This paper examines how natural resource revenues interact with growth and welfare in an overlapping generations model with altruism. The revenues are allocated between public productive services and direct transfers to members of society by spending policies. We analyze how these policies influence the dynamics, and how the dynamics are influenced by the revenue. Abundant revenues may harm growth, but growth and welfare can be oppositely affected. We also provide the social planner solution under which revenues enhance growth. Overall, the analysis suggests that variation in the strength of altruism and in spending policies may be part of the reason why natural resources seem to affect economic performance across nations differently.

In this paper I analyze the forest and debt dynamics in a less developed country (LDC), where the former is a renewable resource and the latter's increase results from the interests to be paid on the current debt minus the balance of trade surplus. Agricultural and industrial goods are produced, and whereas the former requires the converted forest as an input, the latter does not. It transpires that the stock of debt is likely to increase infinitely without repudiation, whereas the stock of forest is likely to oscillate around an equilibrium level. Within this framework, I compare the effectiveness and enforceability of the debt-for-nature and the debt-for-development swaps with respect to tropical deforestation and debt burden issues. Some empirical evidence confirming the theoretical results is provided.

Using U.S. state-level data for the period 1973–1994, this study models the relationship between emissions, output and pollution abatement by defining an emissions function, in a manner that is consistent with the residual (emissions) generation mechanism and firms' optimizing behavior. It thus accounts for factors that were previously unaccounted for or addressed only individually. Applications using this comprehensive setting can offer more informed insights for policy-making, something that is particularly useful for developing countries that face the environmental degradation that comes together with the benefits of economic growth. Using nonparametric econometric techniques as well as threshold regression, the empirical results show that there is a positive nonlinear relationship between emissions and output, rejecting an inverted-U type of relationship between the two (the Environmental Kuznets Curve, or EKC). In the absence of abatement the relationship turns around, verifying the arguments in the literature that abatement is one of the driving forces for an EKC to emerge.

We develop a model of optimal land allocation in a developing economy that features three possible land uses: agriculture, primary and secondary forests. The distinction between those forest types reflects their different contributions in terms of public goods. In our model, reforestation is costly because it undermines land title security. Using the forest transition concept, we study long-term land-use change and explain important features of cumulative deforestation across countries. Our results shed light on the speed at which net deforestation ends, on the effect of tenure costs in this process, and on composition in steady state. We also present a policy analysis that emphasizes the critical role of institutional reforms addressing the costs of both deforestation and tenure in order to promote a transition. We find that focusing only on net forest losses can be misleading since late transitions may yield, upon given conditions, a higher level of environmental benefits.

The use of trade measures for environmental purposes has given rise to a series of economic and legal issues. These are explored in the paper through an examination of the United States embargo on imports of shrimp from several countries for environmental reasons, currently being considered by a WTO dispute settlement panel. The paper examines the effect on competitiveness of compliance with the higher standard imposed by the US, the appropriateness of universalizing those standards, and whether the US action is consistent with WTO rules. The major findings are that, in the case of Trinidad, (a) the competitiveness of the affected fishermen was reduced, (b) the US regulation was inappropriate to the conditions which prevailed in the shrimp industry there, and (c) the US action was WTO inconsistent given current interpretation of WTO rules. The paper anticipates that the current case could lead to a review of WTO rules, in favour of the environment.

Village democratization in rural China is found to have profound impacts on many socio-economic aspects, but little is understood as to how welfare impacts may occur through farmers' principal production activities. This study helps to fill this gap by investigating how village democracy affects rural household welfare through these channels, using a unique household survey. The authors first establish a theoretical framework that links democracy to household welfare through changes in production efficiency. Focusing on both agricultural and forest production, they then implement empirical estimation using stochastic production frontier techniques with careful consideration of household heterogeneity in technical efficiency. They find that higher levels of village democracy significantly increase farmers' production efficiency, thereby improving their welfare. To the authors' knowledge, this is the first study on the impacts of democracy on producer welfare using micro-level data.

Although genetically modified organisms (GMOs) have recently attracted a great deal of public attention, analysis of their economic impact has been far less common. This paper puts forward variants of a simple model of crop production, each one tailored to a particular aspect of transgenic food technology. The focus is on the possibility of monopolization and its consequential welfare costs. Risk factors identified include moderate cost savings from transgenic varieties, high seed storage costs, and high risks of crop loss. The paper also discusses some of the possible remedies including tighter regulation of anti-competitive practices and liberalization of the regulations governing the introduction of new GMOs.

In this paper we present an example where a domestic import-competing industry can benefit from a pollution tax borne by its consumers. We show that this pollution tax can be similar to a traditional trade barrier (such as a tariff) and can raise the price received by the domestic industry. Given an open economy, we highlight conditions under which domestic producers prefer a higher consumption-based pollution tax than is socially optimal. In contrast, when the economy is closed, we find that producers prefer a pollution tax that is lower than socially optimal. Domestic producers turn ‘green’ only when faced with import competition.

This study investigates intended visitation behavior of tourists toward Rekawa wetland under anticipated climate change (CC) scenarios. An interview-based contingent visitation survey was conducted with 365 foreign and domestic tourists to estimate the effects of CC on future visitation. Based on two IPCC scenarios using two direct and three indirect climatic factors, we composed a CC environmental index. The results show a decline in number of trips equal to 43 per cent and 53 per cent under scenarios 1 and 2 respectively, but the difference is not significant. Foreign and domestic tourists differ significantly with regard to socio-demographic characteristics and beliefs about CC effects at Rekawa. Controlling for such differences, we demonstrate that foreign tourists are less likely than domestic tourists to reduce future visitation to Rekawa due to CC impacts. Still, the future of ecotourism at Rekawa wetland is at risk if adaptation measures are not taken to meet CC impacts.

This paper studies soil depletion incentives in a dynamic economic model under two different sources of revenue uncertainty (output and price risk). The focus is on the long-term effects of risk-averse preferences when farming decisions have implications for both expected short-run production and natural topsoil fertility. The analysis shows that the risk properties of the stock variable are crucial for the results arrived. The presence of risk preferences is found to improve soil conservation incentives in a low-input farming system, independent of the source of revenue risk considered. The only case for which soil conservation incentives are weakened is for high-input farming systems under price uncertainty.

JEL classification: Q12, Q20, D81

This study examines the effects of growing manufacturing employment on infant mortality across almost 200 Indonesian districts from 1985 to 1995, a time of rapid industrialization. Overall, we find no relationship between growing manufacturing employment in general and infant mortality. However, when the growth in manufacturing is concentrated in more polluting industries (as measured by the construction of a harm-weighted index of predicted emissions from manufacturing), there were economically and statistically significant increases in infant mortality. Finally, we consider a variety of potential causal channels that may change with industrialization (such as housing quality and access to health care) and whose change may help to explain the observed relationships. Although most of the various factors are correlated with infant mortality and the industrialization measures are correlated with changes in several factors, conditioning on these measures does not change our basic results.

This article develops a framework for environmental–economic decision-making in a single project case that includes the ecological sustainability criteria, environmental costs, natural resource scarcity prices and local peoples’ preferences and presents a case study of the lowland irrigated agriculture system. The geographic information system (GIS) technique has been used for evaluating ecological criteria and integrating information for use in the cost–benefit analysis at different levels of computation process. The environmental costs and economic value of water associated with the lowland irrigated agriculture are estimated using both the direct and indirect economic valuation approaches. Various sets of alternatives were designed for promoting sustainable use of resources, and the net present value is estimated in each of these cases by incorporating environmental costs and economic values of water obtained from different methods. The cost–benefit analysis (CBA) carried out in these different cases indicated that diversification of crops, rather than the conventional monocropping system, would promote sustainable resource use and generate higher benefits to the farmers and society, if external costs, such as environmental costs and scarcity value of irrigation water, and ecological sustainability criteria are also considered in the economic decision-making process. The results of the case study also indicated that sustainability criteria could well be incorporated into the CBA in a single project case by addressing local people's concerns, resource scarcity values and ecological sustainability criteria with the use of spatial analysis techniques such as GIS.

In this study, the author estimates the demand for improvements in the site quality of Hussain Sagar, a large lake in metropolitan Hyderabad, India. Using both revealed and stated preference approaches, it is estimated that the park provides recreational benefits of US$35 per person for on-site respondents and US$14 for off-site respondents per visit to the park. Given that over one million people visit the lake and its parks every year, based on different scenarios, the annual estimated amenity value of the lake ranges from INR1.76bn (US$29m) to INR3.48bn (US$58m). Thus it is recommended that park authorities double the access fee to the park from the current INR10 (US$0.16). With this increase, the government can potentially earn US$0.36–1.48m in revenues per year, which will make it possible to improve the quality of the lake and its surroundings.

Under a General Equilibrium model of International Trade, industrialized countries export capital intensive goods, while developing countries export natural resource intensive goods. Biodiversity is viewed as the number of species conserved while producing these goods. Higher conservation increases demand, but lowers goods supply. Consumers value biodiversity as the weighted sum of all the different species. If producers of both goods conserve more species, the South's terms of trade will rise in relation to the North's. Furthermore, we believe that a switch in consumer preferences, to a more homogeneous valuation of the species, is likely. This change would drop the South's terms of trade. Therefore, under these circumstances, this region is facing a risk. In conserving additional species, the South would be better off, both because its terms of trade increases and because the risk associated with a switch in preferences decreases.

Using data from Bolivia, this paper analyzes seed market participation and how transaction costs in these markets influence intracrop biodiversity and the influence of biodiversity on yields. Results indicate that seed market attributes such as distance and market-level biodiversity have a crucial effect on a farmer's market choice, suggesting that farmers are willing to sacrifice time and income to travel further distances in order to reach markets with a broader range of varieties. This study finds that farmers from this sample who have access to seed markets are more likely to have higher levels of intracrop biodiversity. In addition, for market-integrated farmers, intracrop biodiversity does not seem to have a negative effect on yields, which suggests that improved market access does not threaten biodiversity in contexts with similar characteristics to the study site.

The interrelationships between environmental regulations and firm location are essential features of economic development. This paper examines the optimal location of a competitive firm in response to environmental costs imposed by the abatement investment and taxes when the cost of the environmental regulation varies spatially under uncertainty. It contributes to the literature by incorporating the spatial setting into a risk-averse firm's location decision in the presence of environmental regulation uncertainty. An augmented cost of the abatement, input tax, or emission tax causes the risk-averse firm to locate closer to the output market. Uncertainty about environmental regulations also leads a risk-averse firm to locate closer to the output market. Policy implications of the results are discussed. The results have implications for the design and implementation of environmental and other development-related policies, environment–development debate, and trade–environment debate.