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.

Insights on the indirect effects of the COVID-19 pandemic are critical for designing and implementing policies to alleviate the food security burden it may have caused, and for bolstering rural communities against similar macroeconomic shocks in the future. Yet estimating the causal effects of the pandemic is difficult due to its ubiquitous nature and entanglement with other shocks. In this descriptive study, we combine high-resolution satellite imagery to control for plot-level rainfall with household socio-economic panel data from 2014, 2016, 2019 and 2020, to differentiate the effect of the pandemic from climatic shocks on food security in Morogoro, Tanzania. We find evidence of decreased incomes, increased prices of staple foods, and increased food insecurity in 2020 relative to previous years, and link these changes to the pandemic by asking households about their perceptions of COVID-19. Respondents overwhelmingly attribute economic hardships to the pandemic, with perceived impacts differing by asset level.

While mitigation efforts in developed and emerging economies are necessary in order to meet ambitious climate targets, the international community strives to explore strategies to help the most vulnerable populations to cope with the short-term and long-term impacts of climate change. In the perspective of the 21st COP of the UNFCCC (Paris, December 2015), this Special Issue on ‘Climate change mitigation and adaptation in developing and transition countries’ addresses two complementary topical issues. On the one hand, migration – international and internal – and remittances are analyzed as adaptation strategies for vulnerable households and individuals. On the other hand, climate policies in emerging economies are examined in light of their distributional impacts for households and of the strategic issues they may raise. This special issue introduces five papers with a diversity of approaches, e.g., game theory, econometric modeling and computable general equilibrium (CGE) modeling.

Environmental policies are characterized by salient short-term costs and long-term benefits that are difficult to observe and to attribute to the government's efforts. These characteristics imply that citizens’ support for environmental policies is highly dependent on their trust in the government's capability to implement solutions and commitment to investments in those policies. Using novel survey data from Mexico City, we show that trust in the government is positively correlated with citizens’ willingness to support an additional tax approximately equal to a day's minimum wage to improve air quality and greater preference for government retention of revenues from fees collected from polluting firms. We find similar correlations using the perceived quality of public goods as a measure of government competence. These results provide evidence that mistrust can be an obstacle to better environmental outcomes.

This paper sets up a dynamic model to study the distributive effects of privatizing an open access resource. We show that with or without discounting, privatization is not always Pareto improving. We further derive conditions under which the poor are made worse off when private use rights are equally distributed compared to a situation with open access resource. These conditions imply that privatization is Pareto improving if the natural resource is sufficiently productive, inequality in alternative private project opportunities is low, and if there is no discounting. In addition, we show that once reduction in income from resource harvesting during the transition to a new steady state is accounted for, privatization is desirable for the poor only for very productive natural resources and low discount rates.

This paper estimates a theory-based regression model which studies the macro-economic impact of environmental and consumption risks on consumption growth in the Mediterranean region. The analysis is carried out using time series aggregate data for 13 Mediterranean countries over the period 1965–2008. The results indicate that both risks and their interaction significantly influence consumption dynamics. The estimates of the indices of relative risk aversion and relative prudence, as well as the relative preference for the quality of environment, suggest marked cross-country heterogeneity.

Small-scale fisheries (SSFs) are significant for poverty alleviation, but are threatened by over-exploitation and climate change effects such as drastic drops in regrowth rates. How will fishers adapt? To shed light on this, we ran a common-pool resource experiment with SSF fishers in Thailand. Our results show that groups confronted with a potential abrupt drop in the regrowth rate are more likely to form cooperative agreements compared to groups not confronted with such a drop, which theory cannot predict. However, groups that form cooperative agreements do not necessarily manage the resource efficiently; many groups under-exploit. Over-exploitation is driven by individual characteristics, e.g., if individuals can diversify income, and if they are born outside the village. We conclude that more systematic exploration of the role of socio-economic factors, and how these factors interact with ecological conditions facing fishers, are needed. Our work can be seen as one step in this direction.

This paper addresses the design of corrective taxation schemes to manage multiple, interacting stocks. In the setting of irrigation-induced salinity, a collective groundwater stock aliments a set of individual rootzone salt stocks. It is shown that the policy maker does not need to base the tax rule on the individual salt stocks. Indeed, taxes based on the level of input and on the collective stock induce the agents to achieve the socially optimal irrigation path. An even simpler instrument is sufficient if the policy-maker's goal is to reach optimality at the steady state only.

Developing countries are known to exploit their resource frontier to achieve growth objectives and reduce poverty. This can lead to long-term positive outcomes or – if resource exploitation is unsustainable – lose–lose outcomes that leave populations and ecosystems worse off. This paper introduces a dynamic model of resource exploitation to explain how regions may succumb to, avoid or escape this negative outcome. The theoretical model characterizes a frontier community that uses soil as an input into agricultural production. The model shows that there may be a critical point in the soil stock that determines whether agricultural activities lead to sustainable development or a collapse in local income. This suggests that, in the event of a resource collapse, temporary adjustments to the system may permanently rehabilitate the resource base and change a community's development pattern. Calibration of the model to several frontier states of the Brazilian Amazon points toward an overall outcome of steady development.

In any discussion of the great challenges facing humanity in addressing global environmental problems, a small number of topics automatically rise to the top: climate change, the loss of biodiversity, and the sustainability of the services ecosystems provide us. But no threats to human welfare are more urgent than those posed by infectious diseases; we suffer already the devastating consequences of the emergence of new diseases such as HIV, the reemergence of old ones such as tuberculosis, and simply the increasing toll of endemic diseases such as malaria. Non-human animals play fundamental roles in the spread of many of these diseases – as reservoirs, as vectors, and as cauldrons for the creation of new types. Land-use practices and environmental management both affect the persistence and spread of endemic diseases, such as malaria. Furthermore, as animal populations increase their ranges, due to climate change and human-facilitated alien introductions, the potential for disease spread also increases. These factors, together with the increasing mobility of the human population, conspire to make these environmental problems of great and immediate concern.

This study applies the hedonic pricing model to property sales in the township areas in Windhoek, the capital city of Namibia, where municipal authorities have pursued a programme of selling plots of land to settlers in order to encourage them into a formalized economic situation. We find that, apart from house quality, access to the central business district, access to marketplaces and access to transportation, environmental quality also has a large impact on property prices. Properties located close to a garbage dump sell at considerable discounts, while properties located close to a combined conservation and recreation area sell at premium prices. The results thus suggest that the hedonic pricing method can be useful for studying townships in developing countries, and that this can help to clarify the importance of environmental factors which are otherwise frequently neglected in town planning for township settlements.

This paper offers a quantitative assessment of the impacts of the COVID-19 pandemic-induced lockdown and government fiscal plan, containing ‘green’ elements on the economy and the environment of South Africa. The analysis uses a dynamic computable general equilibrium model operationalised using a social accounting matrix coupled with a greenhouse gas balance and emissions data. We find that while the economy is harshly impacted by the pandemic in the short term, the government fiscal package ameliorates and cushions the negative effects on poor households. Importantly, an adaptation of the fiscal package towards a ‘greener’ policy achieves the same economic outcome and reduces unemployment. Carbon dioxide emissions decrease in the short run due to economic slowdown. This improvement persists until 2030. These results can be used as decision support for policy makers on how to orient the post COVID-19 policies to be pro-poor and pro-environment, and thus, ‘build back better and fairer’.

Advocated across the international community for more than 15 years, the Extractive Industries Transparency Initiative (EITI) is now widely recognised as a hallmark anti-corruption scheme in the extractive sector. This study presents an assessment of the relationship between EITI membership and countries’ progress in tackling corruption. It provides the first study that looks at this issue using a ‘state-of-the-art’ indicator called the Bayesian Corruption Indicator. It also introduces an innovative estimation strategy combining entropy balancing with a difference-in-difference framework to address the baseline inequalities that exist between member and non-member countries. Contrary to the findings of many leading studies, this analysis finds corruption scores have improved significantly among EITI member countries. In particular, the evidence is strongest when we examine a sub-group of EITI members designated fully compliant with the initiative's transparency standards.

This special issue contributes to the natural resource economics literature by shining a light on the specific challenges and opportunities faced by developing countries that have recently become dependent on natural resources or are particularly exposed to climate change. It is composed of five studies on countries from all regions of the developing world, involving a variety of natural resources and policy issues. Four of the five studies illustrate how computable general equilibrium models are particularly well-suited, despite their relatively limited past use, to the analysis of natural resources. All five studies are led by researchers based in these countries, providing unique insights into the specific local context. The studies underscore the extreme vulnerability that the introduction of significant natural resource revenues and climate change can create in developing countries. They also show how the choice of appropriate policies to avoid the resource curse varies according to country-specific economic conditions.

In July 2014 a group of 14 countries (the ‘Davos Group’) launched negotiations on liberalizing trade in ‘green goods’ (also known as environmental goods – EGs), focusing on the elimination of tariffs for a list of 54 products. With an average tariff of 1.8 per cent, this group has little to offer even if the list were extended to the 411 products on the ‘WTO list’. Taking into account tariff dispersion, their tariff structure on EGs would be equivalent to a uniform tariff of 3.4 per cent, about half the uniform tariff-equivalent for non EGs products. Enlarging the number of participants to low-income countries might be possible as, on average, their imports would not increase by more than 8 per cent. Because of the strong complementarities between trade in EGs and trade in environmental services, these should also be brought into the negotiation in spite of the likely difficulties in reaching agreement on their scope.

To improve wildlife conservation incentives in community-based natural resource management programs, a better understanding of rural communities' willingness to engage in wildlife conservation jobs is needed. We implement a discrete choice model explaining reservation wages for nine conservation jobs using contingent behavior data from rural Botswana residents. We present a model in which the conditional indirect utility function incorporates a more general value of time than has previously been used, and this specification outperforms the standard model. Sample estimates indicate that reservation wages are modestly higher for women than for men, and that residents have higher reservation wages for jobs requiring more exertion or involving more danger.