ECON 152 — Economics of Climate Change

Undergraduate · Fall 2026 · Department of Economics, Clark University

Mondays & Thursdays, 2:50–4:05 pm · No prerequisites

Syllabus

• Fall 2026 Syllabus
  Draft — some details (classroom, teaching assistant, office hours) are still to be confirmed.

Course Description

This course examines the economics of climate change and environmental policy. We begin with the core tools of microeconomics — supply and demand, efficiency, externalities, and public goods — and apply them to understand why markets fail to adequately address climate change. We then study the impacts of a changing climate and the methods economists use to measure the costs and benefits of environmental policy, including benefit-cost analysis and the Social Cost of Carbon. The second half of the course surveys the major policy instruments available to governments — carbon taxes, cap-and-trade systems, technology subsidies, and international agreements — and examines the role of international trade in shaping climate outcomes. Topics include the Pollution Haven Hypothesis, carbon leakage, the Carbon Border Adjustment Mechanism (CBAM), and climate clubs.

Prerequisites: None. No prior economics coursework is required, although students who have taken ECON 10 or ECON 11 will find much of the early material familiar.

Course Objectives

Students completing this course will be able to:

• Apply supply, demand, and economic efficiency concepts to environmental problems.
• Explain why climate change constitutes a market failure (externality and public good).
• Assess the impacts of climate change and the economic logic of adaptation.
• Conduct benefit-cost analysis and interpret the Social Cost of Carbon.
• Evaluate climate policy instruments using economic theory, including their distributional consequences.
• Analyze the relationship between international trade and climate policy.
• Work with real economic and environmental data, and communicate the results in writing.

Course Outline

• Part I — Economic Tools
  Demand and willingness to pay · production and supply · market equilibrium and efficiency · externalities · public goods and the commons · discounting and dynamic efficiency.
• Part II — The Economics of Climate Change
  Sustainability and economic growth · the economics of pollution · climate impacts and adaptation.
• Part III — Measuring Costs and Benefits
  Benefit-cost analysis · valuing benefits and costs · risk and uncertainty · integrated assessment models and the Social Cost of Carbon.
• Part IV — Climate Policy
  Institutions and international agreements · carbon taxes vs. cap-and-trade · policy in practice (RGGI, EU ETS, Massachusetts) · technology and innovation policy · distributional effects and just transition.
• Part V — Trade, Globalization, and Climate Change
  Comparative advantage · the Pollution Haven Hypothesis and carbon leakage · competitiveness and the Carbon Border Adjustment Mechanism · climate clubs and international negotiations.
• Part VI — Wrap-Up
  Policy failures and climate politics · closing arguments.

Course Materials

• The Climate Problem in Data
  Session 1 slides — a tour of the global emissions data, built from live Our World in Data charts. Every figure is interactive: change countries, switch to the map or table view, and download the underlying CSV.

Texts

• Jaeger, W.K. (2005)
  Environmental Economics for Tree Huggers and Other Skeptics. Island Press. — main text
• Tal, A. (2024)
  Making Climate Tech Work: Policies that Drive Innovation. Island Press. — climate policy and technology
• Supplementary
  Field & Field, Environmental Economics: An Introduction; Rebonato, R. (2024), How to Think About Climate Change; Mankiw, Principles of Economics (optional review).

Software

The course's data exercises use Stata. Enrolled students receive a free student license — access details are posted on Canvas.