Prof. Dr. Rudi Kurz Office hours: Wednesday 13:45-15:15 Office: W4.1.02 E-mail: [email protected] Markets and the Economics of Natural Resources BREM3001 Syllabus Winter Semester 2016/17 Time (room) Tuesday 15:30-17:00 (W1.5.06) Wednesday 15:30-17:00 (W2.3.15) Begin October 4 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 sustainable development • 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 2 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) 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 3 Time Schedule (preliminary Sept 2016) Introduction: Sustainable Development and Non-renewable Resources Crane/Matten 31-36, passim; Perkins 787-804; Todaro/Smith 483-490; Oct 4, 5 Hoffmann/Woody; Freeman 1-29; Weizsäcker; Weybrecht 13-48; OECD (2008) Basic Economic Concepts: Externalities, Public and Common Goods, Optimal Pollution, Coase Theorem Oct 11, 12 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, Oct 25, 26 Hartwick Rule Siebert; Ströbele Environmental Policy Instruments: Overview and Criteria for Evaluation Information Instruments, Voluntary Agreements, Liability Nov 2, 15, 16 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 Nov 16, 22, 23 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 Nov 29, 30 Stiglitz/Sen/Fitoussi Eco-efficiency (Substitution, Recycling) and Innovation Policy Dec 6, 7 OECD (2013a); Substitution: Oil (Ströbele 75 ff); Recycling: Copper (Ströbele 106 ff) World Markets for Natural Resources: Determinants, Trends and Dec 13, 14 Fluctuations Baker; Clark et al. International Commodity Trading: Physical and Derivative Markets Dec 20, 21 Clark et al. Specifica of the Energy Sector and Energy Markets Jan 10 Ströbele et al.; OECD (2012c) Resource Policy and Company Strategies Jan 11, 17, 18 Crane/Matten: 4-16, 67-82, 92-117, 183-225; Heal; Angrick 2008, 2013; Bringezu 2009, 216 ff Jan 24, 25 Q&A, Feedback 4 Additional Literature Abraham, David (2015): The Elements of Power: Gadgets, Guns and the Struggle for a Sustainable Future in the Rare Metal Age, New Haven / London (Yale University Press) 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, London (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 Resource Efficiency: Eco-Innovation Policies for a Green Economy, Berlin/Heidelberg (Physica) BMUB (Bundesministerium für Umwelt, Naturschutz, Bau und Reaktorsicherheit) (2016): Deutsches Ressourceneffizienzprogramm II. Programm zur nachhaltigen Nutzung und zum Schutz der natürlichen Ressourcen, Berlin (www.bmub.bund.de/publikationen) Collier, Paul (2010): The Plundered Planet: Why We Must – and How We Can – Manage Nature for Global Prosperity (Oxford University Press) umw4 2010 1931 Daniel, Philip / Keen, Michael / McPherson, Charles (eds. 2010): The Taxation of Petroleum and Minerals. Principles, Problems and Practice, London / New York (Routledge) Eller, Roland et al. (Hrsg. 2010): Management von Rohstoffrisiken: Strategien, Märkte und Produkte, Wiesbaden (Gabler) Exner, Andreas / Held, Martin / Kümmerer, Klaus (Hrsg. 2016): Kritische Metalle in der Großen Transformation, Heidelberg (Springer) 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. (2014): Economics, 3rd 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 5 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) 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-