This paper investigates how openness resulting from the adoption of the open-door policy influences air quality in urban China. City-level information is used to minimise the impacts of data inconsistency and data measurement problems. The intensity of international trade is used as a proxy for openness to examine how freer trade influences urban air quality. Several alternative measures of openness are adopted to investigate how different forms of openness can influence urban air quality. Our findings show that technique effects are the key to reversing the degradation of urban air quality and that openness is not necessarily a problem for urban air quality in China.

Area fees have become an increasingly important component of forest revenue systems in tropical developing countries. They are commonly viewed as having a neutral impact on decisions by timber concessionaires. This view is incorrect. Using both theoretical and empirical models, we demonstrate that area fees can induce concessionaires to accelerate timber harvests and to harvest more selectively. In Cameroon, area fees at recent levels create an incentive for concessionaires to harvest forests in half the estimated sustained-yield period. Countries that wish to encourage concessionaires to comply with sustained-yield requirements must implement measures that counter the depletion-accelerating effects of area fees.

With the aid of a lab experiment, we explored how imperfect monitoring and punishment networks impacted appropriation, punishment and beliefs in a common pool resource appropriation dilemma. We studied the differences between the complete network (with perfect monitoring and punishment, in which everyone can observe and punish everyone else) and two ‘imperfect’ networks (that systematically reduce the number of subjects who could monitor and punish others): the directed and undirected circle networks. We found that free riders were punished in all treatments, but the network topology impacted the type of punishment: the undirected circle induced more severe punishment and prosocial punishment compared to the other two networks. Both imperfect networks were more efficient because the larger punishment capacity available in the complete network elicited higher punishment amount.

We analyse the relationship between individuals' subjective wellbeing (SWB) and measures of their country's sustainability. SWB data are sourced from the World Values Survey; sustainability is measured by ecological footprint (EF) and by components of the World Bank's adjusted net savings (ANS) series. ANS, a measure of weak sustainability, represents changes in a country's capital stock including financial, physical, human and natural capital. We show that an increase in strong sustainability, measured by EF and by ANS's natural capital component, is associated with reductions in SWB over the next decade followed by a rebound in SWB over the subsequent decade. We show also that the perfect substitutability assumptions on which ANS is calculated do not hold. Our findings highlight an important political challenge: governments that run sustainable policies may decrease the near-term wellbeing of citizens. This can reduce government's short-term popularity even though the improved sustainability may raise future wellbeing.

Through a dynamic model of energy system change the paper examines the role of innovation in bringing about a low carbon energy system. The processes of innovation and technological substitution are cumulative, dynamic, and highly non-linear processes such that how the energy system evolves in the long term is extraordinarily sensitive to the strength and duration of the initial policies. It is possible, under some policy assumptions, that energy systems would continue to depend on fossil fuels for so long as fossil fuels remain abundant and the least cost resource; and under other assumptions, after allowing for the unavoidable lags associated with investment and the building up of a new capital stock, that fossil fuels would become almost wholly displaced by the non-carbon alternatives. The implication is that the external benefits of innovation, which include the creation of options and the reduction of costs arising directly from innovation itself, and the reduction of environmental damage, are far greater, perhaps by orders of magnitude, than the traditional cost–benefit models used for the analysis of climate change mitigation. The analysis suggests why a focus on discovery and innovation offers a promising way forward for national and international policies on climate change.

The relationship between productive efficiency and sustainable development of fishing industries in developing countries has received little attention. Ill-structured property rights in common-pool resources lead to a contradiction between private and social technical efficiency, with private and social costs dependent on the level of technical efficiency. Development policies that increase private efficiency can increase the social cost with ill-structured property rights and common-pool resources, and thereby increase social inefficiency. This paper examines this relationship through a case study of the mini purse seine fishery of the Java Sea, and finds that private technical efficiency does not depend on any measurable attributes of human capital, diverges substantially between the peak and off seasons, and differs between vessels more within the off season.

This paper investigates firm incentives for developing environmentally clean technologies in a simple two-country model with international oligopoly and lack of regulatory commitment, and compares the incentives under price and quantity regulations with and without policy cooperation between governments. We examine whether policy coordination (choices of policy instruments or policy harmonization) encourages environmental innovation when firms have strategic innovation incentives that may influence future regulation. In a case where policies are non-cooperatively set by governments, quantity regulations yield a greater static benefit for countries; however, dynamically, price regulations encourage more innovation than quantity regulations when environmental damages are not so large. Under both price and quantity regulation regimes, cooperative policy harmonization necessarily enhances net benefits in each country, whereas it discourages firms' innovation incentives when environmental damages are not so small.

This paper uses a model of an inland fishery in Bangladesh to investigate the relationship between poverty and resource sustainability in a specific case. It makes use of detailed fieldwork to build a numerical model of fishery decision making, which incorporates extensions to standard fisheries models. In particular, it includes fish migration between lease units and models the choice of fishing gear, as well as fishing effort, over the year. The modelling of fishing gear choice allows an analysis of the effect of management policies on employment in the fishery, a major factor that influences poverty in the locality. The numerical results show that while some simple policies to improve sustainability are likely to increase poverty, it is possible to design policies which affect gear choice and lead to reduced poverty without harming the sustainability of the resource.

[We] must ensure that ordinary citizens in all countries actually benefit from tradeÑa trade that...protects the environment.

President William J. Clinton

State of the Union Address, 19 January 1999

The hullabaloo that was the World Trade Organization's millenium meeting in Seattle has shown us that ordinary people have serious misgivings about the multilateral trading regime-both the rules and the process. Future progress in trade liberalization will depend on convincing the wider public that trade agreements are good for the environment and good for development (including labour and human rights), not just GDP. This is more than a public relations challenge. The concerns voiced by the Seattle protesters-some of them, anyway-raise profound intellectual questions.

Changes in climatic patterns are expected to have significant effects on health and wellbeing. However, the literature on the effect of climate on subjective wellbeing remains scant and existing studies focus mostly on developed countries or cross-country analyses. This paper aims to identify the relationship between climate conditions on happiness after controlling for individual and social characteristics. Ecuador, a geographically fragmented country with varying climate conditions across municipalities, constitutes an ideal case study to assess the effect of climate variables on happiness. We employ a cross-section analysis to identify the effect of temperature, precipitation and humidity on happiness. The paper shows that climate conditions constitute an important determinant of people's subjective wellbeing. The results also suggest that income and education attenuate the effect of temperature on happiness and that substantial differences are observed depending on whether places are hot/humid or cold/dry.

William Nordhaus has gone further than any economist to date at building a dynamic integrated model of the world’s climate and economic systems, with some one-way linkages to agricultural systems and ecosystems. Managing the Commons is an admirably readable description of this effort which, in his words, ‘balances the costs of emissions controls in energy policies and other areas against the impacts to agriculture, coastlines, and ecosystem values’. In addition to a detailed description of the Dynamic Integrated Climate and the Economy (DICE) model and several scenarios produced by the model, the book includes large sections on sensitivity analysis of the model’s parameter uncertainty and an analysis of the value of information gained at various times in the future to the decision process.

In Rwanda, rural water supply is not uniformly distributed. Rural areas are characterized by differences in the distance to the nearest water point and in water quality for domestic water, by watering frequency and water availability for irrigation water, and by the price for both. A household's perception of further improvements in water supply will, therefore, depend heavily on the situation it currently faces. The authors used a choice experiment to model how the individual status quo (SQ) affects preferences. Accounting for individual SQ information improves model significance relative to simply using the generic SQ parameter in the model, and the willingness to pay increases. Not using this information leads to a downward bias – and, in some cases, statistical insignificance – in estimates of households’ valuation of health improvements linked to improved domestic water availability, as well as of increased watering frequency linked to the improved availability of irrigation water.

Food labelling is costly. Food labelling is often demanded with the introduction of new food products such as genetically modified (GM) food. If consumers do not have trust in the label, scarce resources are wasted. This paper investigates factors affecting the trust in food labels among Ugandan consumers. The results suggest that older, less-educated individuals of smaller household sizes and with trust in government institutions have more trust in food labels. Other factors were also found to be important. The government has to consider those differences in consumer trust when designing a GM labelling policy.

The theoretical definitions of sustainability proposed in EDE's recent symposium, Sustainability and the Measurement of Wealth, are useful for measuring national wealth but not for measuring sustainability. Moreover, because they are based on market prices and extensions to them, the empirical estimates are not indicators of sustainability. Sustainable development is defined and a theoretic indicator is proposed using maximin theory.

Early this year, Thomas Friedman (2014) reported on a (Wikileaks) cable sent in 2008 from the US Embassy in Damascus concerning the drought Syria had been suffering from since 2006 (and which was going to last for another couple of years). The Syrian UN food and agriculture representative was seeking assistance for among others 15,000 small-holding farmers, who might otherwise seek jobs in Syrian cities (leaving many women and children behind in poverty) and who could arguably add to already existing social and economic tensions in those cities.

In the context of climate change and increasing occurrences of extreme events, it is essential to understand farmers' responses to weather shocks and adaptations. This paper uses a panel dataset of 311 selected Indian districts ranging from 1966 to 2009 to investigate how application of chemical fertilizers varies in response to rainfall shocks. Two rainfall shock measures are constructed based on deviation in rainfall from the normal, a categorical measure of rainfall shock; and another, a continuous index of negative rainfall deviation. Based on a panel fixed effect regression, the study finds no apparent reduction in the level of fertilizer use in negative rainfall shock years. However, with a one-year lagged rainfall shock, a reduction in fertilizer application rate is observed for the continuous drought index. Further, exposure to higher intensity droughts in the previous year leads to an increase in the amount of fertilizer application in the current year.

This paper examines the property rights of the Cochin estuarine fisheries in India, which in spite of having well-defined access and conservation rules imposed by the state, have failed to ensure proper resource management. Considering the resource characteristics and the causes for state's failure, co-management, which requires a redefinition of management functions by state as well as users, has been proposed as an alternative. Analysis of user characteristics, using the two-stage estimation procedure, throws policy signals that under co-management the state can strengthen the licensing system to restrict access to fishing and to impart awareness regarding conservation rules. The logit analysis on users' role indicates that, although certain types of heterogeneities contribute towards the critical mass needed for a collective action, the distributional implications may lead at least some to oppose co-management. This implies that, even if users initially get to agree to co-operate and share any rents from conservation, significant prisoner's dilemma will soon occur returning the resource to its current state, and co-management will have to still grapple with lack of well-defined property rights.

The paper analyzes the impact of environmental information dissemination by an information agent in a product market duopoly. The information agent performs the task of disseminating information regarding a green and a polluting firm's environmental profiles to consumers differing in their preferences for the two firms’ products. The result reveals that, in the absence of information dissemination, the green firm earns a lower market share which necessitates the information agent's intervention to encourage the consumption of green product. Moreover, complete information dissemination regarding the green firm's environmental profile is sufficient to generate a higher market share for the green firm. The paper also finds that an increase in information dissemination regarding either of the two firms’ environmental profiles decreases environmental damage accrued to the society and encourages a greener consumption pattern. An eco-efficiency drive is shown to be self-corrective as it negates the need for the informational intervention.