This course introduces students to the application of microeconomic theory to current, real-world environmental issues. The course describes the circumstances under which markets fail to allocate resources efficiently and then introduces market-based policy measures that can correct these market failures as well as methods used to quantitatively assess the costs and benefits of these policies. Other topics covered include sustainability, the optimal management of natural resources, and climate change policy. The primary difference between this course and ECO 208 is the more advanced level of instruction, which assumes knowledge of microeconomic theory at the ECO 405-level. ECO 208 and ECO 412 cannot both be taken for credit.