Prof. Dr. Rudi Kurz Office hours: Tuesday 13:45-15:15 Office: W4.1.02 E-mail: [email protected]

Markets and the Economics of Natural Resources

BREM3001

Syllabus

Summer Semester 2016

Time (room) Monday 13:45-15:15 (W3.2.04) Tuesday 15:30-17:00 (W1.5.03) Begin March 14 ECTS-Credits 5 Workload 150 hours: 60 h contact + 90 h reading/exercises/research Level Advanced Prerequisites Semester 1 and 2 completed (not more than 10 credits missing) Accessibility Obligatory for REM (semester 6) and open to international exchange students (ISP) Exam Written test (90 minutes)

Objectives

Students acquire advanced knowledge, understand and are able to apply instruments. They • understand the role of non-renewable natural resources in the context of • are familiar with the economic aspects of resource scarcity and with solutions offered by resource economics • know important resource markets (including recycling and energy markets) and their performance • are able to analyze world resource market and to evaluate trends and fluctuations

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Contents • Sustainable Development: general concept, rules for non-renewable resources • Market failure (public goods, tragedy of the commons, externalities) • Intertemporal allocation: Hotelling Rule, Hartwick Rule • Economic policy instruments (Pigou tax, tradable permits, Coase Theorem) • Natural resources and (limits to) economic growth, Jevons and Rebound • Accounting problems – beyond GDP • Eco-Efficiency and innovation policy • Energy markets and specifica of the energy sector • World market for natural resources: determinants, trend and volatility of prices • International commodity trading: Physical and derivative markets • Companies’ role and strategies in managing resource scarcity

Basic Literature

Baker, Robert (2010): The Trade Lifecycle: Behind the Scenes of the Trading Process, Chicester (Wiley) umw5 2013 330 Clark, Ephraim / Lesourd, Jean-Baptiste / Thieblemont, Rene (2001): International Com- modity Trading: Physical and Derivative Markets, Chichester (Wiley) umw5 2013 398 Conrad, Jon M. (2011): Resource Economics, 2nd ed., Cambridge, MA (Cambridge Uni Press) Crane, Andrew / Matten, Dirk (2010): Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization, 3rd ed., Oxford (Oxford University Press) Perman, Roger et al. (2011): Natural Resource and Environmental Economics, 4th ed., Harlow (Pearson)

FU Hagen & Lund University (2015): – A Question of Justice? Units 4, 7, 8, https://mooc.umweltwissenschaften.de/

Natural Resource Governance Institute / Columbia Center on Sustainable Investment / SDSNedu / The World Bank (2016): Natural Resources for Sustainable Development, Massive Open Online Course (MOOC), https://www.sdsnedu.org/learn/natural-resources-for- sustainable-development-february-2016

Course Contributions to Program Goals / Learning Outcomes

Goals Contributions Assessment Expert knowledge - Global challenge of non-renewable resources - Efficiency of competitive market solutions - Market failure, government policy instruments written exam - natural resources and economic growth - performance of markets for natural resources Use of information technology Critical thinking and Application of microeconomic methods to class analytical competence analyze real world problems and to assess discussion, government policy written exam Ethical awareness Market failure, role of government in solving class environmental and social problems, role and discussion, responsibility of firms written exam Communication skills class discussion Capacity for teamwork

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Time Schedule (preliminary Feb 2016)

Introduction: Sustainable Development and Non-renewable Resources Crane/Matten 31-36, passim; Perkins 787-804; Todaro/Smith 483-490; March 14, 15 Hoffmann/Woody; Freeman 1-29; Weizsäcker; Weybrecht 13-48; OECD (2008) Basic Economic Concepts: Externalities, Public and Common Goods, Optimal , Coase Theorem March 21, 22 Mankiw/Taylor 189-251; Perkins 758-769; Weybrecht 81-114 Allmende problem ocean fishing: Ströbele 158 ff; WBGU Intertemporal Allocation: Hotelling Rule, Common-Pool-Problem, April 4, 5 Hartwick Rule Siebert; Ströbele Environmental Policy Instruments:  Overview and Criteria for Evaluation  Information Instruments, Voluntary Agreements, Liability April 11, 12  Taxes vs. Regulation  Tradable Permits sPerkins 772-786; OECD (2007); Weybrecht 81-114; Natural Resources and (Limits to) Growth:  Limits to Growth  Environmental Kuznets Curve April 18, 19, 25  Green Growth and Rebound Effects Perkins 3-185; Todaro/Smith 109-205; OECD (2011); Randers; Weizsäcker et al.; Belz/Peattie; Ströbele; Siebert 263 ff Measurement and Accounting Problems – Beyond GDP April 26 Stiglitz/Sen/Fitoussi Eco-efficiency (Substitution, Recycling) and Innovation Policy May 2, 3, 23 OECD (2013a); Substitution: Oil (Ströbele 75 ff); Recycling: Copper (Ströbele 106 ff) World Markets for Natural Resources: Determinants, Trends and May 24, 30 Fluctuations Baker; Clark et al. International Commodity Trading: Physical and Derivative Markets May 31 Clark et al. Specifica of the Energy Sector and Energy Markets June 6 Ströbele et al.; OECD (2012c) Resource Policy and Company Strategies June 7, 13, 14 Crane/Matten: 4-16, 67-82, 92-117, 183-225; Heal; Angrick 2008, 2013; Bringezu 2009, 216 ff June 20 Exercises, Q&A June 27, 28 Q&A, Feedback

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Additional Literature

Arnold, Jan (2010): Commodity Procurement with Operational and Financial Instruments, (Gabler e-book) Bain, Caroline (2013): Guide to Commodities: Producers, Players and Prices, Markets, Con- sumers and Trends, … (Profile Books) umw 1.7 2013 517 Barbier, Edward B. (2011): Scarcity and Frontiers. How Economies Have Developed Through Natural Resource Exploitation, Cambridge, UK (Cambridge University Press) Bardi, Ugo (2013): Extracted: How the Quest for Mineral Wealth Is Plundering the Planet, White River Junction, VT (Chelsea Green Publishing) Bergstrom, John C. / Randall, Alan (2009): Resource Economics. An Economic Approach to Natural Resource and Environmental Policy, 3rd ed., EE Bleischwitz, Raimund / Welfens, Paul J.J. / Zhang, ZhongXiang (2011): International Economics of : Eco-Innovation Policies for a , Berlin/Heidelberg (Physica) Collier, Paul (2010): The Plundered Planet: Why We Must – and How We Can – Manage Nature for Global Prosperity (Oxford University Press) umw4 2010 1931 Eller, Roland et al. (Hrsg. 2010): Management von Rohstoffrisiken: Strategien, Märkte und Produkte, Wiesbaden (Gabler) Hoffmann, A. J. / Woody, J. G. (2008): Climate Change: What’s Your Business Strategy? Boston, MA (Harvard Business School Publishing) Hotelling, Harold (1931): The Economics of Exhaustible Resources, Journal of Political Economy 39, 137–175 Hull, John C. (2014): Options, Futures, and Other Derivatives, 9th ed., Boston etc. (Pearson) Kahn, James R. (2004): The Economic Approach to Environmental and Natural Resources, 3rd ed., Mason, OH (South-Western College Publishing) Kausch, Peter / Bertau, Martin / Gutzmer, Jens / Matschullat, Jörg (Hrsg. 2014): Strategische Rohstoffe - Risikovorsorge, Berlin/Heidelberg (Springer) Krautkraemer, Jeffrey A. (1998): Nonrenewable Resource Scarcity, Journal of Economic Literature 36, 2065-2107 Mankiw, N. Gregory / Taylor, Mark P. (2011): Economics, 2nd ed., Andover (South-Western, Cengage Learning) Maxwell, Philip (ed. 2013): Mineral Economics. Australian and Global Perspectives, 2nd ed., Carlton Victoria (AusIMM) OECD (2007): Instrument Mixes for Environmental Policy, Paris OECD (2008): Conducting Sustainability Assessments, Paris OECD (2009): Promoting Consumer Education. Trends, Policies and Good Practices, Paris OECD (2011): Towards Green Growth, Paris OECD (2012a): OECD Environmental Outlook 2050+, Paris OECD (2012b): Environmental Performance Reviews: Germany 2012, Paris OECD (2012c): Green Growth Studies: Energy, Paris OECD (2012d): Sustainable Materials Management: Making Better Use of Resources, Paris OECD (2013a): Energy Efficiency: Market Trends and Medium-Term Prospects, Paris OECD (2013b): Effective Carbon Prices, Paris Ostrom, Elinor (1991): Governing the Commons: The Evolution of Institutions for Collective Action, Cambridge University Press Perkins, Dwight H. / Radelet, Stefen / Lindauer, David L. (2006): Economics of Development, 6th ed., New York / London (W.W. Norton) Polimeni, John M. / Mayumi, Kozo / Giampietro, Mario (2009): The Myth of Resource Efficiency: The Jevons Paradox, London (Earthscan) Rainey, David Lloyd (2008): Sustainable Business Development: Inventing the Future through Strategy, Innovation and Leadership, Cambridge (Cambridge Univ. Press) Randers, Jorgen (2012): 2052: A Global Forecast for the Next Forty Years, launched by the Club of Rome, Post Mills VT (Chelsea Green Publishing) Reinhardt, Forest L. / Vietor, Richard H. K. (1996): Business Management and the Natural Environment, Cincinnati, OH (South-Western)

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Richards, Jeremy P. (ed. 2009): Mining, Society, and a Sustainable World, … (Springer) umw 4 2013 361 Sandel, Michael (2012): What Money Can’t Buy: The Moral Limits of Markets, New York (Farrar, Straus and Giroux) Schaltegger, S. / Burritt, R. / Petersen, H. (2003): An Introduction to Corporate Environmen- tal Management. Striving for Sustainability, Sheffield Siebert, Horst (2008): Economics of the Environment. Theory and Policy, 7th ed., Berlin etc. (Springer) Skidelsky, Robert / Skidelsky, Edward (2012): How Much Is Enough? Money and the Good Life, New York, NY (Other Press) Stern, Nicholas (2007): The Economics of Climate Change: The Stern Review, Cambridge (Cambridge University Press) Stiglitz, Joseph E. / Sen, Amartya / Fitoussi, Jean-Paul (2010): Mismeasuring Our Lives: Why GDP Doesn’t Add Up, New York / London (The New Press) Strange, Tracey / Bayley, Anne (2008): Sustainable Development. Linking Economy, Society, Environment, OECD Insights, Paris Ströbele, Wolfgang (1987): Rohstoffökonomik. Theorie natürlicher Ressourcen mit Anwendungsbeispielen Öl, Kupfer, Uran und Fischerei, München (Vahlen) Ströbele, Wolfgang / Pfaffenberger, Wolfgang / Heuterkes, Michael (2012): Energiewirtschaft: Einführung in Theorie und Politik, München (Oldenbourg) Sukhdev, Pavan (2012): Why Corporation 2020? The Case for a New Corporation in the Next Decade, Washington, DC etc. (Island Press) Tietenberg, Tom / Lewis, Lynne (2014): Environmental and Natural Resource Economics, Todaro, Michael P. / Smith, Stephen C. (2011): Economic Development, 11th ed., Boston (Addison-Wesley) UNEP (2014): Using Indicators for Green Economy Policymaking, Paris Victor, Peter (2008): Managing Without Growth. Slower by Design, Not Disaster, Cheltenham, UK / Northamption, MA (EE) Weizsäcker, E. v. / Lovins, A. B. / Lovins, L. H. (1997): Factor Four: Doubling Wealth, Halvening Resource Use, London Weizsäcker, E. v. et al. (2009): Factor Five. Transforming the Global Economy through 80% Improvements in Resource Productivity. A Report to the Club of Rome, London / Sterling, VA (Earthscan) wirt3.42 2010 312 Weybrecht, G. (2010): The Sustainable MBA. The Manager’s Guide to Green Business, Chichester (Wiley) Worldwatch Institute (2015): State of the World 2015: Confronting Hidden Threats to Sustainability, Washington, DC (Island Press)

Other Sources and Materials

European Commission – A resource-efficient Europe – Flagship initiative of the Europe 2020 Strategy European Commission - Online Resource Efficiency Platform European Commission - The Roadmap to a resource efficient Europe European Environment Agency Report on Resource Efficiency in Europe German Federal Environment Agency (UBA) – Waste | Resources German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety German National Resources Forum 2012 German Resource Efficiency Programme (ProgRess) Metal Pages http://www.metal-pages.com/ OECD - Resource productivity and waste UNEP - International Resource Panel World Resources Forum

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Company Strategies

Allianz https://www.allianz.com/oneweb/cms/www.allianz.com/de/ verantwortung/download_center/nachhaltige_entwicklung.html Bosch http://www.bosch.com/en/com/sustainability/ sustainability_at_bosch.html Daimler AG https://www.daimler.com/sustainability/ EnBW http://www.enbw.com/content/de/der_konzern/nachhaltigkeitsbericht/ index.jsp?WT.ac=nachhaltigkeitsbericht Ernst & Young http://www.ey.com/DE/de/About-us/Corporate-Responsibility http://www.ey.com/US/en/Services/Specialty-Services/ Climate-Change-and-Sustainability-Services/ Six-growing-trends-in-corporate-sustainability_overview General Electric http://www.gecitizenship.com/ Münchner Rück http://www.munichre.com/corporate-responsibility/de/ homepage/default.aspx Puma http://about.puma.com/sustainability/ Ritter Sport http://www.ritter-sport.de/#/de_DE/company/engagement SAP http://www.sap.com/corporate-en/sustainability/index.epx Schmalz http://de.schmalz.com/unternehmen/nachhaltigkeit/ Siemens http://www.siemens.com/sustainability/en/ Unilever http://www.unilever.com/sustainable-living/

Networks and Institutions

DERA http://www.deutsche-rohstoffagentur.de/ European Business Ethics Network http://www.eben-net.org/index.php Global Reporting Initiative http://www.globalreporting.org/ HWWI http://www.hwwi-rohindex.de/ Intergovernmental Panel on Climate Change http://www.ipcc.ch/ UN Global Compact http://www.unglobalcompact.org/ US Geological Survey http://minerals.usgs.gov/minerals/