This paper measures climate change impacts on Sri Lankan agriculture using the Ricardian method. The model examines the net revenue per hectare of the four most important crops in the country. The limited range of temperature variation allows only a simple test of temperature impacts, but the greater range of precipitation across the country distinguishesmore complex precipitation effects.We then examine the impacts of the climate predictions of five AOGCM models and two simple uniform change scenarios for SriLanka. The impacts of rainfall increases are predicted to be beneficial to the country as a whole in all five AOGCM scenarios, but temperature increases are predicted to be harmful. Nationally, the impacts vary from −11 billion rupees (−20 per cent) to +39 billion rupees (+72 per cent) depending on the climate scenarios. With warming, the already dry regions (the Northern and Eastern provinces), are expected to lose large portions of their current agriculture, but the cooler regions (the central highlands), are predicted to remain the same or increase their output. The paper reconfirms that climate change damages could be large in tropical developing countries, but highly dependent on the actual climate scenario.

Projects in the forestry sector, and land-use change and forestry projects more generally, have the potential to help mitigate global warming by acting as sinks for greenhouse gasses, particularly CO2. However, concerns have been expressed that participation in carbon-sink projects may be constrained by high costs. This problem may be particularly severe for projects involving smallholders in developing countries. Of particular concern are the transaction costs incurred in developing projects, measuring, certifying, and selling the carbon-sequestration services generated by such projects. This paper addresses these issues by reviewing the implications of transaction and abatement costs in carbon-sequestration projects. An approach to estimating abatement costs is demonstrated through four case studies of agroforestry systems located in Sumatra, Indonesia. A typology of transaction costs is presented and related to existing pilot projects. The paper concludes with recommendations to reduce the disadvantages that smallholders may face in capturing the opportunities offered by carbon markets.

Poorer countries are generally believed to be more vulnerable to climate change than richer countries because poorer countries are more exposed and have less adaptive capacity. This suggests that, in principle, there are two ways of reducing vulnerability to climate change: economic growth and greenhouse gas emission reduction. Using a complex climate change impact model, in which development is an important determinant of vulnerability, the hypothesis is tested whether development aid is more effective in reducing impacts than is emission abatement. The hypothesis is barely rejected for Asia but strongly accepted for Latin America and, particularly, Africa. The explanation for the difference is that development (aid) reduces vulnerabilities in some sectors (infectious diseases, water resources, agriculture) but increases vulnerabilities in others (cardiovascular diseases, energy consumption). However, climate change impacts are much higher in Latin America and Africa than in Asia, so that money spent on emission reduction for the sake of avoiding impacts in developing countries is better spent on vulnerability reduction in those countries. His last big project in a long career, Jan Feenstra managed the Netherlands Climate Change Assistance Programme through which the Dutch Government sponsors climate change research in developing countries. He hated how climate change detracted from what he considered to be the real issues. This paper is dedicated to his memory.

Development projects that are potentially eligible for Clean Development Mechanism (CDM) funding under the Kyoto Protocol, require final approval from the host countries where the projects are to be implemented. The approval requires an evaluation of the positive contribution of the CDM project to sustainable development in the host country. A prototype set of sustainable development criteria is introduced using an evaluation process conducted in South Africa. Weighting values that reflect societal priorities in South Africa are required for these criteria. The paper shows how judgements of industry decision makers and the expenditure trends of the national government (on environmental sub-criteria) can be used to generate a first approximation of such weighting values. The industry judgements are obtained from an Analytical Hierarch Process (AHP) survey. They reflect the perceptions of the automotive supply chain and process industry only, and not other parts of the South African society. A more comprehensive study is required to determine the political and social acceptability of the AHP approach, which should be initiated and managed by the Designated National Authority (DNA) of South Africa.

International conservation investments are often made in the form of subsidies to purportedly eco-friendly enterprises rather than as payments conditional on habitat protection. Previous research demonstrated that direct payments for habitat protection are more cost effective than indirect subsidies for the acquisition of com-plementary inputs used in eco-friendly enterprises. In contrast to this earlier research, we assume in this paper that an ‘eco-entrepreneur’ may have market power. Market power is shown to compound the advantage of direct payments. Through a simple numerical example, we show that subsidies intended to achieve habitat conservation by encouraging the acquisition of complementary inputs can be spectacularly inefficient. In some cases it would be cheaper simply to buy the land outright. In other plausible cases, the indirect subsidy approach would simply be unable to achieve habitat conservation objectives no matter how much funding were available.

In the mid-hills of Nepal, as in many developing countries, gradually developing urban centers and increasing demand for agricultural produce, due to population growth and early development activities, have persuaded farm households to reorient their subsistence farming to become farm systems growing surplus food to be sold in the markets. To cope with these changes, institutions play an important role and, for these institutions to be effective, farmers must perceive their participation as not being coerced. Their participation is influenced by individual household characteristics and proximity to support services and markets. Our main findings from the analysis of household surveys based on the level of market participation included: (1) the education level and amount of training attended by family members are influencing social variables, while farm size and gross farm income are dominant economic variables influencing household participation and perceived institutional effectiveness; (2) these variations revealed significant differences in the levels of market economy for household participation and institutional effectiveness within the watershed; and (3) the factor analysis further categorized several socioeconomic variables into three major factors explaining household participation and institutional effectiveness; these included labor quality and resources, supplementary income coming from migration and off-farm activities, and awareness and modern skills acquired by farm household members living within the watershed.

A dynamic model of selective harvesting in multi-species, multi-age tropical forests is developed. Forests are predicted to exhibit different optimal harvesting profiles depending on the nature of their joint cost functions and own or cross-species stock effects. The model is applied to the controversy about incentives produced by various taxes. The impacts of specific taxes are shown to depend on the composition of the forest stocks, growth rates, and joint cost effects. Therefore, specific taxes may create different incentives and impacts in Indonesia than in Brazil or Malaysia, for example, suggesting that no single uniform forest tax policy will be appropriate for all countries or all forests.