Applying Economic Concepts to Environmental Problems

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Categories: GSI Online LibraryTeaching Effectiveness Award Essays

by Shanthi Nataraj, Agricultural & Resource Economics (Home Department: Economics)

Teaching Effectiveness Award Essay, 2009

In my first teaching position at Berkeley, I was a GSI for an introductory course in environmental economics. Most of the students had no trouble during the first half of the course, when they learned basic economic concepts about how consumers and firms behave. When asked to apply those economic concepts to environmental issues during the second half of the course, though, many students had trouble reconciling their knowledge of economics with their existing opinions about environmental issues. For example, all of the students thought it was straightforward for a firm to set marginal cost (the cost of an additional unit of output) equal to marginal benefit (the revenue from an additional unit of output) in order to find the “optimal” level of output. However, when it came to finding the “optimal” level of pollution for society, many students simply said that it should be zero, because pollution is bad; they couldn’t easily grasp the idea of setting the marginal cost of pollution control equal to the marginal benefit.

I realized that I had to help the students understand that economic principles often underlie many of the arguments over environmental issues, even if economic terms are not used. I used two teaching methods to relate economic theory to environmental problems. First, for each environmental topic we covered in class, I tried to find a newspaper article that reported conflicting viewpoints on a policy issue, such as climate change or fisheries management. We read the article, and then discussed economic arguments that could support each viewpoint. Second, I put the students into small groups and created scenarios in which they were asked to make environmental policy decisions. For instance, to illustrate the idea that zero pollution might not always be optimal, the students were told that they were in charge of a wastewater treatment plant, and were asked to determine how much to clean up the water before discharging it to a local stream under various scenarios. In one scenario there was a town directly downstream from the plant, so even small quantities of pollution would harm the town’s drinking water supply; in another scenario there were no nearby towns, so the wastewater would not cause as much damage. The students were asked to weigh the costs of various degrees of water treatment against the benefits to human health and the environment.

As we continued to read articles and work on real-world problems in discussion section, I noticed that the students’ analyses of environmental issues in their problem sets improved. Most students still stated strong opinions about environmental issues – but now, they were able to back up their opinions with economic reasoning. In one problem set, several students argued that there should be zero pollution of a certain toxic compound, but pointed out that this was because the marginal cost of even a little of this compound was so high that it was worth cleaning up. Students who came to my office hours also spent time asking me about points of confusion about the environmental scenarios from discussion section, not just about the problem sets. In their GSI evaluations, a number of students wrote that the real-world examples were the most effective part of the discussion sections.

Most of the students in the class did not plan to become economists, but many wanted to work in the environmental field. I believe that the teaching techniques I used will help them to remember some of the important economic concepts they learned and to apply those concepts to environmental issues in their future careers.