In this paper we examine the influence of foreign direct investment (FDI) inflows on energy intensities of developing countries empirically. We first replicate a simple ordinary least squares (OLS) estimation, as it is found in the literature, that suggests energy-intensity reductions from FDI inflows. However, the OLS estimation turns out to be spurious and only a starting point for further research. In our regressions we use macro-level panel data on 60 developing countries for the period 1975–2004, including other potential determinants of energy intensities, and carry out robustness checks with more specific data. The results do not confirm the hypothesis that aggregate FDI inflows reduce energy intensity of developing countries. Rather, foreign development aid seems to be related to energy efficiency gains.

This paper analyzes the causes for regulatory compliance, using traditional deterrence variables and potential moral and social variables. We use self-reported data from 459 Tanzanian artisanal fishers in Lake Victoria. The results indicate that the decision to be either a non-violator or a violator, as well as the violation rate – if the latter – are influenced by changes in deterrence variables like the probability of detection and punishment and also by legitimacy and social variables. We also identify a small group of fishers who react neither to normative aspects nor to traditional deterrence variables but persistently violate the regulation.

We use a choice experiment to evaluate a hypothetical irrigation water pricing regime in Karnataka State, India. The proposed regime includes increasing the availability of water in the dry season, increasing irrigation frequency, water sharing with downstream water users, set against the introduction of a semi-volumetric irrigation price. The majority of farmers chose the status quo (SQ) option. Given the large heterogeneity in farmers’ SQ water availability, irrigation practices and current water tax payments, the SQ could not be given a unique baseline interpretation. This poses a potential problem for choice model estimation. By coding the individual SQ situation of farmers, we observed considerable increase in the explanatory power of the choice experiment models. The results may be of general interest for choice experiments of environmental goods and services with heterogeneous spatial distribution, heterogeneous respondents and/or contentious policies that are expected to elicit considerable SQ response.

This paper studies the interactions between harvesters, whose income depends on a renewable natural resource as a key factor of production (e.g., fisheries) and industries that can have important impacts on the renewable resource, but whose production does not depend on it (e.g., off-shore oil extraction) in the context of a growing economy. We examine these issues for a closed economy focusing on how the co-existence between these two sectors affects sustainable development and the well-being of the poor, i.e., the harvesters. We show that under certain conditions the existence and expansion of a resource-impacting industrial sector may be consistent with sustainable development. However, if these conditions are not met, growth of the resource-impacting sector leads to further resource depletion and may even threaten the feasibility of sustainable development.

We estimate the technical efficiency gains of introducing individual quotas (IQs) in fisheries. Our estimates are based on two samples of vessels, considering a potential self-selection bias and controlling for quality changes in landings induced by the IQ system. The results suggest that the introduction of IQs has an important positive impact on fleet efficiency, and that properly measuring this impact requires controlling for the self-selection bias and quality changes induced by the regulatory shift.

This paper assesses the implications of large-scale investments in biofuels for growth and income distribution. We find that biofuels investment enhances growth and poverty reduction despite some displacement of food crops by biofuels. Overall, the biofuel investment trajectory analyzed increases Mozambique's annual economic growth by 0.6 percentage points and reduces the incidence of poverty by about 6 percentage points over a 12-year phase-in period. Benefits depend on production technology. An outgrower approach to producing biofuels is more pro-poor, due to the greater use of unskilled labor and accrual of land rents to smallholders, compared with the more capital-intensive plantation approach. Moreover, the benefits of outgrower schemes are enhanced if they result in technology spillovers to other crops. These results should not be taken as a green light for unrestrained biofuels development. Rather, they indicate that a carefully designed and managed biofuels policy holds the potential for substantial gains.

Given the extensive discussion of China's air pollution and urban income inequality problems, relatively little attention has been paid to any relationship which may exist between the two. This paper seeks to do so, by exploring the existence of environmental equity in China. Specifically, we first calculate traditional measures of urban income inequality (the Gini coefficient and Theil's T and L indices) for the years 1995 and 2004. Then, we estimate ‘pollution-adjusted’ incomes using China-based health functions and economic valuation studies, and recalculate the income (or now welfare) inequality measures. The results indicate that as pollution cleanup efforts gain traction over time, the regressive consequences of pollution may diminish. We thus conclude with an encouraging note for developing countries: improving welfare distribution can coexist with an improving environment.

This paper is concerned with the theory of resilience pricing and sustainability measurement in the presence of risk for regime shift in a dynamic economy–environment system. Following Holling (Annual Review of Ecology and Systematics, vol. 4, 1973, pp. 1–23), we consider resilience as the maximal perturbation that the system can absorb without flipping into a qualitatively different state. Using a multisector growth model under uncertainty, we derive the shadow price of resilience that affects the probabilities of the system to flip in the future. We also analyze the role of resilience on sustainability with both ex-ante and ex-post welfare measures.

Ferraro and Simpson (2002) argue that when markets are competitive, payments for environmental services (PES) are more cost-effective in achieving environmental goals than more indirect approaches such as subsidies to capital. However, when eco-entrepreneurs face non-price rationing in input or output markets, as is typical for credit in developing countries for example, we show that interventions which relax constraints can be more cost-effective than PES. One corollary of this is that such indirect approaches are preferred to PES by interveners (e.g., donors) and eco-entrepreneurs alike. Both of these outcomes are more likely when constraints are severe. This has implications for schemes with dual environment and poverty alleviation objectives.

Water rights are currently receiving increased attention from scholars and policymakers due to the growing understanding that ill-defined water rights impair efficient use. In South Africa, smallholder irrigation faces problems of low water use efficiency and cost recovery of government investments. This study uses contingent ranking to analyse the willingness to pay (WTP) of smallholder irrigators for changes in the water rights system. The results indicate that smallholders are prepared to pay considerably higher water prices if these are connected to improvements in the water rights system. By segmenting the population it was also shown that the importance attached to water rights dimensions varies in each segment. While lower institutional trust and lower income levels lead to a lower WTP for transferability, experiencing water shortage increases this WTP. Such information is valuable in guiding policy makers in the future design of water rights.

Technological modernization is widely believed to contribute positively both to economic development and to environmental and resource conservation, through improvements in productivity and strengthening of business competitiveness. However, this may not always be true, particularly in the short term, as it requires substantial investments and may impose financial burdens on firms undertaking such investments. This study empirically examines the effects of technological modernization in China's iron and steel industry in the 1990s on conventional economic productivity (CEP) and environmentally sensitive productivities (ESPs). We employ a directional distance function that can handle multiple inputs and outputs to compute relative production efficiencies. We apply these models to the data covering 27 iron and steel firms in China between 1990 and 1999 – a period when the Chinese iron and steel industry modernized rapidly. We find that ESPs have continuously improved, even in the period when the CEP declined.

This paper assesses how the economics of biodiversity, as a field, has evolved in response to developments in biodiversity science and policy over the life of the journal, Environment and Development Economics. Several main trends in the economics of biodiversity are identified. First, biodiversity change has come to be analyzed largely through its impact on ecosystem services (in the sense of the Millennium Ecosystem Assessment). Second, there has been a growing focus on factors that optimally lead to biodiversity decline, i.e., the benefits to be had from reducing the abundance of pests, predators, pathogens, and competitors. Third, increasing attention is being paid to two global drivers of biodiversity change, climate and global economic integration, and the effect they have on the distribution and abundance of both beneficial and harmful species. Fourth, there has been growing interest in the development of instruments to deal with the transboundary public good aspect of biodiversity, and in particular in the development of payments for ecosystem services. The paper identifies the influence of these trends on attempts to model the role of biodiversity in the production of goods and services.

We combined field experiment and household survey data to investigate whether working in a risky occupation such as fishing makes fishers less risk averse than people in other occupations. The unique characteristic of Vietnam's fisheries enables us to solve the endogeneity problem of occupational choice usually found in this kind of study. We used prospect theory as the main analytical framework and developed a practical procedure to simultaneously estimate the parameters of the utility function under prospect theory. The key finding is that working in a fishery makes economic agents less risk averse than others.

Predicting residential water demand for non-connected households that obtain connections is a crucial issue for water planners in developing countries. We propose a technique derived from Heckman (1976) to accurately measure the expected increase in water use due to access to tap water while controlling for differences in characteristics between connected and non-connected households. Illustration is made on a cross section of 246 households from Dakar, Senegal. We show that getting a tap connection induces an expected increase in water use of 26 L per capita per day.

This study examines, with a focus on regional environmental states in China, whether regional latecomers suffer the domestically created ‘pollution haven’ effect through the interjurisdictional competition for polluted industries within China, or enjoy the spillover effect of nationwide progress in environmental management and technology, using the analytical framework of the environmental Kuznets curve. The study found that the regional latecomer's advantage was verified in the case of wastewater, while its disadvantage was identified in waste gas and solid waste. We speculate that the contrasting result on regional latecomer's effects between wastewater, waste gas, and solid waste comes from the difference in policy performances: the well-designed water pollution control may have regional latecomer's enjoy the spillover effect of nationwide progress, while the ineffective control of air and solid waste pollution may cause a ‘pollution haven’ effect through the interjurisdictional competition for polluted industries on regional latecomers.