Economics of Sustainability

Description:
The lecture course develops a set of economic ideas from economic theory that can be used to develop pragmatic, yet ethically grounded recommendations for the environmental crises the world faces today. A particular focus is on the economic theory of sustainability as a concept and its implications for assessing sustainable development across different geographies.

Primary topics of the course include: an economic analysis of the sustainable development goals and economic theories of sustainability, decision-making for situations of (environmental) catastrophes and existential risk, applying theories of justice to assessing the urgency of environmental problems, the use of behavioural economics to understand whether economic growth is desirable, economic analysis of critiques of consumerism, difficulties with valuing biodiversity and the role of fiscal policy for environmental protection. The course covers a selection of policy examples from around the world.

Module structure
The module will be organized in three phases.

PHASE I (week 1-3) – Introduction and Methods. We aim to provide, as non-experts, an overview of the current state of the environmental crisis before thinking about which concepts from economics are appropriate. Revision of undergraduate environmental economics. Introduction to applied dynamic optimization.

PHASE II (week 4-9) – Normative perspectives on sustainability and the environment. We develop the economic theory of sustainability and illustrate its quantitative and policy implications. We discuss uncertainty and existential risks.

PHASE III (week 10-13) – Inequality and Welfare. We discuss public economics perspectives on environmental policy which suggest how the state should intervene into the economy to 2 achieve environmental protection. A focus of this module is on behavioural perspectives on pricing- and non pricing interventions to protect the environment and on perspectives about inequality and justice.

Literature:

• Aldred, J. The Skeptical Economist. New York & London: Routledge, 2009
• Bowles, S. (2016). The moral economy. Yale University Press
• Fleurbaey, M., & Blanchet, D. (2013). Beyond GDP: Measuring welfare and assessing sustainability. Oxford University Press.
• Haensel, M. C., Drupp, M. A., Johansson, D. J., Nesje, F., Azar, C., Freeman, M. C., Groom, B. & Sterner, T. (2020). Climate economics support for the UN climate targets. Nature Climate Change, 10(8), 781-789
• Klenert, D., Mattauch, L., Combet, E., Edenhofer, O., Hepburn, C., Rafaty, R., & Stern, N. (2018). Making carbon pricing work for citizens. Nature Climate Change, 8(8), 669-677.
• Layard, R. (2006). Happiness and public policy: A challenge to the profession. The Economic Journal, 116: C24-C33
• Parry, I. (1998). The Double Dividend: When You Get it and When You Don’t. Proceedings. Annual Conference on Taxation and Minutes of the Annual Meeting of the National Tax Association (Vol. 91): 46-51.
• Perman, R., Y. Ma, M. Common, D. Maddison, and J. Mcgilvray. Natural Resources and Environmental Economics, 3rd Edition. Pearson 2003.
• Shogren, J.F. and Taylor, L.O. (2008). On behavioral-environmental economics. Review of Environmental Economics and Policy, 2(1), 26-44

Time & venue:
Lectures: Tuesdays, 14:00-15:30 (starting on 14.04.2026); TU Berlin, Fraunhoferstraße 33-36, 10587 Berlin, room FH 312
Tutorials: Thursdays, 14:00-15:30 (starting on 16.04.2026); TU Berlin, Fraunhoferstraße 33-36, 10587 Berlin, room FH 301

Exam:
Combined exam (“Portfolioprüfung”). Written exam (“schriftlicher Test”, 50%), three sets of graded homework (25%) and an extra task for each homework (25%). For the first and third homework, this consists of writing a reviewer report of an academic paper. For the second homework, a paper that is connected to the essay’s topic has to be presented in class (for example: Fabio Antoniou, Roland Strausz (2017): Feed-in Subsidies, Taxation, and Inefficient Entry, Environmental and Resource Economics, Volume 67, pp. 925-940).

More information can be found in the course syllabus (to be provided).

Enrolment & registration:
Please register via email to Marlene Merchert (m.merchert@tu-berlin.de) until 13.04.2026.