Syllabus for APEC 3611w: Environmental and Natural Resource Economics
University of Minnesota
Department of Applied Economics
Spring 2026, Mon/Wed/Fri, 10:40 to 11:30, Ruttan Hall, B25
Associate Professor Justin Johnson
Office: 337H Ruttan
Phone: 912-961-2382
email: jajohns@umn.edu
Office hours: 11:30-12:00 M/W/F or by appointment (or whenever)
3 Credit course.
Course website: https://justinandrewjohnson.com/teaching/apec_3611
Course Canvas site: https://canvas.umn.edu/courses/540318
Teaching Assistant: Ryan McWay: mcway005@umn.edu
Course Content and Objectives
This course introduces upper-level undergraduates to the economic analysis of natural resources and the environment, framed through the lens of earth–economy systems. We study how markets, institutions, ecosystems, and technologies interact to shape resource use and environmental outcomes. Traditional topics—externalities, public goods, market failure, valuation, cost–benefit analysis, renewable and non-renewable resources—are integrated into a coherent systems view in which the economy is embedded within the biosphere.
Students learn to reason across scales, from individual decisions to global dynamics, and to connect microeconomic tools with macro-level outcomes such as climate change, biodiversity loss, and sustainable development. The course emphasizes earth–economy modeling: simplified representations of coupled human–natural systems used to explore tradeoffs, policies, and futures.
Learning Objectives
By the end of the course, students will be able to:
- Explain why environmental problems arise in market economies and how they relate to externalities, public goods, and the commons.
- Analyze resource use decisions for renewable and non-renewable resources using economic models.
- Measure and value environmental impacts using economic tools.
- Evaluate environmental policies using efficiency, equity, and sustainability criteria.
- Understand the economy as embedded within ecological systems.
- Build and interpret simple earth–economy models that link economic activity with environmental change.
- Use models to explore tradeoffs, uncertainty, and long-run dynamics in environmental policy.
Class Hours and Mode of Instruction
This is an IN-PERSON class! We will meet for lectures and discussion section at the times and locations listed below. Attendance is required and 10% of your grade will depend on your attendance and participation. Additionally, classes will include worktime on exercises along with hints on how to complete them (so you will definitely want to come!). However, if you have an excused absence (discussed below), If you have an excused absence, you will not lose any points. Email me in advance (ideally) to confirm. I will be recording each lecture, but these are only for those who have a legitimate absence. To get the video recording link, contact your TA. A detailed schedule will be hosted on the front-page of Canvas.
Course Textbook and Readings
The primary textbook for this course is:
Keohane, Nathan and Sheila Olmstead, Markets and the Environment, second edition, (Washington DC: Island Press, 2016), available for free by UMN libraries at Markets and the Environment (You need to be logged in with your UMN credentials to access the full text.)
Course Website
This course embraces open-access publishing (and subsequent years will likely switch to a new open-access textbook to be created by me!). For now, all course materials, including lecture slides, problem sets, and additional readings, will be available on the course website at https://justinandrewjohnson.com/teaching/apec_3611. Canvas https://canvas.umn.edu/courses/540318 will be used minimally, only for announcements, assignment submission and grade reporting.
Course Schedule
The most up-to-date course schedule is found on the Course Homepage. Below, I reproduce the schedule as of the start of the semester for reference.
| Date | Title | Subtitle |
|---|---|---|
| 1/21/2026 | Introduction | Environmental and Natural Resource Economics in a Global Framing |
| 1/23/2026 | The Doughnut | Macroeconomic Feasibility |
| 1/26/2026 | The Microfilling | Microeconomic Decision-making |
| 1/28/2026 | Supply and Demand | The power of equilibrium and Micro-Macro Synthesis |
| 1/30/2026 | Cost benefit analysis | The standard workhorse of environmental economics |
| 2/2/2026 | Optimal Pollution | A contradiction? |
| 2/4/2026 | Externalities | Spillovers |
| 2/6/2026 | Public Goods | Underprovision is likely |
| 2/9/2026 | Commons | Always a Tragedy? |
| 2/11/2026 | The Whole Economy | Partial vs General Equilibrium |
| 2/13/2026 | GDP and the Environment | Measuring what matters |
| 2/16/2026 | Kuznet’s Curve | Does development improve the environment? |
| 2/18/2026 | Inclusive Wealth | A better metric? |
| 2/20/2026 | Dynamic Efficiency and Sustainable Development | Methods to define sustainability |
| 2/23/2026 | Climate Change | The ultimate externality |
| 2/25/2026 | Social Cost of Carbon | Manage per ton of carbon |
| 2/27/2026 | DICE and Climate Skepticism | It all depends on the social cost of carbon |
| 3/2/2026 | Air Pollution | Spillovers in the air |
| 3/4/2026 | Water Pollution | Spillovers on the ground |
| 3/6/2026 | MIDTERM EXAM | |
| 3/16/2026 | Non-renewable resources 1 | Will we run out? |
| 3/18/2026 | Non-renewable resources 2 | How much should we extract? |
| 3/20/2026 | Renewable resources 1 | Fisheries |
| 3/23/2026 | Renewable resources 2 | Forestry |
| 3/25/2026 | Land as a resource | The forgotten input |
| 3/27/2026 | Land-use change prediction | Tools to predict where nature is at risk |
| 3/30/2026 | Ecosystem Services and Natural Capital | Return to the Micro-Macro relationship |
| 4/1/2026 | Valuing Nature | Bottom-up methods for putting a monetary value on nature |
| 4/3/2026 | Biodiversity | Species protection and the fundamental source of value |
| 4/6/2026 | Ecosystem services 1 | Introduction and context |
| 4/8/2026 | Ecosystem services 2 | Methods and specific services |
| 4/10/2026 | Ecosystem Services 3 | More services and policy directions |
| 4/13/2026 | Risk, Uncertainty and Tipping Points | Regime change and hysteresis |
| 4/15/2026 | Scenarios Exploring Possible Futures | Shared socio-economic pathways |
| 4/17/2026 | Positive Visions of the Future | Nature Futures Framework |
| 4/20/2026 | Designing policies for earth-economy systems | Global policies and cooperation |
| 4/22/2026 | Market-based policies | Micro-level optimization |
| 4/24/2026 | Environmental policies in the real world | Quotas, Trading and Taxes |
| 4/27/2026 | Toy Earth-Economy models | A video game for sustainability? |
| 4/29/2026 | Gridded Earth-Economy models | Millions of markets |
| 5/1/2026 | Earth-economy modeling in practice | GTAP-InVEST |
| 5/4/2026 | Conclusion | Where to go from here? |
| 5/12/2026 | Final Exam: 8:00-10:00 AM |
Reminder, see the full and up-to-date schedule on the Course Homepage.
Prerequisites
APEC 1101 or equivalent (undergraduate level principles of microeconomics). It is possible to take microeconomics concurrently. If you haven’t had such classes (or are taking them concurrently) please talk to me about what you will need to do to keep up.
Course Grading
Class participation 10%
Weekly questions 20%
Problem sets 20%
Midterm 15%
Final project 20%
Final exam 15%
Letter grades will be assigned using the scale below. The usual rounding rules apply.
A: 100 ~ 93
A-: 92 ~ 90
B+: 89 ~ 87
B: 86 ~ 83
B-: 82 ~ 80
C+: 79 ~ 77
C: 76 ~ 73
C-: 72 ~ 70
D+: 69 ~ 67
D: 66 ~ 60
F: 59 ~ 0
Late Work Policy
Submit assignments on time or arrange extensions in advance. Late work without valid excuse loses 10% of the total points per day. Last-minute crises due to procrastination are not acceptable excuses.
Academic Dishonesty and Plagiarism
The University of Minnesota defines academic dishonesty as “Submission of false records of academic achievement; cheating on assignments or examinations; plagiarizing; altering, forging, or misusing a University academic record; taking, acquiring, or using test materials without faculty permission; acting alone or in cooperation with another to falsify records or to obtain dishonestly grades, honors, awards, or professional endorsement” (University of Minnesota’s Board of Regents Student Conduct Code). Plagiarism is the “use the words or ideas of another person as if they were your own words or ideas” (Merriam Webster Dictionary). If you want to use the exact wording from a previously published work in your own work you must put the wording in quotation marks and cite the source (as shown by example in the prior sentence). If you use ideas or specific facts from a source but do not use the exact words then you still must cite the source of the original ideas or facts. Evidence of academic dishonesty will be forwarded to the Student Scholastic Conduct Committee. TurnItIn is used to check for plagiarism on written assignments.
Credits and Workload Expectations
One credit is defined as equivalent to an average of three hours of learning effort per week (over a full semester) necessary for an average student to achieve an average grade in the course. For example, a student taking a three credit course that meets for three hours a week should expect to spend an additional six hours a week on coursework outside the classroom.
Students with Disabilities
The University of Minnesota is committed to providing equitable access to learning opportunities for all students. Disability Services (DS) is the campus office that collaborates with students who have disabilities to provide and/or arrange reasonable accommodations. If you have, or think you may have, a disability (e.g., mental health, attentional, learning, chronic health, sensory, or physical), please contact DS at 612-626-1333 to arrange a confidential discussion regarding equitable access and reasonable accommodations. If you are registered with DS and have a current letter requesting reasonable accommodations, please let me know early in the semester so we can agree on accommodations that will be applied in the course.
Students with Mental Health Issues
As a student you may experience a range of issues that can cause barriers to learning, such as strained relationships, increased anxiety, alcohol/drug problems, feeling down, difficulty concentrating, and/or lack of motivation. These mental health concerns or stressful events may lead to diminished academic performance or reduce your ability to participate in daily activities. University of Minnesota services are available to assist you with addressing these and other concerns you may be experiencing. You can learn more about the broad range of confidential mental health services available on campus via www.mentalhealth.umn.edu.
AI Usage Policy
You are free to use AI in whatever way you want, but you must attribute when you use it with a disclaimer in any assignment. I allow AI because because AI will be a critical tool in the future and so we should learn how best to use it.
Two important caveats:,
- Mistakes made by the AI are considered YOUR mistakes and you are fully responsible for them.
- Using AI is a double-edged sword; you will be able to complete tasks faster but it will reduce your comprehension of the topic. It increases productivity but not understanding. If you rely on AI for assignments, you will likely do worse on the in-class exams.