The growing impact of regulations on the economy has led both Congress and the Administration to search for new ways of reforming the regulatory process. Many of these initiatives call for greater reliance on the use of economic analysis in the development and evaluation of regulations. One specific approach being advocated is benefit-cost analysis, an economic tool for comparing the desirable and undesirable impacts of proposed policies.

Using China's provincial economic and pollution data from 1992 to 2008, we employ data envelope analysis and econometric analyses to explicitly estimate technical efficiency and examine the role of technical efficiency, pollution control instruments (pollution levy and pollution quantity control) and prices of production inputs on pollution intensity. We find that an increase of labor wage and a decrease of capital cost are associated with an improvement in technical efficiency. The levy rates of air pollution improve technical efficiency but pollution quantity control targets have no statistically significant effect on technical efficiency. On the other hand, technical efficiency, the effective levy rates, pollution quantity control targets and capital cost have a negative effect but wage has a positive effect on pollution intensity. The importance of production input prices in pollution intensity and technical efficiency suggests alternative channels for industrial pollution control as well as cautions for the unintended consequence on the environment if any policy changes are made relating to labor and capital costs.

We use farm survey data and a damage control framework to analyze impacts of Bt cotton on yields and pesticide use in Pakistan. We also derive optimal levels of pesticide use with and without Bt, taking into account health and environmental externalities. This has not been done previously in the literature. Conventional cotton growers suffer from significant insect crop damage; they underuse pesticides from a profit-maximizing perspective. Yet, the picture is reversed when externalities are also considered. The social optimum of pesticide use is much lower than the private optimum, and both optima are lower with Bt than without this technology. Bt controls pest damage more effectively. Hence, yields on Bt farms are about 20 per cent higher in spite of lower pesticide use. Large pest damage is a typical phenomenon in developing countries. In such situations, Bt can contribute to productivity growth, while reducing pesticide applications and associated negative externalities.

This study examines conservation effects of wildlife trade using demand and supply data from caged-bird markets in Sumatra, Indonesia. When consumers have a strong preference for species rarity, trade could result in wildlife overexploitation and species extinction. Results from a choice experiment show that buyers of caged birds indeed value species rarity. However, not all rare species are equally preferred. Species that are frequently traded lose their rarity value, even if rare in the wild. Analysis of time-series data collected from traders over a period of 20 months between 2013 and 2015 reveals an inelastic supply function for rare species, with market arrivals being insensitive to price changes. This may be due to a declining stock of rare species in the wild. Bird trade together with habitat loss can lead to extinction of a number of rare species in Indonesia. Several policy approaches on regulating caged-bird markets are discussed.

The effects of economic development on the exploitation of renewable resources are investigated in settings where property rights are ill defined or not enforced. This paper explores potential conservation implications from labor and product market developments, such as enhanced transportation infrastructure. A model is developed that predicts individual fish catch per unit effort based on characteristics of individual fishermen and the development status of their villages. The econometric model is estimated using data from a cross-sectional household survey of artisanal coral reef fishermen in Minahasa, Indonesia, taking account of fishermen heterogeneity. Variation across different villages and across fishermen within the villages is used to explore the effects of development. Strong evidence is found for the countervailing forces of product and labor market effects on the exploitation of a coral reef fishery.

Quantitative research on household participation in the Payments for Environmental Services (PES) programme remains scarce. This paper aims to determine the key factors influencing household participation in a PES programme in Mozambique. Questionnaire-based quarterly surveys were conducted with 290 randomly selected households. We used the instrumental variables technique to identify the factors influencing household participation. The instrumental variables used for forest dependence were: household head born in the village, duration of residence of the household head in the village, ethnicity of the household head, business ownership of the household head and off-farm income of the household. The results show that education of household head and households' trust towards community members positively influenced household participation in PES, while forest dependence influenced it negatively. Future PES projects may thus need to focus more on developing social capital and the resource dependence of households.

This paper examines the effects of the Brazilian governments' title granting policies on the efficiency of agricultural and timber production in the Brazilian Amazon. A two-stage procedure is used that combines Data Envelopment Analysis (DEA) and a Tobit regression. Provision of private land titles before 1995 is found to positively affect the technical efficiency of agricultural and joint agriculture–timber production in 1995. Governmental expenditures, including expenditures to secure property rights, also are found to increase technical efficiency in the agricultural industry. The analysis indicates that revenue efficiency can be improved by producing more roundwood and less agricultural product. Land-granting policies may favorably affect environmental conservation by intensifying land use in agriculture, but they also may harm development by discouraging timber production.

Programs that provide incentives to induce conservation are often ineffective, leading farmers to abandon conservation once assistance is withdrawn. An alternative to incentives is to offer conservation technologies in conjunction with measures that enhance the short-term profitability of agriculture. Our results indicate that CARE, an international non-governmental organization, has used this approach successfully to promote resource conservation in the Ecuadorian Andes. In particular, the adoption of terraces was found to increase significantly when accompanied by alterations to the agricultural system, such as new crops, biological barriers, and improved agricultural production.

Previous research suggests that forest-dependent households tend to be poorer than other groups, and that extreme reliance on forest resources might constitute a poverty trap. We provide an example in which a non-timber forest product – charcoal – appears to be providing a pathway out of poverty for some rural households in Uganda. Data come from households living adjacent to natural forests, some of whom engage in charcoal production. We use a semi-parametric method to identify the determinants of participation in charcoal production and a quantile regression decomposition to measure the heterogeneous effect of participation on household income. We find that younger households and those with few productive assets are more likely to engage in charcoal production. We also show that, as a result of their participation, charcoal producers are better off than non-charcoal producers in terms of income, even though they are worse off in terms of productive assets.

This paper undertakes a quantitative analysis of the socioeconomic and environmental impacts of different trade agreements for Chile. A dynamic general equilibrium model is used to compare the consequences of unilateral liberalization and trade agreements with the European Union (EU) and the United States (USA). The results show that economic gains under the trade agreements are only significant if foreign investment increases or value added taxes are modified. Winners and losers depend on the agreement; however, unskilled labor-intensive sectors always progress. Consequently, these agreements seem to be good for the poorest groups. Some natural resource intensive sectors significantly increase their production with the EU and the US agreements, also increasing the environmental pressures. CO2 and PM-10 emissions are not very different under these agreements as compared to business as usual – under which environmental pressures increase significantly. The results show the importance of economy-wide analysis of trade agreements in developing contexts.

Based on multiple rounds of household survey data collected in the year after the 1998 massive flooding in Bangladesh, we investigate the role of private transfers as a social coping response to natural disasters. We also explore the role of private transfers (gifts) as an informal insurance mechanism to smooth consumption in the face of an adverse covariate shock caused by the flooding. The level of transfers made is shown to be altruistically calibrated to the severity of flood exposure. As an indicator of the economic importance of such gifts, the amount of transfers received is shown to significantly contribute to reducing household consumption variability. We discuss the policy implications of our findings in a developing country context.

This paper considers a model of household demand for water in a theoretical framework consistent with fundamental principles of consumer behaviour. It applies this model to individual household data to estimate the price and income elasticities of residential demand for water in Cyprus and evaluate the welfare effects associated with changes in the water pricing system. We find that the current regionally heterogeneous, increasing block-pricing system introduces gross price distortions that are not justified on efficiency grounds. A shift towards uniform marginal cost pricing will eliminate the deadweight loss of the current system. However, its benefits will be distributed in favour of the better-off households.

This paper addresses the potential of in situ crop landrace conservation, employing market-based instruments, which pre-requires that (1) consumers hold positive use-value for the landrace attribute and (2) their willingness to pay covers both the transaction cost of implementing these instruments and the opportunity cost of landrace cultivation. The empirical examination is based on two closely related analyses of eggplant production and consumption sectors of India. At present, the vegetable markets of south India provide the landrace cultivators with a price premium adequate enough to cover the opportunity cost of not opting for high-yielding modern varieties. However, we detect an underutilized consumer demand for landrace products. The wide margin that exists between the price premium farmers currently obtain for the landrace attribute and what consumers are willing to pay for it is indicative of the unexploited potential of labelling and certification schemes as an emerging agrobiodiversity conservation strategy.

The growing disenchantment with state management of natural resources has led to increasing reliance on co-management. This involves devolution of the rights to manage and control access to the resource from the state to the resource appropriators. Co-management has been introduced in many Third World countries with varying success. Co-management programmes have typically assumed that the resource community wants to conserve the resource and is prevented from doing so by their inability to form a collective choice arena. Hence such programmes have attempted to provide a collective choice arena. However, these attempts overlook the need to change the attitudes of resource users and create a demand for the resource regime. In this paper we have presented two case studies of Joint Forest Management in India to illustrate this point.

This paper explores the interrelationship between poverty, risk, and deforestation by small farmers in the low-income tropics. A nonseparable household model reveals how exogenous shocks to the mean or variance of a food price distribution might affect peasants' incentives to clear forest. The resulting links between food price policy, farmer behavior, and deforestation offer an innovative explanation of the vicious cycle of peasant immiserization and tropical deforestation. An intriguing, testable hypothesis also emerges: that market-oriented reforms that increase the mean and variance of food prices may inadvertently stimulate deforestation in economies in which a sizable proportion of farmers are net buyers.

The objective of the study is to construct forest resource accounts for the state of Maharashtra in India and incorporate the value of depletion and degradation of forest resources into the system of national accounts (SNA). The net state domestic product (NSDP) is adjusted for the depletion of the forest resources to obtain Environmentally adjusted net state domestic product (ESDP). The results show that the value added by forests is 3.56 per cent of NSDP and the value of depletion is 19.8 per cent of the estimated value added. The ESDP of Maharashtra is found to be 99.3 per cent of the estimated NSDP. The study has demonstrated that, although the existing database needs further improvement, forest resource accounting is feasible for the state of Maharashtra in India and can serve as an indicator of economy's performance.

Migration literature has considered environmental constraints as one of the prime movers of populations, especially from dry regions, where water rather than land is the primary limiting factor. This study examines the impact of degradation of private as well as common pool land resources on migration decisions, based on primary data from over one thousand households in three dry land districts in Gujarat. The study finds that economic assets and natural capital have differential impacts on short-term and long-term migration decisions. Thus, any employment creation in rural dry land regions is likely to help the poorest. Further degradation of common-pool land resources influences short-term but not long-term migration. Therefore, better management of common-pool resources would strengthen the livelihood base of traditional herder communities and limit migration among middle-income households. Overall, in dry areas such as Gujarat, access to irrigation, rather than land ownership per se, is likely to deter migration.

The Emissions Compensation (EC) Program in Santiago, Chile, has been affected from the beginning by the incidence of individual violations of maximum-emission capacity permits. Based on information at the individual source level, in this paper we develop and estimate a model explaining the individual compliance decision with emission capacity permits. Our results indicate that the compliance behavior of sources during the period 1993–1999 do in fact depend on their individual characteristics. Among other factors, type of equipment used, industrial sector to which the source belongs, fuel type used, the initial allocation of emission capacity permits to the source, and population density as well as average income in the area where the source is located, turn out to be relevant. Furthermore, the evidence does not allow us to reject the presence of structural change in the individual decision to comply with permit holdings because of the introduction of natural gas in the Metropolitan Region of Santiago at the end of 1997.

A contingent valuation (CV) method was performed to estimate the conservation value of the Woopo Wetland, Ramsar site, in Korea. The CV survey was rigorously designed to comply with the guidelines for best-practiced CV studies. Respondents overall accepted the hypothetical market and were willing to pay a significant amount (2,731 to 3,960 Korean won = USD 2.10 to 3.05), on average, per household annually to conserve the wetland. These findings have important implications for efforts to consider environmental quality in policy decisions.

This paper builds a multi-generation household model of consumption, accumulation, and risk management to assess the dynamic consequences of climate risk exposure. The model incorporates long-term impacts of consumption shortfalls, induced by optimal ‘asset smoothing’ coping behavior of the vulnerable, on poverty. The analysis shows the long-term level and depth of poverty can be improved by incorporating ‘vulnerability-targeted social protection’ into a conventional social protection system. The paper further shows insurance-based vulnerability-targeted social protection dominates (in economic growth and poverty reduction measures) both in-kind transfers and asset-based vulnerability-targeted protection. We then stress test social protection mechanisms and find the relative performance of insurance-based vulnerability-targeted social protection improves when subjected to current pessimistic projections about increasing drought risk. However, if drought risk increases beyond current climate change projections, then even the vulnerability-targeted policy loses its ability to stabilize the extent and depth of poverty.