Small Island Developing States (SIDS) are quite diverse in terms of various development metrics, but are uniformly vulnerable both to macroeconomic shocks and to changes in the biodiversity that supports fisheries and tourism. This special section assembles a set of papers that analyze international demand for the natural resources associated with the two sectors, and the factors that lie behind changes in their supply. Since each stresses the resource base, albeit in different ways, we argue that limits on tourist pressure will be as important as limits on allowable fish catches in the future. We identify the challenge for SIDS as the need to implement an integrated, sustainable resource management strategy that allows biological resources to be allocated to their highest valued uses, while respecting the interests of those with prior rights to those resources.

Small Island Developing States (SIDS) are characterized by high levels of biodiversity that are under threat. Simultaneously, the tourism sector plays a key role in many of these economies. In this paper, the Hausman-Taylor estimator is used to investigate a tourism demand function in SIDS in which marine and terrestrial biodiversity play a key role, in addition to the traditional economic and price variables. This estimator allows for both the presence of time-invariant variables, a standard feature of environmental data, and the existence of endogenous covariates. Levels of biodiversity are found to have a significant influence on tourism in SIDS and, in particular, a test for redundant variables shows that the biodiversity variables are jointly significant. This justifies their inclusion in a tourism demand function, over and above the conventional economic factors, and points to the importance of national and international policy in protecting the biodiversity of SIDS.

A major problem facing the Seychelles islands is the decline in the quality and the value of marine protected areas (MPAs). Economic valuation can help guide policy makers to understand the value of marine resources and the cost of neglecting MPAs by expressing the value of their goods and services in monetary terms. This paper presents an analysis of the economic value of a group of marine parks in Seychelles. The travel cost method is used to establish willingness-to-pay of international tourists for trips to marine parks in Seychelles from their observed behaviour. The average per-trip consumer surplus is approximately €128 for single-site visitors and €65 for multiple-site visitors. The total social welfare value attributable to the recreational opportunity in marine parks is approximately €3.7 million annually. These results provide policy makers with a strong justification for government investment needed to maintain marine sites in Seychelles.

We study the effects of providing subsidies to the fisheries in small island developing states (SIDS), where fisheries are important to both the food security and livelihoods of the populations. By analyzing data on current and potential catch and computing the potential catch losses from the Exclusive Economic Zones (EEZs) of SIDS, we find that, collectively, SIDS have currently overfished their waters to the extent that their current catch is just under 50 per cent of the maximum catch potential. This catch loss results in direct and indirect food security impacts in terms of losses in healthy, varied and nutrient-rich food, revenues, incomes and economic impacts in SIDS. Our results also demonstrate that capacity-enhancing subsidies contribute to overfishing while the effect of good subsidies is unclear and needs further analysis.

Conservation practitioners are increasingly turning to incentive-based approaches to encourage local resource users to change behaviors that impact on biodiversity and natural habitat. Three such approaches are buyouts, conservation agreements and alternative livelihoods. We assess the design and performance of these types of marine conservation interventions through an analysis of 27 case studies from around the world. Here we focus on cases that are particularly relevant to designing incentives for Small Island Developing States. Many more opportunities exist for interventions that combine the strengths of these approaches, such as through performance-based agreements that provide funds for education or alternative livelihood development.

Transboundary pollution is a particularly serious problem as it leads people located at regional borders to disproportionately suffer from pollution. In China, where the environmental policy is decentralized and where environmental conflicts between provinces have occurred several times, transboundary pollution is likely to exist. However, until now, nearly all the studies have focused on developed countries. In this paper we study whether transboundary pollution problems exist in China. To do so, we estimate whether, within Hebei province, polluting firms are more likely to set up in border counties than in interior ones. The estimations of a count-data model allow us to conclude that border counties are more attractive destinations for polluting firms than counties located within the province. Moreover, it appears that this effect has strengthened over time.

This paper uses data for 134 countries for the period 1960–2010 to document an energy ladder that nations ascend as their economies develop. On average, economic development results in an overall substitution from the use of biomass to energy sourced from fossil fuels, and then increasingly towards nuclear power and certain low-carbon modern renewables such as wind power. The process results in the carbon intensity of energy evolving in an inverse-U manner as per capita incomes increase. Fossil fuel-poor countries climb more quickly to the low-carbon upper rungs of the national-level energy ladder and so typically experience larger reductions in the carbon intensity of energy as they develop. Leapfrogging to low-carbon energy sources on the upper rungs of the national-level energy ladder is one route via which developing countries can reduce the magnitudes of their expected upswings in carbon dioxide emissions.

The June 2012 issue of Environment and Development Economics published a symposium with considerable focus on our paper, ‘Sustainability and the measurement of wealth’. The Symposium also contained five articles in which other researchers offered valuable comments on our paper. The present note replies to those comments. It clarifies important issues and reveals how important questions relating to sustainability analysis can be fruitfully addressed within our framework. These include questions about the treatment of time, the use of shadow prices and the treatment of transnational externalities. This note also offers new theoretical results that help substantiate our earlier empirical finding that the value of human health is something very different from the value of the consumption permitted by health and survival.