This study investigates the effects of foreign direct investment (FDI) on emissions of five pollutants in China using a panel data set of 29 provinces over the period 1992–2004. The study applies a simultaneous equations estimation technique to estimate the scale, technique and composition effects of FDI on China's overall and regional pollution emissions. The estimation results show that FDI in general helps reduce pollution emissions in China, contributing largely to its technique effect. Capturing both the direct and indirect technique effects improves the accuracy in assessing the environmental impact of the FDI. The study also finds that the environmental impacts of FDI vary significantly among different regions and for different pollutants in China.

The design and implementation of environmental policy often involve more than one pollutant, and must consider pollution as a byproduct of the production of marketable output. In this paper, we test the implicit assumption in the empirical literature that (1) production of marketable output, pollution and abatement are separable, and (2) different pollutants can be abated separately. Using unique plant-level data in India, we reject the null hypotheses of separability between marketable output and pollutants, and between different pollutants. Firms must incur abatement costs for reducing pollution levels. In addition, complement and substitute relationships between water pollutants are demonstrated with statistical significance.

After reviewing the Kyoto Protocol rules for carbon sequestration accounting and the different carbon accounting methods proposed in the literature for forest management, for reforestation and, more recently, for avoided deforestation or degradation, we discuss possible carbon accounting rules for a post-Kyoto world. We then apply the results of this discussion to micro-applications in an Annex I country (Spain) and in a non-Annex I country (Tunisia), comparing avoided degradation with reforestation alternatives. In both areas we focus on Mediterranean forest, one of the world's hotspots of biodiversity. We calculate CO2 break-even prices, including in the analysis not only commercial values, but also, where these are relevant, existing subsidies. We also investigate social preferences for avoided degradation and reforestation using stated preference methods. Our results support the convenience of a change in focus for European Union subsidies from reforestation to avoided degradation.

The literature on volunteering has increased over the last few years. However, despite the importance of active environmental participation for solving public good and externality problems, there is still a lack of substantial empirical evidence regarding several interesting factors that influence this form of volunteering. This empirical study investigates the area by analyzing a cross-section of individuals from 38 countries using micro-data from wave III of the World Values Survey (1995–1997). The results suggest that individuals' active participation in environmental organizations is related not only to socioeconomic factors but also to political interest. We also find that a higher level of corruption is related to participation in environmental organizations. However, the situation is different for transition countries in which there was a collapse of institutional structures. The energy required to negotiate the ensuing chaos may have crowded out other forms of engagement.

Global forests could play an important role in mitigating climate change. However, there are significant implementation obstacles to accessing the world's forest carbon sequestration potential. The timing of regional participation and eligibility of sequestration activities are issues. The existing forest carbon supply estimates have made optimistic assumptions about immediate, comprehensive, and global access. They have also assumed no interactions between activities and regions, and over time. We use a global forest and land use model to evaluate these assumptions with more realistic forest carbon policy pathways. We find that an afforestation only policy is fundamentally flawed, accelerated deforestation may be unavoidable, and a delayed comprehensive program could reduce, but not eliminate, near-term accelerated deforestation and eventually produce sequestration equivalent to idealized policies – but with a different sequestration mix than previously estimated by others and thereby different forests. We also find that afforestation and avoided deforestation increase the cost of one another.

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.

This study estimates the willingness-to-pay (WTP) of Beijing residents in order to maintain the improved air quality experienced during the Olympic Games. A double-bounded contingent valuation method is applied to a survey of 566 Beijing residents. The results indicate that the mean annual WTP per household is between CNY 22,000 and 24,000, and the median WTP is around CNY 1,700. The WTP for this actually experienced improvement is significantly higher than the results from previous hypothetical WTP surveys in China.

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 paper extends the debate on the environmental performance of developing countries by focusing on a new factor. Theoretically, financial development has capitalization, technology, income, and regulation effects on the environment. Using the provincial panel data of China, the econometric analysis provides some evidence of a linkage between financial development and industrial pollution discharges. In recent years, the environmental performance of China has been significantly improved by financial development and some environmental protection schemes. This relationship offers new implications for policy makers in developing countries.

We estimate the implicit prices of the crime rate and airborne pollution in Chile, using spatially compensating price differentials in the housing and labor markets. We evaluate empirically the impact of different estimation strategies for the wage and rent equations, on the economic value of these two amenities. The results show that increments in the crime rate or in air pollution have a negative impact on welfare and that the estimated welfare measures and their variances are sensitive to selection bias, endogenous amenities and clustering effects. In contrast, the welfare measures do not seem to be very sensitive to the simultaneity bias.

We estimate and quantify the fiscal consequences of natural disasters using quarterly fiscal data for a large panel of countries. In our estimations, we employ a panel vector autoregression framework that also controls for the business cycle. In developed countries, we find fiscal behavior in the aftermath of disasters that can best be characterized as counter-cyclical. In contrast, we find pro-cyclical decreased spending and increasing revenues in developing countries following large natural catastrophes. These pro-cyclical fiscal dynamics are likely to worsen the adverse consequences of natural disasters on middle- and low-income countries. We quantify these dynamics.

We use satellite remote sensing data of grassland cover in Inner Mongolia, China to test whether the existence of and the size of roads in 1995 is associated with the nature of the grassland in 2000 and/or if it affects the rate of change of the grassland between 1995 and 2000. The regression results show that the impact of roads on grassland cover depends on the nature of the resource. When the grassland is composed of relatively high quality grassland, roads lead to degradation, whereas when grassland resources are sparse, access to a road results in the restoration of the resource.

A framework is provided for structuring programs aimed at reducing emissions from deforestation and forest degradation (REDD). Crediting reference levels and the coordination among different implementing entities at multiple geographic scales are discussed. A crediting reference level has an error component if it differs from the business-as-usual (BAU) without REDD. Both the BAU emissions and the impact of REDD actions are uncertain, implying that participating in REDD entails stakeholder risk, the distribution of which depends on REDD program design. To categorize REDD architectures we define scale-neutrality whereby, for a given REDD design, crediting relative to the reference level at a given scale is not affected by errors in reference levels at scales below it. Sufficient conditions are derived for scale-neutrality to hold. A Brazilian Amazon example is provided, comparing potential REDD architectures, and highlighting how a cap-and-trade approach may match the environmental outcome obtainable with perfect foresight of the BAU emissions.

This study uses a global climate-energy-economy model to investigate potential implications of linking credits from reducing emissions from deforestation and forest degradation in developing countries to a global carbon market, focusing on reducing emissions from deforestation (RED) and effects on energy technology innovation. Integrating RED into a global carbon market lowers the estimated total costs of a policy to achieve 535 ppmv of CO2-equivalent concentrations in 2100 by up to 25 per cent. Alternatively, a global RED program could enable additional reductions of about 20 ppmv by 2100 with no added costs compared with an energy-sector-only policy. The results indicate that market linkage of RED induces modest reductions in clean energy innovation overall but slightly enhances development of particular technologies, including carbon capture and storage. We also find that RED in combination with credit banking encourages greater mitigation in the near term, enhancing flexibility to potentially tighten emission targets at lower cost in response to future information.