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.

In this paper, we analyze the effects of population aging on economic growth and the environment in a two-period overlapping generations model of growth, aging, and the environment. We show that aging may be beneficial to economic growth and the environment under perfect annuitisation, while possibly harmful under imperfect annuitisation. We also discuss the implications of our results for environmental policy in an aging economy.

Lithuania is one of ten countries in Central and Eastern Europe that is aligning its environmental policies with those of the European Union (EU). The costs of harmonizing environmental policies are expected to be extremely high and to fall disproportionately on local governments. One policy option for financing these service upgrades is to use increased tariffs. We evaluate the feasibility of this strategy by estimating household willingness to pay for upgraded landfill, sewerage, and recycling programs. We then compare estimated benefits with costs from the literature. We find that household willingness to pay is substantial for upgraded landfill management and expanded sewerage service, but virtually zero for the two recycling programs considered. Relative to costs, households are willing to pay approximately 80–90 per cent of costs for landfill improvement, but less than 10 per cent for upgraded sewerage service and recycling programs. These results suggest that targeted subsidies will be critical to fund the municipal environmental expenditures required for Lithuania to join the EU.

The establishment of a private property regime is often proposed as a solution to the degradation of natural resources. While arguably more efficient than open access, private property often comes at a distributional cost (Weitzman, M. (1974), ‘Free access vs private ownership as alternative systems for managing common property’, Journal of Economic Theory 8(2): 225–234) as traditional users of the resource lose income and employment in the process. The present paper demonstrates that, in the case of renewable resources, traditional users may gain from privatization even if they are denied ownership of the resource. Indeed, a private owner maximizing profits tends to preserve the resource, which results in long-term increases in employment. We derive the conditions under which these long-term gains more than compensate traditional users for the short-run fall in labor demand and resource rents.

Excess capacity and overfishing are problems in the open-access, common-pool fisheries of the Java Sea. Data development analysis is used to estimate excess fishing capacity and the number of vessels to decommission in three Java Sea fisheries of Indonesia, the purse seine, mini purse seine, and longline. First- and second-best policy measures are discussed to reduce the excess capacity and give sustainable management and development. The importance of incentive design, asymmetric information, and the regulator's principal–agent problem are emphasized in license limitation programs.

The trade-off between short-term welfare and long-term agricultural development in the highlands of Ethiopia represents a challenge to successful economic development in a predominantly agriculture-based economy. We employ nearest neighbor and kernel-based matching techniques to measure the impact of sustainable land and watershed management (SLWM) on the value of production at the plot level. Analysis suggests that plots that received SLWM investments (terraces, bunds, check dams) within the first study period (1992–2002) had a 24 per cent higher value of production in 2010. In addition, continuous treatment effects analysis provides a robustness check and suggests that plots with existing SLWM infrastructure have a positive and increasing value of production seven years after construction. Although value of production increases over time, net benefits may not outweigh costs, and mechanisms to incentivize maintenance may be needed.

This study evaluates the effects of vegetative soil conservation practices (afforestation and/or bamboo planting) on farm profit and its components, revenue and variable cost. Since farmers self-select themselves as adopters of conservation measures, there could be a problem of selection bias in evaluating their soil conservation practices. We address the selection bias by using propensity score matching. We also check if there exists spatial spillover in adoption of vegetative conservation measures and how it affects matching. We use primary survey data from the Darjeeling district of the Eastern Himalayan region for the year 2013. Our results suggest strong spatial correlation. We find that the propensity score estimated from the spatial model provides better matches than the non-spatial model. While the results show that vegetative soil conservation can lead to significant gains in revenue, it also increases costs so that no significant gains in profit accrue to farmers.

This paper empirically investigates the effect of energy use on economic growth throughout different stages of development. Along with direct effects, energy is allowed to influence income growth indirectly by capital accumulation through input substitution. We find that energy use affects economic growth primarily through the capital channel and that this result varies substantially with regard to the country's income level. For middle-income countries including the quintet of large emerging economies – Brazil, Russia, India, China and South Africa – an increase in energy use drives capital accumulation, which favors economic growth. On the contrary, for high-income countries, a higher energy input tends to withdraw productive resources from capital accumulation, harming economic growth. Considering these differences, policy measures aiming at restricting energy consumption should be evaluated against the background of a region's stage of economic development.

The occupation of the last remaining tropical forests has been an initiative of many developing nations that is debated by the global community due to impacts on soil erosion, biodiversity loss and contributions to global climate change. Arguments against development range from the irreversible nature of tropical deforestation to the synergistic losses associated with environmental degradation and continued poverty. The focus of this paper is to determine if evidence of market advancements and growth can be found in an Amazonian settlement, thus providing counter-evidence for the boom–bust pattern of development that has been predicted for much of the Amazon. Using panel survey data (for four survey waves between 1996 and 2009), we find trends that are consistent with the industrial life cycle, suggesting a pattern that is more consistent with growth, development and consolidation.

The authors study the impact of natural resource degradation on income diversification in Beninese fishing communities. Using survey data and econometric analysis, they show that fishermen are more likely to diversify their income when the degradation of the fish stock is more severe. However, the level of income diversification that they find is surprisingly low and far from sufficient to relieve the stress on the lakes. The latter relates to low levels of formal education among fishermen and the unregulated use of highly productive, but damaging, fishing gear. These two factors result in a high return to fishing relative to non-fishing activities, even amid degradation.

For a closed economy with human-made capital, non-renewable resource depletion and (possibly) exogenous, hyperbolic technical progress as explicit-form inputs to a production function, there is a feasible development path that is ‘as if’ optimal with respect to hyperbolic utility discounting. On this path, typically, welfare-equivalent income > wealth-equivalent income > Sefton-Weale income > net national product, with possibly dramatic differences among these measures; and sustainable income can be greater than, equal to, or less than NNP. For low enough discounting, growing consumption is optimal even when technical progress is zero. A particular discount rate makes all income measures and consumption constant and (except net national product) equal; and zero technical progress then gives the Solow (1974) maximin as a special case. The optimal path is time-consistent because of the way the utility discount rate is chosen to depend on the economy's stocks, and hence on absolute time.

Formulation and estimation of a correctly specified abatement cost function would be central to policy formulation regarding imposing taxes or user-fees as well as of sharing social cost in the presence of environmental pollution. Often in research, the output of an abatement activity for water pollution appears to us not to have been clearly specified. This activity is very distinct from whatever is the actual product of the plant. We propose in this paper that the output is only and exclusively the reduction in the level of the pollutant in the outflow from the plant and illustrate this with primary data for small-scale factories in Nandesari Industrial Estate in Gujarat, India. The cost function estimates provide evidence of significant scale economies and high marginal abatement cost in wastewater treatment by small-scale factories.

There have been increasing pressures by governments and NGOs to restrict international trade in secondary material waste in the conviction that imports of these goods are in reality a disguise for waste dumping by the exporting country. Moreover, cheap imports of secondary material waste tend to crowd out the local recovery system leading to a domestic waste disposal problem. Alternatively, proponents of trade argue that a ban on secondary material waste leads to an inefficient use of resources resulting inevitably in higher economic and environmental costs, both in developed and developing countries. In this paper we set out to investigate if free trade in secondary material waste can support economic development and simultaneously reduce environmental degradation in a developing country and the conditions necessary for the trade to be permitted. In this study we focus on the trade in waste plastics in China. A life cycle model is formulated within an optimization framework and solved by non-linear programming methods. Preliminary results suggest that trade in waste plastics is both economically and environmentally advantageous but under a number of stringent conditions.

It is well known that an efficient pollution taxation scheme should charge each source according to its specific marginal contribution to social damages. Despite significant advances in environmental assessment, geographic information systems and data analysis, this requirement would impose technical, informational and administrative expenses that most regulators – notably in developing countries – seem unable to afford. This paper shows that it can actually be less demanding than it seems. If polluters are price-takers, for instance, in a context where the affected population concentrates at a given location, then the optimal emission tax will disregard a source's location. Otherwise, the adjustment of the optimal tax to location will depend on the extent of a polluter's market power.

To foster the adoption of sustainable intensification practices amongst Ghana's farmers, they are widely promoted through training sessions provided by development organizations, companies, and the public extension service. We investigate whether these training sessions are effective and find that they are effective only for the diffusion of organic fertilizers but not for mulching. We suggest that this comes from the complexity of the innovations. Mulching is one of the simplest sustainable intensification technologies. It diffuses easily through peer learning and, after an initial training delivered to a critical mass of farmers, does not require training anymore. The use of organic fertilizers, in contrast, requires more specific knowledge and adaptation, which limits the effectiveness of peer learning and increases the effectiveness of training. This suggests that to achieve a widespread diffusion of sustainable intensification amongst Ghana's farmers, training sessions should focus on those practices that are complex and thus difficult to learn from peers.

This article analyzes a general equilibrium growth model with overlapping generations and (production-induced) environmental degradation. Individuals react to environmental damages through mitigation or adaptation. In the former case, they reduce production and its environmental impact. In the latter, they do not tackle the causes of the problem but rather its consequences (i.e., the wellbeing loss due to environmental degradation) by increasing defensive expenditures. Despite its simplicity, the model can generate different long-term outcomes: convergence to a stationary state following a unique trajectory or local/global indeterminacy. In the last scenario, initial conditions (history) and individual expectations matter and the model can generate coordination failures and endogenous fluctuations. Results cast doubt on solutions to environmental problems relying on the role of individual behavior change or adaptation.

This research uses field-level data from Burkina Faso to ask what determines farmers' investment in two well-known soil and water conservation techniques: field bunds (barriers to soil and water runoff), and microcatchments (small holes in which seeds and fertilizers are placed). Survey data for 1993 and 1994 are used to estimate Tobit functions, compute elasticities of adoption and intensity of use, perform robustness tests and estimate alternative models. Controlling for land and labor abundance and other factors we find that those who have more ownership rights over farmland, and who do more controlled feeding of livestock, tend to invest more in both technologies. The result suggests that responding to land scarcity with clearer property rights over cropland and pasture could help promote investment in soil conservation, and raise the productivity of factors applied to land.

This study analyzes a public-spending option from mining and oil resources and its impact on Niger's economy. The windfall gain from mining and oil revenues provides an opportunity for the country to reinvest natural resource rents, enhance economic development, and address infrastructure gaps. Drawing on the country's recent and expected mining and oil exploitation, we evaluate the effects of a reinvestment policy in road infrastructure using a dynamic computable general equilibrium (CGE) model. We find that investment in road infrastructure brings positive spillover effects to other sectors of the economy and benefits to the economy in the long run. Our analysis additionally shows that reinvestment in road infrastructure, given the initial state of infrastructure in Niger, could help mitigate the resource curse.

In the December 2014 issue of Environment and Development Economics, we published the article, ‘The economic power of the Golden Rice opposition’ by Wesseler and Zilberman. The paper generated substantial interest, not only in academia but also among civil society groups. In this note, we address some of the concerns that have been raised about our results. Our main conclusion remains that misguided regulations in the case of Golden Rice have cost millions of healthy life years and billions of dollars.

We analyze the performance of the Federal Industrial Inspection Program operated by the Federal Attorney for Environmental Protection (PROFEPA) in Mexico City. We seek to answer three questions: What drives the inspections? What determines non-compliance? And what drives imposition of fines? We use firm-level data that identify certain characteristics of the firms, PROFEPA's inspections, compliance results and fines for all air polluting firms under the Program during the period January 2000–October 2008. We obtain three main results. First, PROFEPA's inspections have focused on larger firms devoted to industrial activities located in poor and dense municipalities. Second, past inspections were significant and have a high marginal effect on compliance. Third, the severity of the infraction was not relevant to the decision to impose a fine but rather to its amount.