As an international metropolitan area undergoing rapid development, Beijing is facing a sharp rise in the volume of motor vehicles and mobility, which has become the major contributor to the air pollution in this city. This is evident in the recent ranking of Beijing as the most congested as well as the most polluted city in the world by the Millennium Cities Database. Local government has adopted a battery of policies to reduce these problems. In this study, we investigate the impact of increasing the fuel tax on travel mode choice based on a large sample of travel survey data. We estimate that if the price of gasoline increased to a moderate level, 11.53 RMB/liter, the total car volume on the road would be reduced by 7 per cent, which corresponds to a reduction in CO2 emissions of 786,002.4 tons, or about 8 per cent of vehicular emissions from private cars and company-owned cars in Beijing.

We apply the target revenue model, a version of prospect theory, to investigate how fishermen adjust their trip length to changes in daily revenue. The key finding is that certain groups of fishermen seem more likely to behave according to the target revenue model rather than to the standard model of labor supply. We also find that vessel capacity has little effect on whether the captains seek target revenue. The study strongly supports the integration of prospect theory into the framework of labor supply analysis.

This essay introduces a special section of this issue containing a set of papers on the dynamics of coupled human and natural systems. We frame this introduction by setting out some of the major issues confronting researchers who wish to incorporate both economic and biophysical dynamics in their analysis. We contrast the three papers contained in this section in terms of how they respond to these different issues. We conclude that these papers provide important new insights on both how to model and analyze dynamic coupled human and natural systems and how to define policies that will lead to improved human well being and environmental conditions.

A diverse body of empirical literature recognizes that investment can influence tenure security, yet this phenomenon has rarely been examined analytically. This paper develops a theoretical model that demonstrates explicitly conditions under which the probability of eviction is endogenous to investment undertaken on illegally encroached land. By accommodating explicitly the government's objective function and its ability to commit credibly to an eviction policy, the model reveals why both those farmers who under-invest, and those who raise their investment levels to improve tenure security, may be behaving rationally. Indeed, both types of behaviour are accommodated within a single model.

Successful economic growth in Chile based on open market and export strategy, is characterized by a high dependence on natural resources, and by polluting production and consumption patterns. There is an increasing concern about the need to make potentially significant trade-offs between economic growth and environmental improvements. Additionally, policy makers have been reluctant to impose standards that could have regressive consequences, making the poor poorer. Using the CGE model ECOGEM-Chile we study the direct and indirect effects of imposing environmental taxes in Chile for PM-10 as well as taxes on fuels. We analyze the effects over macroeconomic variables as well as sectoral, distributive, and environmental variables. The results show that the most significant impacts are on emissions and sectoral outputs. There are winners and losers. Macroeconomic and distributional impacts are low when low emission reductions are required, however they can be significant if a 50% reduction in emissions are imposed.

Solid fuel burning in households is a leading health risk for people in developing countries. Several studies of indoor air pollution from solid fuels have analyzed the problem at the village and household level, but to design effective policies it is important to understand the large-scale socioeconomic drivers of household air pollution (HAP). Using county-level data covering all of China, we examine relationships between socioeconomic variables and ambient concentrations of PM and SO2 resulting from household energy use. Applying both non-parametric and parametric techniques, we find that income and education are robust determinants of HAP; structural characteristics affect the HAP turning points; and the poorest counties bear a disproportionate amount of total pollution, especially urban counties and counties located in the coastal provinces.

This study estimates Indonesian households’ carbon emissions that are attributed to their expenditures in 2005 and 2009 to analyze the pattern, distribution and drivers of their carbon footprint. Employing an input-output-emission-expenditure framework, the authors find a significant difference in household carbon emissions between different affluence levels, regions and educational levels. They also find that, while many household characteristics influence emissions, total expenditure is by far the most important determinant of household emissions, both across households and over time. Consequently, emissions inequality is very similar to expenditure inequality across households. The decomposition analysis confirms that changes in emissions are predominantly due to rising expenditures between the two periods, while expenditure elasticities analysis suggests that the rise in household emissions is mainly caused by the overall rise in total household expenditure, and not by shifting consumption shares among consumption categories. The paper discusses policy options for Indonesia to reduce this very strong expenditure–emissions link.

Our study examines the effect of water utilization together with the effect of water quality on economic growth across countries. We constructed a panel of 177 countries covering the period of 1960–2009. We analyse two dependent variables, gross domestic product per capita and the average of five years of growth. The analysis is conducted using a fixed effects model and fixed effects with instrumental variables. We find that although water utilization affects growth, water quality also proves to be highly significant and affects growth in both the short and long run to a greater degree than water quantity.

The choice of appropriate discount rate for comparing the long-term health benefits of policies is a complex issue. This study contributes to this sparsely researched issue from the perspective of developing countries by estimating the implicit discount rate that workers reveal through their willingness to incur death risks on-the-job and quantity-adjusted value of life of workers using an original data set from the Indian labor market. The estimated real discount rate ranges from 7.6 to 9.7 per cent, which is closer to the financial market rate for the study period and consistent with earlier studies from developed nations. The estimated value of life ranges are Rs. 24.3–26.5 (US $1.34–1.47) million. The results of the study can aid policy makers, international agencies, and researchers in evaluating health projects in India and other developing nations.

Optimal pollution control is an important challenge for sustainable development with three distinct cases. First, the situation where nature's assimilative capacity is completely destroyed involves normative problems that require further research. Second, environmental restoration with initial pollution above the steady-state stock requires an economy to initially allocate a relatively high share of its resources to cleaning-up activities. In return, this generally results in an intertemporally efficient development path that is both environmentally and economically sustainable. Third, optimal trajectories in situations with initial stocks of pollution below the long-term optimum generally imply an increase in pollution and a decline of optimal consumption. In this case, the investment of the environmental rents accruing from nature's assimilative capacity into man-made capital is required in analogy to the famous Hartwick rule to maintain a constant flow of instantaneous welfare. This would facilitate growth in consumption sufficient to compensate for the rising disutility of pollution.

This article uses the welfare foundations for the usual net domestic product (NDP) income measure of the traditional National Accounts System (NAS) provided by Weitzman (1976, 2000), and the propositions of Hartwick (1993) and Hamilton (1994a) to correct this measure in order to obtain a green (sustainable) measure of economic income. It estimates green measures of the economic income of Chile's mining sector for the period 1977–1996. Different methodologies regarding the valuation of mining resources are employed, and exploration expenditures in the mining sector are included to empirically estimate the green measures of income. The results clearly show that the usual income measures of the traditional NAS overestimated the economic income generated by the Chilean mining sector during the period by 20–40 per cent, and its rate of growth by 3–20 per cent. Moreover, this overestimation has increased in recent years. These empirical results are remarkably similar when different methodologies are used to calculate green measures of the mining sector's economic income. The empirical evidence produced in this work, together with the one provided by other studies, leads to the conclusion that Chile's outstanding recent economic growth has not delivered the amount of economic income recorded by its NAS, since a significant part of it corresponded to depreciation of the country's natural capital.

Land is an essential factor of production. Institutions that govern its efficient use determine the sustainability of this essential resource. In Ethiopia all land is publicly owned. Such an institutional setting is said to have resulted in the major degradation of Ethiopia's land resources and dissipation of the resource rent. An alternative to this is assigning a private property institution. In this paper, we examine the consumer welfare effects of a change in the institutional setting on communal forest and grazing lands, using a cross-section data set of 200 households in Northern Ethiopia. Findings suggest that changing the current institutional setting could indeed be welfare reducing.

The exact specification and motivation for an environmental Kuznets curve (EKC)is the subject of a vast literature in environmental economics. A remarkablydiverse set of econometric approaches and candidate regressors have beenproposed, which highlights the degree of model uncertainty surrounding therelationship between environmental quality and pollution. We introduce Bayesianmodel averaging (BMA) to the EKC analysis to examine: (a) whether a sulphurdioxide EKC exists, and if so (b) which income/pollution specification issupported by the data. BMA addresses model uncertainty as part of the empiricalstrategy by incorporating the uncertainty about the validity of competingtheories into the posterior distribution. We find only weak support for an EKC,which disappears altogether when we address issues relating to the extremeoversampling of two industrialized countries in the sample. In contrast, ourresults highlight the relative importance of political economy and site-specificvariables (specifically executive constraints and precipitation variation) inexplaining pollution outcomes. Trade is shown to play an important indirectrole, as it moderates the influence of the composition effect on pollution.

A bioeconomic model is used to study the effect of Prosopis juliflora, an exotic tree, on diverse agents in Ranthambhore National Park. Tigers prey on wild herbivores, cattle, and goats that compete with each other to feed on green biomass, i.e. leaves and grass. There are four agents: goat owner, cattle owner, wood gatherer, and park manager. It is shown that there is an inherent trade-off between the number of tigers and village livestock that are grazing. Prosopis juliflora makes management of this trade-off more difficult. The four agents have different interests in the park, and a different ranking of the four scenarios that are simulated.

Climate and institutions might be crucial in lowering the vagaries of climate change impacts in terms of productivity. This study measures the relationships of productivity measures adjusted for the regulation of carbon emission and institutions together with climate change throughout the world. This paper finds that there is higher potential for reduction of CO2 emissions in developing countries at lower cost. However, the cost to reduce emissions lowers their growth potential in terms of lost productivity growth. Better institutions help to lower the negative impacts of climate change by improving the process of technological adoption in developing countries. Climate change reduces the productivity growth in developing countries by lowering the process of technological adoption, and better institutions result in higher productivity.

A better understanding of the relative importance of factors related to climate change and to changes associated with economic growth would serve to inform water policy and to focus scarce public resources on anticipated problems arising from distinct sources of changes in water demand. This article investigates the determinants of residential water consumption in Chile, a developing country that has seen noteworthy changes in incomes, household size, poverty rates and levels of urbanization, and which is projected to experience significant climatic but varied changes, depending on the region of the country. Panel data for 1998-2010 at the municipal level is used to analyze the sensitivity of residential water demand to climate and development-related factors. In the case of Chile, the effect on water consumption of these development-related changes is estimated to be several times that of the changes associated with climate projections for 50 to 80 years in the future.

Choice models and a referendum format contingent valuation survey are used to investigate household preferences for improved water services and decentralization levels (actual departmental administration vs. further decentralization to the municipality) in urban Matiguás, Nicaragua. Choice models suggest that households prefer the current departmental administration over municipal provision for service and capacity, but believe that the municipality would be more interested in improving services. Results also indicate that households are willing to pay an increment of at least 112 per cent above their current monthly water bill for reliable and safe drinking water services, regardless of administration type.

This paper develops four agricultural household models of forest clearing – as both an input for current production and an investment in future production – over two periods under distinct land and labor market institutions. Five different effects of policies on farmers' forest clearing decisions are identified. Careful comparison of their relative magnitudes reveals (potential) pro-forest policies under distinct market conditions. In Latin American countries, poor early settlers are often bid off their cleared land after or without cultivation by wealthy large holders. With this ‘sell-out effect,’ price transfer and technological transfer for soil management targeting poor colonists and policy reforms eliminating land price distortions are recommended to arrest deforestation. On the other hand, especially in places where land transaction opportunities are nil like Sub-Saharan African countries, policies promoting non-agricultural activities among poor farmers are needed.

This study examines, in a developing-country context, the nature of the linkages between deforestation, land degradation and the movement of population from one region to another. While it is usually hypothesized that environmental degradation leads to stress migration from rural areas, changes in institutional arrangements and the subsequent regeneration of land and water may change the situation, decreasing the attractiveness of the option to migrate. Primary data from six villages in Rajasthan (a region in Western India) are used to set up alternative models using OLS, logit and 3SLS systems methods to test alternative forms of the hypotheses. It is found that the proper specification of group property rights, as a consequence of the existence of non-governmental organizations, does reduce migration. Further, a household's decisions to migrate and/or to participate in common property right creation are interrelated, being parts of its labour force allocation decisions. Other variables influencing household decisions to participate are levels of asset ownership, degree of dependence on common land and level of education.

A discrete choice experiment, aiming to elicit public preferences for improvements in solid waste services, is carefully administered across socioeconomic zones in the city of Hawassa, Ethiopia. Observed and unobserved preference heterogeneity are analyzed using mixed logit choice models. The results show that there exists substantial willingness to pay to increase collection frequency and separate recyclable waste. A new issue is the focus on child labor in the waste management sector. Significant gender effects are found: women are more interested than men in increasing waste collection frequency and value the abolishment of child labor more highly, as do higher income households. As expected, respondents living in wealthier neighborhoods are more likely to pay higher service charges. Education indirectly influences preferences for waste separation. The study provides important insight into the social benefits of public investment decisions to improve the quality of solid waste management services in large cities in Ethiopia.