Economics: Total Economic Valuation of the Arctic
- Increase climate literacy by engaging in academic research based on the value of lost ecosystem services in the Arctic associated with climate change.
- Apply the total economic valuation framework to estimate the annual value of the Arctic and identify the key assumptions made in the estimation and how they impact the final value.
- Employ economic and computational skills in Excel, including adjusting for inflation, converting currency, and tabulating and organizing data.
Context for Use
This module has been used in undergraduate economics courses and an upper level interdisciplinary course with no economics pre-requisite. Class sizes ranged from 18 to 40 students. The module uses both PowerPoint slides to guide the students through the analysis and an Excel spreadsheet for entering data and making calculations. The module introduces environmental economic topics on total economic valuation, and guides students through currency conversions based on purchasing power parity and inflation adjustments.
This module contains three parts that can be completed in class over two shorter class periods (~50 min) or one longer class (~80+ min). The module can also be shortened at the instructor's discretion. Students also complete the introduction to the module before coming to class, which takes about 1 hour.
Description and Teaching Materials
Outline of Module
- Introduction to Module
- Part I: Gathering the Data
- Part II: Estimating the Total Economic Value of the Arctic
- Part III: Adjusting for Exchange Rates and Inflation
- Discussion Questions
- Follow up assignment prompt
Workflow of Module
- The instructor briefly introduces the module in class and assigns the Introduction of the Total Economic Valuation of the Arctic module (PowerPoint 2007 (.pptx) 22MB Mar9 20) (in PowerPoint) to be completed as homework before starting the module in class. The Introduction includes an overview of climate change impacts in the Arctic. The students also read the journal article (6 pages) for which they will complete the partial replication. (For reference, see the published version).
- In class, the instructor briefly reviews the Pause for Analysis questions in the Introduction then the students start Part I of module referring to the selected papers and reports, and entering the relevant data into the Excel spreadsheet (Excel 2007 (.xlsx) 22kB Mar9 20) component of the module.
- As they work through the module, students are encouraged to work in pairs or small groups and are prompted to answer "Pause for Analysis" questions throughout the module located in the PowerPoint slides.
- Students should be able to work through Parts I and II during a 50-minute class period (depending on Excel skills). 5-10 minutes before class is over, the instructor can bring the group back together and go over selected Pause for Analysis questions.
- The instructor could either assign the rest of the module to complete outside of class as homework, or have the students complete Part III of the module in the first part of the following class period. For longer class periods, students should be able to complete all or most of the three parts of the module in class.
- After the students have completed all three parts of the module, the instructor concludes with a discussion on the assumptions and limitations of the analysis based on the suggest discussion questions provided in the Powerpoint slides.
- The instructor has the option of assigning the addendum assignment (included in the PowerPoint) for which students research an additional value not previously included for the Arctic and then re-calculate the total economic value written up as an addendum to the paper.
Additional Instructor Materials
- Instructor Guide for Pause for Analysis and Discussion Questions (Microsoft Word 2007 (.docx) 22kB Apr28 20)
- Selected papers and reports for Part I of module:
- Fall (2016) Subsistence in Alaska Update 2014
Teaching Notes and Tips
For more details on implementing the module in class, see the paper:
Fortmann, L. Beaudoin, J., Rajbhandari, I., Wright, A., Neshyba, S., and Rowe, P. (2019). Teaching Modules for Estimating Climate Change Impacts in Economics Courses using Computational Guided Inquiry. Journal of Economic Education. 51(2).
Assessment of the module largely takes place during class time as the instructor walks around helping students work through the module. Additionally, class discussions on the Pause for Analysis and Discussion Questions at the end of the module allow the instructor to gauge student learning and highlight key takeaways.
A follow up assignment prompt is also included, which entails the students writing an addendum to the journal article that incorporates a new value from the Arctic not included in the paper. The students are required to find an original source for the data and then convert the data into an annual value to be added to the one calculated in the module based on the published paper.
References and Resources
Boxall, P. C., Adamowicz, W. L., Olar, M., West, G. E., & Cantin, G. (2012). Analysis of the economic benefits associated with the recovery of threatened marine mammal species in the Canadian St. Lawrence Estuary. Marine Policy, 36(1), 189-197.
Economist article, Sandwiched: Burgernomics says currencies are very dear in Europe but very cheap in Asia from July 24th, 2008. Retrieved from: https://www.economist.com/node/11793125
Fall, J.A. (2016) Subsistence in Alaska: A Year 2014 Update. Division of Subsistence, Alaska Division of Fish and Game.
Goodstein, E., Euskirchen, E., & Huntington, H. (2010). An initial estimate of the cost of lost climate regulation services due to changes in the Arctic Cryosphere. Washington, DC: Pew Centre.
O'Garra, T. (2017). Economic value of ecosystem services, minerals and oil in a melting Arctic: A preliminary assessment. Ecosystem services, 24, 180-186.
Olar, M. et al. (2011). Evidence of the socio-economic importance of polar bears for Canada. Prepared by ÉcoRessources Consultants, for Environment Canada.
Purchasing Power Parities. OECD Data. Retrieved from: https://data.oecd.org/conversion/purchasing-power-parities-ppp.htm