This article investigates the use of payments for environmental services to support a wildlife corridor between two Priority Tiger Conservation Landscapes in central Sumatra, Indonesia. Several hundred smallholders operate within a Protection Forest linking the Tiger Conservation Landscapes. This study explores the willingness of these smallholders to accept a payment requiring them to forgo access to their land for five years. In addition to asking households directly what they would be willing to accept (WTA), we also ask them to infer what their neighbour would accept. The study finds evidence of hypothetical bias in the conventional WTA values, with a statistically significant difference between what people say they would be willing to accept when surveyed, compared to what they say would actually be willing to accept in a ‘real life’ situation. We show how inferred valuation techniques can mitigate against this.

Since 2007, Burkina Faso's mining sector has grown quickly, with gold replacing cotton as the country's biggest export. The decline in gold prices since 2012, however, has hit the Burkina Faso economy hard. Using a static computable general equilibrium model, we assess whether – in a context of gold-price decline and volatility – an increase in the tax burden on the mining sector, as implemented by the government of Burkina Faso, is the appropriate way to avoid the natural resource curse. The results show that a tax policy based solely on increasing taxes on the gold sector brings only limited economic benefits, notably in terms of employment, and fails to significantly mitigate the effects of gold-price volatility.

Finding the ways that work to deliver the innovation needed should be given parity of esteem with getting the prices right as a focus of the economics profession and policy systems. Learn from experience as regards carbon pricing and carbon-reducing innovation; insights from the latter coming mainly from the US, China and Europe; demographically relatively small countries – Denmark (wind) and Australia (solar PV) – can make outsize contributions. A carbon price ceiling is too low to drive innovation; generating carbon-reducing innovation requires that it be explicitly recognized as a priority, and nurtured accordingly: identify the priority area(s) where innovation at scale will be necessary to make progress; baseline the elements of the innovation ecosystem which are already in place, and the gaps that need to be filled. Key elements include institutions and incentives that promote innovation, a research and enterprise community that make it happen, and a supportive public.

Honduras is vulnerable to catastrophic losses associated with landslides and flooding in the aftermath of hurricanes (Fifi in 1974 and Mitch in 1998, most recently). Taking a watershed-scale approach to targeting conservation programs to promote stability on cropped steeplands in rural southern Honduras would reduce landslide and flooding risks, thus protecting export-earning downstream industries and investments. A case study of the Land Use and Productivity Enhancement project (1990–1998) was conducted to estimate the costs of extension programming to promote three conservation technologies – mulching, vetiver grass barriers, and rock walls – and to assess their efficacy (i.e., cost per ton of soil saved). Geographic Information System mapping tools were applied to suggest conservation priorities for steepland sites that are the most prone to landslides, both to maximize the soil saved per hectare protected and to minimize downstream damages.

Climate change is considered to be one of the most significant and complex challenges facing the world in the twenty-first century. As such, it is essential to increase the knowledge base regarding climate change and how best to address its impacts through efficient policies. This special issue, which is divided into two parts – published in the previous and current issues of Environment and Development Economics – is a selection of papers related to ‘The Economics of Climate Change and Sustainability’, the topic of an international workshop organized by the Economics Department of the University of Bologna in April 2018. The papers in this special issue cover a wide range of climate-change-related topics, including endogenous growth and overlapping generation models; climate-related financing and green bonds; demography; location decisions and technology diffusion; quantitative relationships and experimental approaches. They aim at providing new insights into the economics of climate change and help to identify new directions for future research.

This study aims to examine the interannual variation in fish biomass and to estimate the maximum sustainable yield (MSY) for the marine fisheries of Kerala, India. Although the productivity of a fishery is known to be dependent on species diversity, this relationship is not widely documented. This paper uses an extended Gordon–Schaefer model that is modified to incorporate species diversity to estimate the MSY levels of catch and the corresponding fishing effort. Species diversity is expressed as both biological and bioeconomic diversity using the Simpson index. The model reports that the actual fishing effort has exceeded the maximum level necessary to support sustainable yield, while the maximum level of catch for maintaining sustainable yield is not known. A comparison of fish landings and effort data across different fishing techniques indicates that there is a potential to decrease the current level of fishing effort without experiencing a significant decline in fish catch.

There is increasing concern that the intensification of cereal production in northern Nigeria is threatening the sustainability of the agricultural environment. This article describes the effects of trade restrictions on grain imports and of fertilizer subsidy on households' decisions, and draws implications for degradation of the agricultural environment. It develops social accounting matrices (SAMs) for two household types as the basis for capturing the structure of resource allocation, cropping choices, and input use, and then uses the SAM to simulate household responses to changes in relative grain prices and fertilizer prices. Both simulations, but particularly the fertilizer price change, favour the shift from cereals to legumes. A third simulation reflecting technical change in legumes results in the largest shifts from cereals to legumes. It is concluded that appropriate policy reforms complemented by technical change will increase diversification of the cropping system and reduce inefficient fertilizer use. The cumulative effects of these changes will improve soil nitrogen and organic matter and help break the pest and disease complex, thereby improving the agricultural environment.

This paper models joint implementation (JI) for emission reduction between a developed and a developing country. When the per unit price of JI abatement is negotiated, the relative pay-offs deviate from the ratio of bargaining powers. When firms bargain, country-wise gains can increase with a greater abatement target. But if the governments bargain, the developing country's gains increase at the expense of the developed country as the target increases. However, the Pareto optimal JI can be achieved only when the governments negotiate over both abatement and transfer.

A growing population and growing per capita consumption threaten the environment and the natural resource base. Where natural resources are at risk, the livelihoods of many are at risk as well. In May 2006 the Environmental Economics and Natural Resources Group of Wageningen University organized a conference on ‘Poverty, Environment and Natural Resource Use’ with the aim of contributing to a better understanding of the links between poverty and the natural resource base. The state of the environment affects people's living conditions – and poverty affects environmental quality. Environmental policies cannot be designed and natural resources cannot be managed without appropriate consideration of local people's reactions to those policies and management decisions.

The deployment of cleaner production technologies is supposed to be crucial to mitigate the effect of climate change. The diffusion of technology from developed to developing countries can be done through different channels. It can be a business decision such as firms' relocation, opening of a subsidiary or the adoption of technology by southern firms, or it may be decided at the government level. This paper investigates, in a two-country model (North and South), the relationship between the diffusion of mitigation technologies, firms' relocation and the environment. We assume that both countries implement a carbon tax and there are two kinds of production technology used: a relatively clean technology and a dirty one. This paper theoretically shows that the technology diffusion by technology adoption, public transfer or subsidiary creation induces a decrease in relocation, while technology diffusion via purchasing dirty southern firms may increase the number of relocated firms. The paper also demonstrates that technology diffusion may have perverse effects in the long run. Indeed, total emissions may increase with technology diffusion since southern firms become more competitive.

Coral bleaching is associated with large income shocks and a substantial decrease in protein consumption among the affected fishery households in Indonesia [Chaijaroen (2019) Long-lasting income shocks and adaptations: evidence from coral bleaching in Indonesia. Journal of Development Economics136, 119–136]. According to the health and economics literature, early childhood exposures to shocks such as those from coral bleaching can have long-lasting effects on health, schooling, and other later-life outcomes. This paper explores how the mass coral bleaching in 1998 affected household decisions on fertility and child development. Using the Indonesian Family Life Survey (IFLS) and a triple differences approach, results from 2000 suggest an increase in fertility and an increased likelihood of severe childhood stunting among the affected households. For comparison, rainfall shocks are associated with a decrease in fertility and smaller adverse effects on child health and schooling outcomes. This study suggests that the effects of coral bleaching might have been underestimated, and our findings yield more targeted policy recommendations on climate shock mitigation.

The notion of intertemporal h-option value is introduced to extend to environmental decision-making problems of the concept of quasi-option value, defined by Arrow and Fisher and Henry, whenever an individual faces imprecise information, or hard uncertainty, represented by a non-additive measure over events. Under hard uncertainty and irreversibility, the decision-maker faces the intertemporal h-option value, that is an uncertainty premium of preservation, which represents the gain from being able to learn about the future consequences of irreversible actions. The intertemporal h-option value is a correction factor that has to be taken into account in evaluating the total economic value of feasible actions.