FRE 603 Advanced Food and Resource Economics

What is the best use of renewable and non-renewable resources from society’s perspective? How much fish should we harvest now, and how much should we leave in the oceans to grow and reproduce? How much old-growth forest or fossil fuels should we preserve for future generations? How does the outcome change when we consider equity or climate change? After this course, you will be able to answer these questions.

We will first introduce the mathematical tools for resource economics. We then use these tools to derive the fundamental results in resource economics. Finally, we take the results to the data to see how they can help us to understand the real world.

In addition to those technical skills, you will learn about the frontiers of research in resource economics, how to present economic research, and how to write referee reports and proposals.

The class meets on Tuesdays and Thursdays at 3:30 pm in ORCH-Floor 4-Room 4068.

Please send me an email if you have difficulties registering for this class. I am happy to help you: frederik.noack@ubc.ca

FRE 603: Advanced Food and Resource Economics
Syllabus
Frederik Noack
Office: McMl 331
Email: frederik.noack@ubc.ca
UBC, Fall 2024
UBC’s Point Grey Campus is located on the traditional, ancestral, and unceded territory of the Musqueam people.
Please email me if you can’t register for this class.

Course Description
What is the best use of renewable and non-renewable resources from society’s perspective? Why are the farmer’s choices not necessarily desirable from society’s perspective? How much fish should we harvest now, and how much should we leave in the oceans to grow and reproduce? How much oil should we use now, and how much should we leave for the future? Should our decisions change if we consider our impact on the climate system? After this course, you will be able to answer these questions. To do so, I will first introduce the fundamental mathematical tools for static and dynamic optimization. We then discuss how these tools are used to derive the most important results in resource economics. Finally, we will apply these tools to environmental and resource problems to formulate policies that ensure optimal use from a societal perspective. Although the course will cover resource use and dynamic environmental problems, including climate change, more broadly, it focuses specifically on the use and conservation of renewable resources in developing countries including agriculture, forests, biodiversity, and fisheries. Further, it focuses on the theory of food and resource economics and how it motivates and guides current empirical approaches in this field.

Learning Objectives
By the end of the course, you will be able to

• Describe the decision problem of farmers and resource harvesters using mathematical models.
• Define the optimal use of renewable and non-renewable resources such as forests, fisheries, and fossil fuels from society’s perspective.
• Formulate efficient policies for static and dynamic environmental problems such as deforestation and overfishing.
• Formulate, solve, and visualize mathematical problems in the programming language R.
• Critically assess current research in food and resource economics.

5. Difference and differential equations
Introduction to dynamics in continuous and discrete time, steady states, and the concept of stability.
6. Dynamic optimization
Optimal control and dynamic programming.
7. Non-renewable resources and the Hotelling model
Optimal extraction of non-renewable resources with and without externalities.
8. Renewable resources and bioeconomic models
Optimal fish harvest with and without discounting, optimal timing of harvesting a stand of trees.
9. Food and resource economics policies
Taxes and quota.
10. From theory to empirics
Testing theoretical predictions empirically.

Section 2

11. Agriculture and the environment
• Foster, A. D., & Rosenzweig, M. R. (1995). Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture. Journal of Political Economy, 103(6), 1176-1209.
• Karlan, D., Osei, R., Osei-Akoto, I., & Udry, C. (2014). Agricultural decisions after relaxing credit and risk constraints. The Quarterly Journal of Economics, 129(2), 597-652.
• Taylor, C. A. (2024). Cicadian Rhythm: Insecticides, Infant Health and Long-term Outcomes. Working Paper.
12. Biodiversity conservation
• Weitzman, M. L. (1998). The Noah’s Ark Problem. Econometrica, 1279-1298.
• Frank, E., & Sudarshan, A. (2024). The social costs of keystone species collapse: Evidence from the decline of vultures in India. American Economic Review.
13. Forestry and deforestation
• Hartman, R. (1976). The Harvesting Decision When a Standing Forest Has Value. Economic Inquiry, 14(1), 52-58.
• Souza-Rodrigues, E. (2019). Deforestation in the Amazon: A unified framework for estimation and policy analysis. The Review of Economic Studies, 86(6), 2713-2744.
14. Fisheries
• Sanchirico, J. N., & Wilen, J. E. (2001). A bioeconomic model of marine reserve creation. Journal of Environmental Economics and Management, 42(3), 257-276.
• Noack, F., & Costello, C. (2024). Credit markets, property rights, and the commons. Journal of Political Economy, 132(7), 000-000.
15. Economic development and the environment
• Harstad, B., & Mideksa, T. K. (2017). Conservation contracts and political regimes. The Review of Economic Studies, 84(4), 1708-1734.
• Burgess, R., Hansen, M., Olken, B. A., Potapov, P., & Sieber, S. (2012). The political economy of deforestation in the tropics. The Quarterly Journal of Economics, 127(4), 1707-1754.