The paper first presents evidence from the engineering literature on air and water pollution control, which shows that, when the pollution abatement technologies are in place, large reductions in pollution have been achieved at costs that are small relative to the costs of production. A simulation model is then developed to study the effects of technical progress on pollution abatement, and applied to particular cases in developing countries. The results are compared with the projections of an environmental Kuznets curve: they reproduce the latter if policies were not to be introduced until per capita incomes reached levels comparable to those of the industrial countries when they first introduced their policies; but show dramatically lower and earlier peaks if policies were to be introduced earlier. The conclusion is shown to apply more generally, and it is argued that developing countries can aspire to addressing their environmental problems at a much earlier phase of development than the industrial countries before them.

Chongqing is a heavily polluted industrial megacity in China. We have estimated the environmental cost of water pollution in Chongqing. Limiting our inquiry to the resource cost, i.e. real resources spent or production possibilities foregone because of water pollution, our estimate equals 1.2 per cent of Chongqing gross product, with a subjective 95 per cent confidence interval of (0.9–1.5). Damage to agriculture constitutes the largest share of costs, 56 per cent, while damage to health and damage to industry make up 20 per cent and 18 per cent, respectively. The cost estimate of 1.2 per cent, which employs the human capital approach, is sensitive to the valuation of statistical lives. A calculation using willingness-to-pay for avoiding premature death sets the total cost at 4.3 per cent of Chongqing gross product.

Resource conservation programs have often been launched without careful evaluation of farmers' intertemporal tradeoffs in undertaking conservation investments. Such investments often have long pay back periods and reduce short-term household incomes. The critical question is whether long-term benefits would be sufficient to compensate farmers' immediate costs. Lack of empirical data on crop responses to soil erosion has hindered policy-relevant research. This study uses empirical data from the Ethiopian highlands to estimate the damage from soil erosion and evaluate the profitability of proposed conservation investments. A farm-level model is developed to study economic incentives to implement proposed conservation methods. Results show that incentives to invest in conservation practices are very low except for low cost methods like grass strips. The yield penalty due to area loss and high investment costs contribute to this. Policies focusing on minimizing the area loss effect and subsidizing the initial investment costs are shown to improve farmers' incentives to conserve the soil. A preferred policy option in the short-term is supporting low cost technologies that provide short-term benefits to poor farmers.

Conventional wisdom amongst environmentalists holds that the cutting of tropical forest for livestock production is not only bad business but also bad for the environment. In particular, it is thought that conversion to pasture leads to a rise in the sedimentation of waterways and reservoirs, an increase in flooding and loss of dry season water supply. Using the case of the Rio Chiquito watershed (which drains into Lake Arenal, Costa Rica), the paper questions this conventional wisdom. The paper demonstrates that both livestock production and the associated downstream hydrological impacts represent important values to the local economy; values that significantly outweigh expected returns from options for reforestation or forest regeneration. Given that non-hydrological externalities associated with livestock production are expected to be of minimal importance in the watershed, there is little reason – as is often proposed – to foster large-scale reforestation of the watershed or to purchase land for protection. Instead efforts should focus on how to maximize the complementary returns from livestock and the support to hydroelectric power provided by water production.

We have drawn two propositions, critical from a developing country viewpoint, from the trade and environment literature and assessed them for cloth and leather production in Pakistan. The first is that trade liberalization will result in export by developing countries of their environmental capital. The second is that the costs of mitigating these damaging environmental effects in the South are very high. We find that, given the state of implementation of environmental laws in Pakistan, exports induced by trade liberalization can indeed have major negative environmental impacts. However, we do not find support for the proposition that the costs of mitigation are very high. We also find that the social benefits far exceed the costs of mitigation.