We study entry policies as an alternative form of environmental policy. Given the strong political opposition to standard output subsidies and taxes, several countries have recently used entry policies to promote renewable energy technology, such as solar panels and biofuels. We study a two-stage game in which two regulators choose an entry policy (i.e., tax, subsidy or permit) to maximize domestic welfare. Observing the policy, firms decide the region in which to enter and compete as Cournot oligopolists. We find that both domestic (uncoordinated) policies and internationally coordinated policies increase welfare relative to unregulated settings. However, the welfare gains from international policy coordination are only large when the product is extremely clean. These results indicate that the welfare gains of international policy coordination may only offset the costs of negotiation in relatively clean industries.

We examine how the composition of residential energy consumption and its sensitivity with respect to income changes. The paper characterizes the energy transition, analyzing the behavior of income elasticity of energy demand along the economic development stages by fuel types. The results indicate a nonlinear relationship between income and domestic energy consumption that can be explained by two factors. First, along the income distribution, consumption of modern fuels increases, replacing traditional and transitional fuels until modern fuels drive all of the growth in domestic energy demand. Second, at the highest income levels, income elasticity starts to decrease, leading to concavity in energy consumption. That is, the income elasticity of residential energy demand follows an inverse U-shape along the world income distribution. This finding suggests that at high income levels, residential energy consumption shows satiation and net energy-saving effects.

This paper seeks to understand the link between resource governance and investor expectations in resource-rich countries. We test whether voluntary membership in the Extractive Industries Transparency Initiative (EITI), a public-private partnership that promotes transparency and accountability in the extractives sector, behaves as a credible signalling mechanism to investors that governments in resource-rich countries can manage resource revenue and adhere to sustainable fiscal policies in the medium and long run. Using an interrupted time series analysis coupled with a fixed effects model, we examine whether investor expectations on the price of sovereign debt behave as a credible signalling mechanism in the presence of certain conditions. Results indicate that in some cases there is a significant change in spread on the default price of sovereign debt as a result of announcement of either EITI candidacy or EITI compliance. However, it is clear that EITI membership alone is not a sufficient signal to investors that a country can effectively manage its resource revenues in the long run because the result of EITI implementation is heavily influenced by country-specific conditions.

This paper studies the implications of distortions in intertemporal margins for the conduct of climate policy. We do so by introducing a framework that combines a standard two-period overlapping generations (OLG) model with a tractable model of household heterogeneity, in which over-accumulation of capital arises from uninsurable idiosyncratic labor income risk. We illustrate that market-based climate policies must be adjusted when the government cannot provide full insurance to households by taxing only capital and is constrained to transfer resources across generations for risk-sharing. In a numerical exercise, we find that idiosyncratic risk leads to an optimal capital income tax rate of 35 per cent and a carbon price 7.5 per cent lower than its first best.

We investigate the relative efficiency of an agreement based on a uniform standard without transfers and one based on differentiated standards with transfers when strictly identical countries deal with transboundary pollution. We especially ask what role fixed cost plays. Two approaches are examined: the Nash bargaining solution, involving two countries, and the coalition formation framework, involving numerous countries and emphasizing self-enforcing agreements. In the former, in terms of welfare, strictly identical countries may wish to reduce their emissions in a non-uniform way under the differentiated agreement. For this result to hold, the fixed cost of investment in abatement technology must be sufficiently high. The nature of the threat point of negotiations, however, also plays a crucial role. As concerns global abatement, the two countries abate more under the uniform agreement than under the differentiated one. In terms of coalition formation when numerous countries are involved, a grand coalition could emerge under a differentiated agreement.

This study constructs comprehensive operational equitable initial rights of emissions allocation models by estimating the total abatement cost based on the criteria of egalitarianism, sovereignty, the ability to pay, polluter pays and various scenarios of the Greenhouse Development Rights (GDRs) framework among groups of countries or individual nations. The analyses provide the potential crux regarding the agreements, cooperation and/or conflict among nations for joining the trading. The results show that the polluter pays principle generates the greatest total abatement cost saving for upper-middle and low-middle income nations, but not for others. Full capacity GDRs apply to China, egalitarianism to India and sovereignty to the United States on an individual basis. The results show that the disagreement and gaps with regard to an equitable initial allocation of rights among groups or individual nations is one of the possible obstructions and hindrances to the promotion and formation of a world trading scheme.

A major issue in international multilateral negotiations is the creation of a fund for the fair and equitable sharing of benefits arising out of the utilization of plant genetic resources for food and agriculture (PGRFA). This paper provides a conceptual understanding of the economic value of PGRFA, identifies proxies for this value that can be used to determine the relative contribution of each country to the benefit-sharing fund, and evaluates the suitability of each proxy to this task.

In this project, an attempt is made to estimate the costs and benefits of managing forested catchments in Malaysia. Three land use options are simulated for four selected catchments in the Hulu Langat Forest Reserves (HLFR), Selangor, Malaysia. These options are no logging or catchment protection (CP), reduced impact logging (RIL) and conventional logging (CL). The potential sedimentation impacts of each option on the dam and water intake ponds in the catchments are calculated. The benefits derived from logging, hydro-electric power (HEP) generation and the water regulatory dam for water treatment and the external costs emanating from the sedimentation under the three options are estimated. The computations are based on data collected from previous studies conducted in adjacent areas with similar hydrological parameters, secondary data from published reports by various departmental agencies and from on-site personnel surveys.

The structure of stated preference questions to value consumption from public infrastructure can vary depending on the conditions of consumption facing the household. Specifically, a good could be offered as a quasi-public or quasi-private good. This paper demonstrates how consumption from two alternative electricity allocation options can be valued using two types of stated preference questions. Since surveyed households were asked two types of questions, the authors develop a joint model of a contingent valuation question and a contingent quantity behavior response that allows for correlation in error terms across models. In their application to two villages in Rwanda, the authors find higher WTP for electricity consumed as a quasi-private good rather than a quasi-public good, with four hours of electricity per day, only in the evening. They also find correlation in the error terms across the two models, suggesting that their joint estimator is more efficient than estimating each model individually.

This study analyzes the costs borne by Malaysian palm oil mills (POMs) in order to reach standard levels. A number of studies have been conducted on Malaysian palm oil mills; however, none has obtained the marginal abatement cost (MAC) through an estimated total cost function. More particularly, as far as inflation is concerned, the effluent-related fee and effluent charge specified have not been revised within the past two decades. In addition, to our knowledge, there has not been any study comparing MAC to the mills of the two different methods of disposal, namely watercourse and on land. Our results show that, to force POMs to meet the standard, the effluent charge must be set higher, equaling the MAC. While the results show the existence of economies of scale in abatement activity, setting the effluent-related fee equal to the MAC may encourage mills to further abate their water pollution.

This study investigates the impacts of the COVID-19 lockdown on municipal solid waste (MSW). Based on a unique data set of daily discarding records of 252 communities in Beijing, China, we conduct a difference-in-differences estimation and find that the total daily MSW decreased by 134.16 kg in a community, which is equivalent to at least 0.22 kg per household per day, and the average weight of MSW per package decreased by 56.8 per cent after the COVID-19 lockdown. We consider a series of potential mechanisms, such as MSW hoarding, shifts in discarding time, and fear of going out, and find the most support for consumption pattern shifts with reduced consumption. We then discuss the effect of the lockdown on the reduction of MSW generation because of the strict restriction of consumption. We also conduct various heterogeneity analyses. Our results present clear implications for municipal waste management by highlighting the effect of the lockdown on the generation of MSW and the underlying consumption mechanism.

Allowing water to be traded in an irrigation system with de facto riparian rights can increase the efficiency of water use. With irrigation supplementing uncertain rainfall, both supply and demand for water are uncertain. When rainfall events are positively correlated, water supply and demand movements are negatively correlated, causing large price fluctuations. Using a stylized two crop, two region irrigation system, numerical integration over a bivariate rainfall distribution is used to demonstrate the impact of varying rainfall correlation on water price, expected returns, and return variability. A spot market for water captures the majority of the returns to water rights transfers, relative to a complete market. This spot market results in higher returns and reduced return volatility for farmers in the water deficit region, while farmers in the water surplus region see greater returns but also greater return volatility.

Most decisions involving risk are not taken in isolation. In addition to the risk from that decision, other independent, so-called ‘background’ risks, are considered. Our research adds to the growing evidence that this background risk influences risk-taking. We report results from a repeated lab-in-the-field investment task with Senegalese fishers in the presence of background risk related to their fishing income and their health. Our measure of background risk is the monthly wind condition. Without controls, we find that fishers act on average intemperately. Adding controls, we find that the impact of background risk on risk-taking—measured as the investment in the investment task—depends on the boat size of the fishers. When dividing the sample according to wealth, we find temperate behavior for the relatively poorer group and intemperate behavior that depends on boat lengths for the relatively richer group. Our results show the interrelations between background risk and context factors.

This study aims to understand how Rwandan farmers value the improved characteristics of climate services introduced to them in a choice experiment setting. Data were collected from 1,525 household heads in November 2019. A random parameters logit model was used to analyze the data. Results suggest that Rwandan farmers value forecast accuracy, dissemination through a combination of extension agents and the Participatory Integrated Climate Services for Agriculture process, and bundling with market price information. This study suggests that to improve agricultural management planning and food security of farmers through the provision of climate services, these services need to be accurate, user-tailored, and accessible.

This paper investigates how poverty reduction and natural resource preservation can be simultaneously achieved in a small open dual economy with urban wage rigidity, open access rural resources, and rural-urban migration. An increase in the export tax rate on the rural resource good increases urban unemployment in both the short run and the long run with resource dynamics. Given the institutional failures, the first-best policy is an urban wage subsidy combined with either a rural wage subsidy at a lower rate or, if the urban output price is sufficiently high, a rural tax. When the institutional failures can be resolved endogenously, an increase in the export tax on the resource good can induce rural institutional change away from open access. However, tariff protection of urban manufacturing hinders such a rural institutional change.

This paper investigates the possibility of using public works to stimulate farmers' fertiliser use in India's SAT. Inadequate replenishment of removed nutrients and organic matter has reduced fertility and increased erosion rates. Fertiliser use, along with other complementary measures, can help reverse this process, which ultimately leads to poverty, hunger, and further environmental degradation. In a high-risk environment like India's SAT, there may be a strong relation between off-farm income and smallholder fertiliser use. Farmers can use the main source of off-farm income, wage income, to manage risk as well as to finance inputs. Consequently, the introduction of public works programmes in areas with high dry-season unemployment may affect fertiliser use. This study confirms the relevance of risk for decisions regarding fertiliser use in two Indian villages. Nevertheless, governments cannot use employment policies to stimulate fertiliser use. Public works even decrease fertiliser use in the survey setting.

The design of a Payment for Environmental Services (PES) scheme that involves setting a ‘pseudo market price’ per unit of environmental service requires the estimation of demand and supply. This paper presents the results of discrete choice experiments aimed at estimating the demand for environmental and social services generated by a wildlife protection PES scheme in two protected areas in Lao PDR. The discrete choice experiments targeted international tourists sampled at Vientiane airport and the urban Lao population sampled in Vientiane City as potential buyers of the environmental and social services provided by the PES scheme. The survey was customised to a developing country context to address diversity in respondents' literacy levels, language limitations of the interviewers, socio-cultural conventions, and limited trust in confidentiality and anonymity of the survey process. The marginal benefits of the environmental services so estimated were used to inform the development of a PES scheme.

Greater ecosystem complexity is recognized by studying a two species predator–prey model under two property rights regimes: free entry and a system such as individual quotas which execute an economically optimal solution. A bottom-up management experiment is discussed in the context of Lake Victoria fisheries.

Attitudes towards and acceptance of agricultural biotechnology, which involves inserting genes that carry new traits into existing varieties, has been subject to much debate. This special issue aims to address several gaps in the literature on genetically modified (GM) technology in agriculture. Some of the papers in the issue address the economic and health aspects of genetic modification in agriculture while others examine consumers’ attitudes towards GM products, and the marketing and labeling of GM products.