MOOC 2- Economics and Policies of Climate Change
Course description
Being aware of the urgency and importance of climate change is not enough to tackle it effectively. To avoid the worst climate outcomes, decisive action has to be taken. But what realistic options do we have? Since our resources are limited, is it better to act now or wait until we have more advanced and less expensive technology? How big do our abatement efforts have to be?
This MOOC will help learners understand how economists try to answer these questions and find the optimal course of action. Most important, it will give learners the conceptual tools to draw their own conclusions.
In the first part of the MOOC, learners will learn about the two main approaches used by economists to determine when and how much we should invest in the fight against climate change. The first method is the net-present-value approach. Here the social discount rate plays a central role in determining optimal policy, by showing how future benefits and costs can be compared and made comparable (‘present-valued’) with expenditures today. In the second approach learners will learn how Integrated Assessment Models (IAMs) work. In particular, they will study in detail the strengths and weaknesses of one of the most popular IAMs, the DICE model, developed by Nobel laureate Professor Nordhaus. This model tries to figure out the optimal course of action by providing a simplified account of the science, the technology and the economics of the problem.
The second part of this MOOC then explores the different types of economic policies that decision-makers can adopt. Learners will be introduced to different methods used to control emissions, such as carbon taxes, regulations and standard-setting. They will also learn about the most developed emissions trading markets around the world and their effects on the economy.
This MOOC is for those who wish to understand the economics of climate change and use this understanding to form their own informed opinion about the policies on which we can rely to tackle it. It is not necessary to have specialized prior knowledge, apart from basic familiarity with economic concepts such as utility functions.
We do suggest, however, taking the first MOOC of this specialization before starting this one in order to gain a simple but solid understanding of the physical and technological aspects of the problems.
Faculty
Riccardo Rebonato
Professor of Finance, EDHEC Business School
Scientific Director, EDHEC-Risk Climate Impact Institute
PhD in Science of Materials, Stony Brooks University, NY, USA
Doctorate in Nuclear Engineering, Milan University, Italy
Lionel Martellini
Professor of Finance, EDHEC Business School
Scientific Advisor, EDHEC-Risk Climate Impact Institute
PhD UC Berkley
Learning objectives
- Understand the likely impacts on the real economy of the different courses of actions ahead of us
- Evaluate projects on a portfolio basis the economic attractiveness of various abatement projects
- Assess critically the economic desirability of different technologically feasible abatement technologies
- Understand the various policy approaches involved in the transition to a low carbon economy including in particular “cap & trade” carbon markets.
About EDHEC
Operating from campuses in Lille, Nice, Paris, London and Singapore, EDHEC is one of the world’s top 15 business schools. Fully international and directly connected to the business world, EDHEC commands a strong reputation for research excellence and the ability to train entrepreneurs and managers capable of breaking new ground. EDHEC functions as a genuine laboratory of ideas and produces innovative solutions valued by businesses. The School’s teaching is inspired by its research work and a focus on “learning by doing”, all with the aim of equipping people with the skills to succeed in business.
