The growing evidence that increased levels of carbon dioxide in the atmosphere are related to global warming has prompted several countries to consider options for reducing and offsetting current carbon dioxide emissions. Opportunities for carbon sequestration with forestry activities have been analysed in detail primarily in industrialized nations, mainly because of data availability. This article presents a model that simulates a tropical forest stand in its role as a source of income and as a carbon store, and quantifies the potential for and cost-effectiveness of carbon sequestration through modifications of management practices. Results suggest that financing modifications of forestry practices may achieve net carbon sequestration in a relatively cost-effective way. Tropical countries with extensive forest resources may be in a position to offer cost-effective net carbon sequestration options.

We consider a two-period model of an indebted developing country endowed with a natural resource whose extraction causes negative global externalities, where the country may borrow in period one and there is asymmetric information about its willingness to service its loans. We show that when the resource is large, the interest rate on new borrowing equals the resource growth rate. A greater initial debt level then leads to reduced new borrowing and more rapid extraction. An outside 'donor' may affect the resource extraction of the country. Donor schemes that tie debt reduction to postponing or abstaining from extraction of the resource are more powerful than non-conditional schemes in reducing the extraction rate for governments that actually repay, but may in some cases lead to a greater probability of default through increased debt. While conditional schemes generally are potentially Pareto-superior to non-conditional ones, the welfare of the borrowing country is higher with non-conditional schemes.

This article addresses the causes of different regional performances of the forest sector in the process of Chinese rural reforms. After characterizing rural forestry reform processes in different regions, we estimate farmers' production responses to land tenure change and price liberalization, two major components of the reforms, and conduct a growth accounting. It is found that farmers' responses in different regions vary substantially, and the reform programmes can be important forces in determining either resource growth or stagnation. Our study suggests the critical importance of a stable policy environment in economic transition.

There is increasing concern that the intensification of cereal production in northern Nigeria is threatening the sustainability of the agricultural environment. This article describes the effects of trade restrictions on grain imports and of fertilizer subsidy on households' decisions, and draws implications for degradation of the agricultural environment. It develops social accounting matrices (SAMs) for two household types as the basis for capturing the structure of resource allocation, cropping choices, and input use, and then uses the SAM to simulate household responses to changes in relative grain prices and fertilizer prices. Both simulations, but particularly the fertilizer price change, favour the shift from cereals to legumes. A third simulation reflecting technical change in legumes results in the largest shifts from cereals to legumes. It is concluded that appropriate policy reforms complemented by technical change will increase diversification of the cropping system and reduce inefficient fertilizer use. The cumulative effects of these changes will improve soil nitrogen and organic matter and help break the pest and disease complex, thereby improving the agricultural environment.

Environment and economy interact. Most economists and economic policy makers have tended to neglect this interaction as 'external' to mainstream market economics. The question is whether environmental externalities have reached a level where they overwhelm optimality and efficiency in resource allocation. Sustainability in growth and development has been advanced as a criterion for dealing with the social costs of environmental impacts. The article examines how this criterion can be operationalized for assessing the significance of environmental concerns in economic analysis and policy. Indicators of economic and ecological sustainability are defined and compiled for selected countries. Based on these indicators, operational paradigms of 'eco-nomics' and 'sustainable development' are advanced.