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D1.1 Environmental and Water Economics

This course studies the application of economic theory to the management of the environmental and water resources. More specifically, the course discusses the role of economic theory in understanding and solving environmental and water management problems and presents empirical applications in financial and socioeconomic analysis of water projects, using both market and non-market valuation approaches.  Topics that are covered include: management of water resources from an economic viewpoint, economic impacts of pollution and overexploitation of water bodies, investment analysis, water pricing, etc. The course consists of the following components which provide a concise introduction in environmental and water resource economics:

  1. Fundamentals of microeconomics: demand and supply analysis, competitive and imperfect markets, price, income and cross elasticity of demand, consumer and producer surpluses, etc.
  2. Fundamentals of environmental and water resource economics: overview of environmental economics concepts, market failures, environmental externalities, Piguvian taxes, environmental subsidies, Coase Theorem, total economic value of environmental goods and services, etc.
  3. Direct and indirect valuation methods and techniques: stated and revealed preference methods (e.g. contingent valuation, choice experiments, travel cost analysis, hedonic pricing), value transfer method, etc.
  4. Financial and cost-benefit analysis of water projects: cash flow analysis, discount rates, economic criteria (Net Present Value, Internal Rate of Return, Payback Period, etc.), sensitivity and risk analysis, etc.
  5. Applications in the field of water resources management: water pricing in the context of Water Framework Directive, monetization of groundwater pollution, etc.