Economic Principles for Natural Resource Conservation and Management

Last changed: 20 March 2020

Number of credits: 7.5 ECTS
Subject: Economics
Part of research school: ECOS, Ecology and society
Education cycle: Third
Marking scale: Pass / Fail
Language: English
Prerequisites: None
Objective: The aim of the course is: (i) to introduce participants to how economics approaches renewable natural resources management and conservation; and (ii) to illustrate and discuss how principles grounded in economics are applied to specific natural resource contexts. The target audience for this course is primarily doctoral candidates in a variety of fields that intersect with natural resource management who wish to familiarise themselves with the fundamental economic principles related to managing natural resources.

Upon completion of the course the student should be able to:

  • Describe relevant aspects and trade-offs involved in managing natural resources in various contexts from an economics perspective.
  • Identify and characterise the economic rationale for public policy interventions in various contexts relevant to renewable natural resources, specifically relevant to fisheries, forests, and wildlife.
  • Explain notions of welfare, public goods and externalities, and the relevance of property rights to the sustainable management of renewable natural resources.
  • Evaluate the role, and suitability, of specific instruments or approaches (discussed in the course) to managing renewable natural resources, and how they may vary across alternative institutional settings.

Content: The course commences with an introduction to basic notions in economics relevant to renewable resources: goods, public and private; maximisation of an objective by the individual resource user and society; externalities; optimal policy interventions via different instruments, e.g. taxes, subsidies and quotas. Key theories related to specific resources are briefly developed e.g. classic models of fisheries, and the relevance of regimes of property are introduced, with a view to illustrate the its key role in the use of renewable resources.

This is followed by an application of how market imperfections stemming from externalities and weak property rights yield undesirable outcomes in the form of illegal deforestation and degradation. Taking examples from temperate and tropical forests, we will demonstrate how market imperfections affect the opportunity cost for forestland and forest resources, and how policy interventions can be devised to ameliorate them. The course then continues with an orientation on economic concepts and theories regarding other types of renewable (e.g. fish) and non-renewable (e.g. oil) natural resources. Particular attention is given to the way in which economic theory is used to analyze the utilization of these types of natural resources.

The importance of ownership forms for management is studied (e.g. tragedy of the commons), in particular to gain insight into and understanding why different forms of misuse can occur. Subsequently, characteristics of common pool management will be illustrated, with field experimental methods introduced briefly. In addition, strategic interaction aspects between different agents will also be discussed along with the role of institutions, with particular reference to common pool and other resource problems.

Finally, two basic approaches to the valuation of non-market goods and services, such as ecosystem services, shall we considered. The focus here will be on application of the methods to forestry and natural resources problems. Throughout the course, specific resource problems, as appropriate to the tool or approach in question, shall be discussed to enable participants to both grasp the essentials of the approach and also to understand how the tool is applied in practice.

Method of Instruction

Instruction will consist largely of lectures, group interactions or discussions, supplemented by self-study of assigned readings.
The course is offered as an intensive course, with approx. 5 days of full-time lectures and exercises with either physical meetings at Umeå or web-based meetings (via skype, Zoom or other related web-based learning platforms, for instance). The remaining 4 weeks will involve self-study by the participants. The course is proposed to be offered starting June 1, with self-study. The course meetings is held at Umeå/online (via skype or zoom), June 8-12, and continues with self-study during the period June 15-30. The course concludes with a take home exam/assignment, due June 30.

COVID-19 update: As of now, the course is planned to be run via a web-based platform instead of a physical meeting at Umeå. Should this change, we will get in touch with applicants.

Examination: Approved written take-home exam, and active participation in problem sessions that will conclude the Umeå-based or web-based course meeting.

Additional information: The Department reserves the right to cancel the course if there are not more than 5 students who have applied for the course. There is no tuition fee. The student is responsible for any housing and travel costs. Students belonging to the ECOS research school, and the Swedish University of Agricultural Sciences, have priority to the course.




Responsible department: Department of Forest Economics
Location: Umeå

Course Literature

The course literature will consist of (selected chapters of) textbooks and research papers, along with lecture notes and presentations prepared by the instructors. A short list of the most relevant literature is provided below:

Text books

Field, B. (2015): Natural Resource Economics. Third ed. Waveland.
Sterner, T. and Jessica Coria (2012). Policy instruments for environmental and natural resource management. Resources for the Future (RFF Press). (Second Edition)

Research Papers

  • Babigumira, R. et al. (2014). Forest Clearing in Rural Livelihoods: Household-Level Global-Comparative Evidence. World Development. 64: S67-S79.
  • Blackman, A. et al. (2017). Titling indigenous communities protects forests in the Peruvian Amazon. Proceedings of the National Academy of Sciences. 114: 4123-4128.
  • Mohebalian, P. and F.X. Aguilar. (2018). Design of Tropical Forest Conservation Contracts Considering Risk of Deforestation. Land Use Policy. 70: 451-462.
  • Cardenas, J. C., Tranlund, J., & Willis, C. (2000). Local environmental control and institutional crowding-out. World Development, 28(10), 1719-1733.
  • Rode, J., Gómez-Baggethun, E., & Krause, T. (2015). Motivation crowding by economic incentives in conservation policy: A review of the empirical evidence. Ecological Economics, 117, 270-282.
  • Johnston, R. J., K. J. Boyle, W. Adamowicz, J. Bennett, R. Brouwer, T.A. Cameron, W. M. Hanemann, m.fl. 2017. "Contemporary Guidance for Stated Preference Studies". Journal of the Association of Environmental and Resource Economists 4 (2): 319–405. Also at
  • Bishop, Richard C., Kevin J. Boyle, Richard T. Carson, David Chapman, W. Michael Hanemann, Barbara Kanninen, Raymond J. Kopp, m.fl. 2017. "Putting a Value on Injuries to Natural Assets: The BP Oil Spill". Science 356 (6335): 253–54.

Estimated workload: 235 hours, split into
Lectures: 25 hours
Student activities during the lecture period: 10 hours (presentation/discussion etc.)
Independent work: 200 hours
(full time 5 weeks)

Responsible for graduate education

Chandra Kiran Krishnamurthy,

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