This paper integrates soil science variables into an economic analysis of agricultural output among small-scale farmers in Kenya's highlands. The integration is valuable because farmers’ choice of inputs depends on both the status of the soil and socioeconomic conditions. The study uses a stochastic production frontier in which the individual farm's distance to the frontier depends systematically on individual factors. We show the importance of including key soil properties and find that phosphorus has a negative output elasticity, suggesting that farms may be using the wrong fertilizer mix. Hence, the central policy implication is that while fertilizers are generally beneficial, their application needs to be based on better soil information. This highlights the importance of strengthening agricultural extension, increased access to markets and more diversified supply of production inputs.

Estuaries are water bodies, many of which contribute to the sustainable development of cities. Many of them are considered natural landscapes, offering various recreational services to the population. However, estuary degradation is a common problem in developing countries. Ecuador, for example, has a significant problem with the pollution of its estuaries. Machala is one of the most affected cities due to the contamination of these water bodies. This issue has generated negative externalities in the housing market. Thus, our central hypothesis is that rental prices of houses are revalued as their distance from polluted estuaries increases. Using the hedonic pricing approach, our results confirm that the price of a residence increases by US$9.45 for every 100 m farther it is from the closest estuary. This amount constitutes approximately 5.25 per cent of the average rental value in Machala.

This paper attempts to explore how the Taiwan government can effectively use subsidies to retire aquacultural farms based on the externality ground subsidence from pumping groundwater, using the town of Budai in Chia-Yi county as an example. The research first constructs the relationship between ground subsidence and groundwater consumption after taking the externality into consideration. An economic model that minimizes the total subsidy expenditure is then used for targeting the fish farms that need to be retired first in order to meet environmental goals. The results show that when the interaction caused by pumping groundwater among neighborhood farmers is considered, the responsibility for achieving the targets of environmental control is not evenly shared by aquacultural farmers. The location, and not the farm size, plays a more important role in determining whether environmental goals can be met.

This paper reviews the evolution of the field of environment and development over the last two decades. I argue that a central concern of the field has been the relation between natural resource use, income and growth, under the institutional and market conditions that prevail in developing countries. Particular attention is paid to the demographic and other drivers of change in the asset base, the linkages between poverty, property rights and the allocation of natural resources, the valuation of environmental assets and investment of resource rents, and the development of policies for managing environmental externalities and environmental public goods. I consider how the balance between topics and the treatment of individual topics has changed over time, and indicate how the field might be expected to move in the future.

Exploiting a natural experiment involving the imposition of a technical regulation by Germany on Indian leather and textile industries in 1994, a firm-level data set is used to study the trade, adaptation and discontinuity effects and how they vary by firm size. It is found that: (a) regulation significantly increases the export revenues of a firm through use of new technology and high-quality imported raw materials – indicating a possible signalling effect; (b) this gain is concentrated only on the upper half of the firm size distribution, i.e., in the 3rd and 4th quartiles; (c) use of imported raw materials significantly explains low exit probabilities of a firm; and (d) there is evidence of a sorting effect – regulation significantly affecting the operation of small firms.

In wealth accounting and sustainability assessments, we characterize the non-declining wealth criterion under dynamic average utilitarianism (DAU) as defined by Dasgupta (2001). Under DAU, the objective function consists of total intergenerational well-being divided by the present discounted sum of population from the present to the future. It is shown that, in order for an economy to be on a sustainable path, inclusive wealth should grow at a rate higher than the difference between the discount rate and the share of current population of the discounted future population. Our application to the inclusive wealth index shows that, among other results, the DAU criterion changes sustainability assessments for some developing countries with future demographic change, implying that wealth does not accumulate sufficiently in light of DAU. We also show empirical estimates of the value of population change under total utilitarianism, average utilitarianism, and DAU.

Economic models for assessing costs of greenhouse gas abatement can be classified as macroeconomic (top-down) models or micro (bottom-up) models. As yet little attention has been focused on the modelling of developing countries. This paper proposes a methodology for integrating the two approaches and illustrates it with the example of India. The results show that a carbon tax would have limited effectiveness in controlling carbon emissions. Investing carbon tax revenues in carbon-abating technologies can give substantial carbon savings. The costs of carbon abatement using the integrated model are higher than those predicted by other global models with India as a sub-region.

Reducing emissions from deforestation and degradation (REDD) has been proposed as an economic and extensive source of emission abatement to supplement other long-term climate policies. However, critics suggest an excess supply of REDD credits may disrupt emerging carbon markets and raise north–south equity concerns. In this context, we investigate the economic implications of REDD regulations and future emissions reduction commitments. Numerical model simulations show that unrestricted exchange of REDD units reduces the international carbon price by half and cuts compliance costs by roughly one-third. Developed nations’ requirements for policy supplementarity, which restrict demand for REDD credits, reduce such price impacts but go at the expense of both economic efficiency and benefits to rainforest areas. Instead, unlimited REDD access facilitates climate policy targets to be tightened by almost a quarter at constant compliance cost, tripling the environmental ambition of the Kyoto Protocol and providing considerable wealth transfers to developing countries.

In response to the CITES ban on trade in elephant ivory, mammoth ivory began to be produced in post-Soviet Russia. We investigate how this substitute to elephant ivory has affected the poaching of elephants. We argue that the early success of the 1989 ivory ban at increasing the African elephant population was driven in part by increasing supply of mammoth ivory. The more recent increases in poaching appear to be driven by increasing demand and falling African institutional quality. We find that absent the 80 tonnes of Russian mammoth ivory exports per annum 2010–2012, elephant ivory prices would have doubled from their $ 100 per kilogram level and that the current poaching level of 34,000 elephants per year may have increased by as many as 55,000 elephants per year on a population of roughly half a million animals.

This paper examines the impact of changes in agricultural land use on deforestation at the local level in the Tapajós Basin in the Brazilian Amazon. It uses exogenous variation in crop-to-beef relative prices to investigate the effects of pasture-to-cropland conversion on deforestation. The findings indicate that increases in crop-to-beef relative prices increase the rate of pasture-to-cropland conversion and reduce the rate of deforestation. The magnitude of the effects implies that land conversion reduced deforestation at the local level by 5,300 square kilometers from 2002 to 2012. This reduction is the equivalent of almost 15 per cent of the total deforestation observed in the region during this period. These results are consistent with a land use model in which cattle ranching and crop cultivation have different input-intensities and there is imperfect mobility of productive factors between municipalities. This model highlights the fact that changes in relative prices affect deforestation through its effect on input prices.

This paper explores a few cooperative aspects of investments in uncertain, real options. By hypothesis some production commitments, factors, or quotas are transferable. Cases in point include energy supply, emission of pollutants, and harvest of renewable resources. Of particular interest are technologies or projects that provide anti-correlated returns. Any such project stabilizes the aggregate proceeds. Therefore, given widespread risk aversion, a project of this sort merits a bonus. The setting is formalized as a two-stage, stochastic, production game. Absent economies of scale, such games are quite tractable in analysis, computation, and realization. A core imputation comes in terms of shadow prices that equilibrate competitive, endogenous markets. Such prices emerge as optimal dual solutions to coordinated production programs, featuring pooled commitments, or resources. Alternatively, the prices could result from repeated exchange.

This paper evaluates how the marginal abatement cost (MAC) and the efficiency cost of policies will change at the regional and global level if reduction targets are based on consumption-based emissions (CBEs) rather than on production-based emissions (PBEs). Using a CGE model, this paper finds that the MAC of CBEs is in general higher than that of PBEs, mainly due to limited substitution possibilities between energy and non-energy goods in final consumption compared to those in the choice of inputs in production activities under PBEs. Interestingly, when policies such as border carbon adjustments (BCAs) are introduced to reduce CBEs, net importers of emissions are better off, while net exporters of emissions are worse off in this approach compared to the PBEs target. If border tariffs are not allowed, the CBEs target turns out to be worse both for net importers and exporters of emissions.

Outdoor air pollution continues to be a challenging health issue, even as countries experience economic growth. By exploiting a unique transboundary setting in East Asia, we study the impact of an increase in particulate matter (PM) concentrations on fetal deaths. Due to the westerlies in the mid-latitudes, residents in South Korea at times experience intermittent exposure to high levels of air pollution. Using such atmospheric setting, we estimate a reduced-form impact of high PM events on fetal deaths, which captures in utero exposure to pollution. Controlling for local weather and pollution trends, regression results indicate that high PM events in Beijing lead to a significant increase in daily fetal mortality rates in Korea, by approximately 7.4 per cent. This research finding provides lower-bound estimates of not only negative spillovers manifested in fetal health but also the impact of pollution on the health of the Chinese population and calls for a need to tackle transboundary air pollution via international cooperation.

Can benefit-cost analysis (BCA) be used in the developing world in the same way in which it is used in developed market economies? The paper by Arrow et al. makes a good case for employing BCA to evaluate environmental, health, and safety regulations in the United States. It offers a number of principles to guide the use of benefit-cost analyses, some of which can be applied to developing countries. Conservation policies in the tropics can help illustrate the relevance of BCA for evaluating regulations in less industrialized countries. I use a set of studies on the Mantadia National Park to show in practical terms how and when BCA can serve as an effective evaluative tool.

We examine the substitutability of waste and scrap exported from different countries by estimating the export demand functions of China. In particular, we focus on the export of other ferrous waste and scrap (HS code 720449) and other waste, parings and scrap of plastics (HS code 391590). It is shown that the substitutability of these wastes and scraps is weak among the exporting countries. Our empirical results imply that a uniform ban on trading hazardous waste, represented by the Basel Ban, could be an inefficient environmental policy.

This paper builds on the earlier development of WAS – a method of dealing with water issues that focuses on water values rather than water quantities and takes into account public values that are not simply private ones (see Fisher et al., 2005). WAS can be used for infrastructure or policy planning, but it can also assist in the resolution of water disputes. Indeed, WAS-guided cooperation in water can turn what appears to be a zero-sum gain into a win-win situation. It is shown that if WAS sets the rules for cooperation, then, when all claimants use those rules, the coalition of all of them together is stable. Results for possible coalitions of Israel, Jordan, and Palestine are given for varying assumptions as to water ownership. The gains from cooperation are compared and analyzed. WAS-guided cooperation is seen to make the value of ownership shifts relatively trivial.

Occasionally, households use forests as a source for collecting minor forest products. These goods can serve as an important additional source of income or nutrient supply. Considering this link between forest production and the agricultural sector, we estimate the collection function of the extractive good in a sample selection framework in which the wealth status, the prime agricultural cash source, and paid labour are assumed to influence the decision about collecting minor forest products. Results show that poorer households are more dependent on minor forest products. We also find that returns to labour in the agriculture and forestry sectors are not significantly different. We use these returns to establish shadow prices for the extractive good and in turn, use these to estimate price and income elasticities for the good's demand. The minor forest product is a normal good with unit elasticity; shadow income elasticity is equal to 0.82.

This essay offers a limited study of income sustainability for one oil-exporting country: Iraq. The nature of the study motivates a discussion of some theoretical issues concerning levels of non-renewable resource depletion and re-investment as well as related questions about the substitutability of man-made and natural capital and critical natural capital. The results of the study, which decomposes oil revenues into consumption and capital portions, suggest that the re-investment in physical capital offset the depletion of natural assets arising from oil extraction in the period under consideration. Because of the lack of data, a complete study of the capital balance is not feasible. Consequently the findings are tentative.

This paper investigates the impact of structural adjustment policies on deforestation taking place when the agricultural frontier advances into forest reserves in Nicaragua. A computable general equilibrium model incorporating deforestation by squatters is used for policy simulations. The opportunity cost of migrating to the frontier does not simply depend on wage income opportunity, but also on market prices of basic grain which determine the capacity to consume beyond subsistence food-level given a certain real wage. Reducing public expenditures both conserves forests and enhances economic growth, while showing positive distributional effects. On the other hand, a strong conservation trend following a sales tax increase is driven by increasing poverty in rural areas. Noticeably, there are policies which initially intensify deforestation, but turn out to ease the pressure on forests over time. Rapid economic growth does not ensure less pressure on forest reserves.

Much of the debate between the European and US positions about the labeling of genetically modified (GM) foods has been whether consumers perceive labels as a source of information or as a signal to change behavior. In this paper we provide an experimental framework for examining these roles of information and signaling. While previous studies have focused on the impact of labels on consumer behavior, our interest is also in what happens prior to the expression of aversion to GM-labeled foods. In particular, the experiment design allows the researcher to estimate a lower bound of the informational impact of labels on GM food aversion. The other novel feature of this paper is that, unlike earlier studies, it uses subjects from a developing country.