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.

Agriculture in Sub-Saharan Africa is regularly threatened by the occurrence of weather shocks. We wonder whether the way farmers respond to shocks can affect land use and induce deforestation. Reviewing the existing literature, we found that this question has only been marginally studied. Drawing from the adaptation and land-use change literatures, we then expose the mechanisms through which weather shocks can push farmers to induce land-use change, or conversely to foster conservation. As farmers cope with shocks, their responses can cause degradations in ecosystems which could, in the long term, encourage deforestation and land-use change. To prepare for the next growing season, or adapt to climate variability and risk in the longer term, farmers also make structural adjustments in their farm and land-use decisions, which may lead to changes in land holding. They also resort to adaptation strategies that can indirectly affect land-use decisions by affecting households’ resources (labor, income).

Livestock health is economically important for agropastoral households whose wealth is held partly as livestock. Households can invest in disease prevention and treatment, but livestock disease risk is also affected by grazing practices that result in inter-herd contact and disease transmission in regions with endemic communicable diseases. This paper examines the relationships between communal grazing and antimicrobial use in Maasai, Chagga and Arusha households in northern Tanzania. We develop a theoretical model of the economic connection between communal grazing, disease transmission risk, risk perceptions, and antimicrobial use, and derive testable hypotheses about these connections. Regression results suggest that history of disease and communal grazing are associated with higher subjective disease risk and greater antimicrobial use. We discuss the implications of these results in light of the potential for relatively high inter-herd disease transmission rates among communal grazers and potential contributions to antimicrobial resistance due to antimicrobial use.

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.

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.

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.

Sense of ownership is often advocated as an argument for local participation within the epistemic development and nature conservation communities. Stakeholder participation in initiating, designing or implementing institutions is claimed to establish a sense of ownership among the stakeholders and subsequently improve the intended outcomes of the given institution. Theoretical and empirical justifications of the hypothesis remain scarce. A better understanding of the effects of local participation can motivate more extensive and stronger participation of local stakeholders and improve institutional performance. This paper applies theories from psychology and behavioral economics to sense of ownership. The empirical investigation is a framed field experiment in the context of tropical forest conservation and payments for environmental services in Tanzania. The results lend little support to the hypothesis in this context. The participation treatment in the experiment is weak, and a possible explanation is that sense of ownership is sensitive to the participation form.

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.

I am in agreement with the main thesis of the paper by Levin et al., namely that complex, non-linear systems, whether ecological or socioeconomic, do not lend themselves to management protocols based on assumptions of linear, globally stable, single equilibrium systems. As the authors point out, policy makers need a better understanding of the concept of resilience. Furthermore, it is especially important for them to understand the crucial elements for maintaining resilience in the integrated ecological-socioeconomic resource use systems (the forests, rangelands, and agro-ecosystems) on which most human welfare depends.

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.

To guide investments in ecosystem-based adaptation (EbA) in developing countries, numerous stated preference valuation studies have been implemented to assess the value of ecosystem services. These studies increasingly use time payments as an alternative to money. There is limited knowledge, however, about how to convert time to money and how the type of payment affects willingness to pay (WTP). In this study, the results of choice experiments using time and money payments are compared in the context of EbA measures in Vietnam. Six, of which five individual-specific, conversion rates are applied. WTP estimates are found to be higher for time payments. Moreover, the type of payment vehicle as well as the conversion rate has substantial effect on mean WTP and WTP distributions. We discuss implications of these results for the conversion of time to money and the use of resulting WTP estimates in cost benefit analyses in developing countries.

The operation of a number of non-contiguous parcels of land as a single farming unit is known as land fragmentation. It is a widespread and persistent phenomenon and, at the same time, widely criticized by development agencies. Available evidence clearly suggests that the unqualified faith in the merit of consolidation is not justified; fragmentation may have some rationale. This paper substantiates the latter position with a case study of an irrigated agricultural system. Thereafter, it locates fragmentation within the broader context and analyses its role within a hierarchy of phenomena in the linked social and ecological local system. For this analysis an evolutionary game model is used. It is shown that fragmentation increases the resilience of the system of cooperation. The study concludes by suggesting an appropriate strategy for resilience management.

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.

Using individual travel diary data collected before and after a rail transit expansion in urban Beijing, the impact of urban rail accessibility improvement on the usage of rail transit, automobiles, buses, walking and bicycling, as well as the cross-area externality induced by congestion alleviation, is estimated. The results show that rail transit usage significantly increased for commuters residing in the affected areas and that the additional rail passengers were previously auto users, rather than bus passengers. The cross-area externality is estimated as small, which implies that the congestion alleviation was not large enough (yet) to change the travel mode choices of commuters residing in areas that did not experience the improvement. Furthermore, the results show that neither the number of commute work trips nor their length increased, indicating that the quantity of travel was not increased by the rail transit expansion.

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.

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.

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.

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.