resources. Journal of Economic Dynamics and Control, 27(4), 551-572.
Weblink Weblink to ADAM


Admission requirements The course is based on the presentation of a general framework and a selection of papers. For each chapter, we will first present the general framework with related mathematical modelling details and economic intuition. Second, you will be asked to read one specific paper. Each lecture will begin with a short presentation of this paper by students and move on to a detailed discussion of the problem addressed in the paper, its methods, and results. Therefore, you will not be able to follow the discussion if you do not read the paper in advance. Due to time constraints, we will provide additional related references that you can read for a broader understanding of the scientific discussion.
Course application Registration: Please enrol in MOnA. EUCOR-Students and students of other Swiss Universities have to enrol at the students administration office ( within the official enrolment period. Enrolment = Registration for the exam!
Language of instruction English
Use of digital media Online course


Interval weekly
Date 02.03.2021 – 01.06.2021
Time Tuesday, 16.15-18.00 - Online Präsenz -

The course will be taught online at the dates you can see below:

Date Time Room
Tuesday 02.03.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 09.03.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 16.03.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 23.03.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 30.03.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 06.04.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 13.04.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 20.04.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 27.04.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 04.05.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 11.05.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 18.05.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 25.05.2021 16.15-18.00 - Online Präsenz -, --
Tuesday 01.06.2021 16.15-18.00 - Online Präsenz -, --
Modules Module: Core Competences in Economics (Master's Studies: Sustainable Development)
Specialization Module: International Trade, Growth and the Environment (Master's Studies: Business and Economics)
Assessment format end-of-semester examination
Assessment details The assessment of this course includes both presentations by students and a final written exam. There will be two rounds of presentations and students will randomly choose one paper from a selection of papers. Each student is expected to present one paper from either the first list or the second list. The presentation should focus on a short description of the problem and research questions, the methods, the policy recommendations and the link with the concepts studied in class. The students should also briefly state how they think the paper could be improved. It is also expected from the other students to participate to the discussion by asking questions. The grade obtained for the presentation is 30% of the final grade.

The written exam at the end of the term will evaluate your ability to transfer a problem into a simple model and provide recommendations based on the results. More precisely, it will evaluate your capability to apply all the methods, concepts and scientific arguments discussed in class to a new environmental problem. The written exam represents 70% of the final grade.
date of the written exam: tbd
Assessment registration/deregistration Registration via MOnA during registration period
Repeat examination no repeat examination
Scale 1-6 0,1
Repeated registration as often as necessary
Responsible faculty Faculty of Business and Economics ,
Offered by Faculty of Business and Economics