Since modification of agricultural production choices in developing countries often provides positive environmental externalities to people in developed countries, payment for environmental services (PES) has become an important topic in the context of economic development and poverty reduction. We consider two broad categories of PES programs, land-diversion programs, where lands are diverted from agriculture to other uses, and working-land programs, where agricultural production activities are modified to achieve environmental objectives. PES programs are generally good for landowners. The distribution of land and land quality is critical in determining poverty impacts. Where ES and agricultural productivity are negatively correlated and the poor own lands of low agricultural quality, they stand to gain from PES programs. Consumers and wage laborers may lose where food supply is inelastic and programs reduce labor demand. Working-land programs may have better distributional effects than diversion programs.

This paper uses data from a Payments for Environmental Services (PES) project being implemented in Nicaragua to examine the extent to which poorer households that are eligible to participate are in fact able to do so, an issue over which there has been considerable concern. The study site provides a strong test of the ability of poorer households to participate, as it requires participants to make substantial and complex land use changes. The results show that poorer households are in fact able to participate – indeed, by some measures they participated to a greater extent than better-off households. Moreover, their participation was not limited to the simpler, least expensive options. Extremely poor households had a somewhat greater difficulty in participating, but even in their case the difference is solely a relative one. Transaction costs may be greater obstacles to the participation of poorer households than household-specific constraints.

Transboundary pollution is a particularly serious problem as it leads people located at regional borders to disproportionately suffer from pollution. In China, where the environmental policy is decentralized and where environmental conflicts between provinces have occurred several times, transboundary pollution is likely to exist. However, until now, nearly all the studies have focused on developed countries. In this paper we study whether transboundary pollution problems exist in China. To do so, we estimate whether, within Hebei province, polluting firms are more likely to set up in border counties than in interior ones. The estimations of a count-data model allow us to conclude that border counties are more attractive destinations for polluting firms than counties located within the province. Moreover, it appears that this effect has strengthened over time.

This paper discusses the gain in efficiency from including deforestation risk as a targeting criterion in payments for environmental services (PES) programs. We contrast two payment schemes that we simulate using data from Mexican common property forests: a flat payment scheme with a cap on allowable hectares per enrollee, similar to the program implemented in many countries, and a payment that takes deforestation risk and heterogeneity in land productivity into account. We simulate the latter strategy both with and without a budget constraint. Using observed past deforestation, we find that while risk-targeted payments are far more efficient, capped flat payments are more egalitarian. We also consider the characteristics of communities receiving payments from both programs. We find that the risk-weighted scheme results in more payments to poor communities, and that these payments are more efficient than those made to non-poor ejidos. Finally, we show that the risk of deforestation can be predicted quite precisely with indicators that are easily observable and that cannot be manipulated by the community.

This paper analyzes the effect of different types of cookstoves on firewood demand at the household level. Using nationally representative household survey data from Nepal, we find that stove type significantly affects the firewood demand for household uses. Traditional mud-stove user households seem to use less firewood than the open-fire stove users. Surprisingly, households with the so-called ‘improved’ stoves seem to use more firewood than the households with mud stoves. Thus, converting traditional open-fire stoves to mud stoves may be a better conservation strategy in the short term rather than installing improved stoves, unless the technology improves. However, in the long run, making cleaner fuel more accessible to rural households is desirable to reduce indoor air pollution.

The management of the Matang Mangrove Wetlands in Perak State, Malaysia is under review. To assist decision makers in determining the optimal management strategy, a choice modelling application was undertaken to estimate the non-market values provided under different management options. Implicit prices for environmental attributes including the area of environmental forest protected, the number of bird species protected and the recreation use of the area were estimated. In addition, the implicit price of a social, non-market attribute, the employment of local people in wetland based extractive industries, was estimated. Compensating surplus estimates for a number of alternative wetland management scenarios were also calculated.

The pollution haven hypothesis maintains that the industries that are highly pollution intensive, i.e. dirty industries, have been migrating from developed economies to the developing world. It is argued that the environmental concerns of the developed economies caused them to enact strict environmental regulations, which have increased the cost of production of the dirty industries at home. On the other hand, the developing countries with their low wages and lax environmental regulations have been attractive alternative producers in these sectors. Thus, developing countries provide pollution havens for dirty industries. In this study, the pollution haven argument for Turkey, for the 1994–1997 period, is examined. The study focuses on the pollution haven hypothesis from the trade perspective by looking at the manufacturing industry data at four-digit ISIC detail by using the panel data approach. It is found that exports increase as the dirtiness of the industries increases, providing some evidence for the pollution haven hypothesis.

This paper discusses the validity of the Environmental Kuznets Curve (EKC) hypothesis for the case of China's industrial SO2 emissions: both its reduced form and structural model are considered. The EKC curve for China's per capita industrial SO2 emissions predicts the turning point at 10,000 yuan (3,085 US$, Purchasing Power Parity (PPP)). However, given China's fast population expansion, the decreasing trend in per capita emissions may well not be enough to bring about an immediate reduction in terms of total industrial SO2 emissions and emissions density. Using the structural EKC model makes it possible to reveal how various factors contribute to the industrial SO2 emissions density – namely, the three commonly known structural determinants and the marginal impact of international trade. International trade proves to have a two-fold impact: a significantly negative direct one and an indirect one that is dependent on the current capital–labour abundance ratio and on the income level of each province.

In this paper, we empirically investigate the impact of the Kyoto Protocol on CO2 emissions using a sample of 170 countries over the period 1992–2009. We propose the use of a difference-in-differences estimator with matching to address the endogeneity of the policy variable, namely Kyoto commitments. Countries are matched according to observable characteristics to create a suitable counterfactual. We correspondingly estimate a panel data model for the whole sample and the matched sample and compare the results to those obtained using an instrumental variable approach. The main results indicate that Kyoto Protocol commitments have a measurable reducing effect on CO2 emissions, indicating that a treaty often deemed a ‘failure’ may in fact be producing some non-negligible effects for those who signed it.

Universal access to modern energy services, in terms of access to electricity and to modern cooking facilities, has been recognized as a fundamental challenge for development. Despite strong praise for action and the deployment of large-scale electrification programs and improved cookstove (ICS) distribution campaigns, few studies have shed light on the barriers to, the enablers of and the impacts of access to energy on development outcomes, using rigorous methodologies. This paper reviews this recent strand of research, trying to fill these gaps. The authors focus on the demand-side and household perspective. Their main outcomes of interest are electricity connection and ICS adoption for the analysis of barriers, time allocation, labor market outcomes and welfare for the impact analysis. They provide evidence of significant wellbeing impacts of electrification and mixed evidence for cookstoves.

This paper examines the nature of community management of woodlots and investigates the determinants of collective action and its effectiveness in managing woodlots, based on a survey of 100 villages in Tigray, northern Ethiopia. Despite limited current benefits received by community members, the woodlots contribute substantially to community wealth, increasing members' willingness to provide collective effort to manage the woodlots. We find that benefits are greater and problems less on woodlots managed at the village level than those managed at a higher municipality level, and that the average intensity of management is greater on village-managed woodlots. The factors that do significantly affect collective action include population density (higher collective labor input and lower planting density at intermediate than at low or high density), market access (less labor input, planting density and tree survival where market access is better), and presence of external organizations promoting the woodlot (reduces local effort to protect the woodlot and tree survival). The finding of an inverse U-shaped relationship between population density and collective labor input is consistent with induced innovation theory, with the increased labor/land ratio promoting collective effort to invest in resources as population density grows to a moderate level, while incentive problems may undermine collective action at high levels of population density. These findings suggest collective action may be more beneficial and more effective when managed at a more local level, when the role of external organizations is more demand-driven, and when promoted in intermediate population density communities more remote from markets. In higher population density settings and areas closer to markets, private-oriented approaches are likely to be more effective.

Resource conservation programs have often been launched without careful evaluation of farmers' intertemporal tradeoffs in undertaking conservation investments. Such investments often have long pay back periods and reduce short-term household incomes. The critical question is whether long-term benefits would be sufficient to compensate farmers' immediate costs. Lack of empirical data on crop responses to soil erosion has hindered policy-relevant research. This study uses empirical data from the Ethiopian highlands to estimate the damage from soil erosion and evaluate the profitability of proposed conservation investments. A farm-level model is developed to study economic incentives to implement proposed conservation methods. Results show that incentives to invest in conservation practices are very low except for low cost methods like grass strips. The yield penalty due to area loss and high investment costs contribute to this. Policies focusing on minimizing the area loss effect and subsidizing the initial investment costs are shown to improve farmers' incentives to conserve the soil. A preferred policy option in the short-term is supporting low cost technologies that provide short-term benefits to poor farmers.

Is international migration an adaptation strategy to sudden or gradual climatic shocks? In this paper we investigate the direct and the indirect role of climatic shocks in developing countries as a determinant of out-migration flows toward rich OECD countries in the period 1990–2001. Contrarily to the bulk of existing studies, we use a macro approach and explicitly consider the heterogeneity of climatic shocks (type, size, sign of shocks and seasonal effects). Our results show that the occurrence of adverse climatic events in origin countries has significative direct and indirect effects on out-migration from poor to rich countries.

Maize originated in Mexico, where it is typically grown in association with other crops in the milpa system. This ancient mode of production is practiced today in ways that vary by cultural context and agro-environment. We use a choice experiment to estimate farmers' valuation of three components of agrobiodiversity (crop species richness, maize variety richness, and maize landraces) in the milpa system, and examine their interest in cultivating genetically modified (GM) maize. We apply a latent class model to data collected from 382 farm households in the states of Jalisco, Oaxaca, and Michoacán to analyze the heterogeneity of farmer preferences. We identify the characteristics of farmers who are most likely to continue growing maize landraces, as well as those least likely to accept GM maize. Findings have implications for debates concerning the introduction of GM maize and the design of in situ conservation programs in these sites.

The effectiveness of adaptation strategies is crucial for reducing the costs of climate change. Using plot-level data from a specifically designed survey conducted in Pakistan, we investigate the productive benefits for farmers who adapt to climate change. The impact of implementing on-farm adaptation strategies is estimated separately for two staple crops: wheat and rice. We employ propensity score matching and endogenous switching regressions to account for the possibility that farmers self-select into adaptation. Estimated productivity gains are positive and significant for rice farmers who adapted, but negligible for wheat. Counterfactual gains for non-adapters were significantly positive, which is potentially a sign of transactions costs to adaptation. Other factors associated with adaptation were formal credit and extension, underscoring the importance of addressing institutional and informational constraints that inhibit farmers from improving their farming practices. The findings provide evidence for the Pakistani Planning and Development Department's ongoing assessment of climate-related agricultural losses.

Mumbai, the largest metropolitan city in India, generated 6,256 tons of waste per day in 2001. It is the responsibility of the Municipal Corporation of Greater Mumbai (MCGM) to provide Municipal Solid Waste (MSW) management services; however, the MCGM is not able to handle the increasing quantity of waste. As a result, waste litters all over the place giving rise to health and environmental problems. Hence, there is a need to involve private sector and community participation in waste management. In this paper, a linear programming model is developed to integrate different options and stakeholders involved in MSW management in Mumbai. Various economic and environmental costs associated with MSW management are taken into consideration while developing the model.

To reduce plastic bag litter, China introduced a nationwide regulation requiring all retailers to charge for plastic shopping bags on 1 June 2008. By using the policy implementation as a natural experiment and collecting individual-level data before and after the implementation, we investigate the impacts of the regulation on consumers’ bag use. We find that the regulation implementation caused a 49 per cent reduction in the use of new bags. Besides regulation enforcement, consumers’ attitude toward the regulation and some consumers’ socioeconomic characteristics also affected bag consumption. However, the regulation effects differ largely among consumer groups and among regions and shopping occasions.

Estimating the potential impacts of climate change requires understanding the ability of agents to adapt to changes in their climate. This paper uses panel data from India spanning from 1956 to 1999 to investigate the ability of farmers to adapt. To identify adaptation, the author exploits persistent, multidecadal monsoon regimes during which droughts or floods are more common. These regimes generate medium-run variation in average rainfall, and there is spatial variation in the timing of the regimes. Using a fixed-effects strategy, she tests whether farmers have adapted to the medium-run rainfall variation induced by the monsoon regimes. The author finds evidence that farmers adjust their irrigation investments and their crop portfolios in response to the medium-run rainfall variation. However, adaptation only recovers a small fraction of the profits farmers have lost due to adverse climate variation.

This study combines hydrological modeling with applied micro-econometric techniques to value a complex ecosystem service: drought mitigation provided by tropical forested watersheds to agrarian communities. Spatial variation in current baseflow allows estimation of drought mitigation values as the marginal profit accruing to agricultural households. The paper shows that this uncommon focus on producer (not consumer) surplus measures is appropriate for valuation as long as markets for commodities related to the environmental services are complete. For the typical household, the estimated marginal profit is positive, validating the central hypothesis that baseflow makes positive contributions to agricultural profits. There is some evidence, however, that increased watershed protection will increase profits through greater baseflow only in watersheds with a unique mix of physio-graphic and climatic features. The paper evaluates and provides some support for the hypothesis, put forward by hydrological science and the Indonesian Government, that protected watersheds can supply latent and unrecognized ecosystem services to local people.

This article offers an account of the economics of the environment. I sketch the subject's motivation and scope, and try to identify what we know and what we don't as yet know about matters of concern. This demands brazen selection, and I haven't avoided it: for the most part, the article explores the interface of rural poverty and the environmental resource-base in poor countries. A contrast is drawn between geographically localized resources and the global commons. The role of property rights, both private and collective, and their implied resource allocation mechanisms are studied. Criteria for social cost–benefit analysis of projects and policies are derived, and their link with the concept of net national product is drawn.