‘Agroindustrialization’ comprises three related sets of changes: 1 growth of commercial, off-farm agro-processing, distribution, and input provision activities; 2 institutional and organizational change in the relations between farms and firms both upstream and downstream, such as a marked increased in vertical integration and contract-based procurement; and 3 related changes in product composition, technologies, and sectoral and market structure (Reardon and Barrett, 2000). The actual and potential environmental effect of these changes have been sparsely documented to date. There does not seem to have been any attempt at a reasonably general analysis of the pathways by which such effects might occur or of the instruments governments might have at their disposal to influence these pathways. This essay is meant to fill the latter gap while the articles and policy forum that follow provide more detailed findings and perspectives on constituent issues.

The paper first presents evidence from the engineering literature on air and water pollution control, which shows that, when the pollution abatement technologies are in place, large reductions in pollution have been achieved at costs that are small relative to the costs of production. A simulation model is then developed to study the effects of technical progress on pollution abatement, and applied to particular cases in developing countries. The results are compared with the projections of an environmental Kuznets curve: they reproduce the latter if policies were not to be introduced until per capita incomes reached levels comparable to those of the industrial countries when they first introduced their policies; but show dramatically lower and earlier peaks if policies were to be introduced earlier. The conclusion is shown to apply more generally, and it is argued that developing countries can aspire to addressing their environmental problems at a much earlier phase of development than the industrial countries before them.

The total fertility rate is lower in island nations than non-island nations, and in small land-area nations than large land-area nations. Because islands tend to be much smaller than non-islands, these phenomena raise the question of whether there are two distinct effects or two manifestations of a single effect. This paper uses 1990 cross-sectional data on 198 countries to estimate the independent effects of islands and land-area on fertility. We find evidence that there are two separate effects. One possible explanation for the island and small-country fertility effects can be drawn from the theory of the commons, but another possible explanation is offered by the new theory of economic growth. We explore each of these possible explanations and conclude that the small-country effect is consistent with new theories of economic growth while the island effect is likely the result of a ‘commons effect’.

This paper reviews recent developments in the study of the so-called ‘double dividend’, i.e. the possibility of improving the environment and, at the same time, reducing the distortions of the tax system through revenue-neutral green taxes. The main goal of the analysis is to identify the relationship between the modeling strategy and the double dividend results. Recent modeling advances are considered at both the theoretical and the empirical levels. In particular, we note that the most significant theoretical advances have been made in the direction of allowing for imperfectly competitive markets, especially the market for labor. At the same time, we argue that empirical work, particularly on the ‘employment double dividend’, is still relatively scant and that much more needs to be done both in the direction of more realistic empirical models and of an extended sensitivity analysis of the main findings.

Chongqing is a heavily polluted industrial megacity in China. We have estimated the environmental cost of water pollution in Chongqing. Limiting our inquiry to the resource cost, i.e. real resources spent or production possibilities foregone because of water pollution, our estimate equals 1.2 per cent of Chongqing gross product, with a subjective 95 per cent confidence interval of (0.9–1.5). Damage to agriculture constitutes the largest share of costs, 56 per cent, while damage to health and damage to industry make up 20 per cent and 18 per cent, respectively. The cost estimate of 1.2 per cent, which employs the human capital approach, is sensitive to the valuation of statistical lives. A calculation using willingness-to-pay for avoiding premature death sets the total cost at 4.3 per cent of Chongqing gross product.

The rapidity of change has left scant opportunity for investigation of the consequences of adoption of transgenic crops on long-term ecosystem or economic system functioning. Economic theory suggests that, if the “Biotechnology Revolution” is left to market forces alone, there will be neglected public goods. Theory and limited empirical evidence suggests that there are significant incentives for private firms to discount and neglect certain environmental impacts and to develop products that meet mainly the needs of those able and willing to pay. Negative distributional impacts on rural societies and economies will not normally enter the private calculus nor will the long-term problems of insect and plant resistance. Thus, there is a strong case for enhanced public roles with respect to the use of transgenic crops. The adoption of the precautionary approach in public policies addressing transgenic crops is one alternative to better reflect public concerns.

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 article, local institutions for forest conservation and management are analysed. The discussion is based on data from 37 villages and 180 households randomly sampled from a protected area in Rajasthan, India. Local management institutions are described, factors affecting inter-village differences in management institutions and collective action are analysed in a logit model, and the impact of institutions and other variables on common resource dependency and forest outcomes is tested using instrumental variable regression. Village population size has a positive effect and prior institutional experience a negative effect on the probability of collective action. It is concluded that efforts at improving forest management should not be confined to the poorest farmers. Large landowners are heavily involved in degrading use practises, especially when resources have good market potential. Local management institutions play a positive role in the area, but their impact appears insufficient to safeguard forests and commons from continued degradation. Conservation policies should target win–win options through interventions aimed at improving technologies for private and common lands as well as institutional changes.

This paper estimates the historic relationship between carbon emissions and GDP using data across countries and across time. We combine this relationship with plausible projections for GDP and population growth to construct a model that offers insights into the likely path of global emissions in the next century. In addition, we experiment with a method for incorporating oil prices into the model. Our analysis provides independent confirmation of the business-as-usual forecasts generated by the larger structural models.

This study examines the trend in pesticide use in Brazil in the 1990s in the context of agroindustrialization and globalization (trade liberalization). It also seeks to document the environmental costs and human health hazard associated with pesticide use in Brazil. Results from time series data indicate that agricultural trade liberalization has led to increased pesticide use in Brazil, particularly in export crops. Results from cross-section municipality-level data point to higher incidence of pesticide use in municipalities with high income, higher levels of education, large-size farms, predominance of export crops, and with high prevalence of sharecropping. Finally, the study finds that Brazil's agricultural growth in the era of trade liberalization has been clouded by serious human health problems and environmental damage caused by pesticide use.

Resource conservation programs have often been launched without careful evaluation of farmers' intertemporal tradeoffs in undertaking conservation investments. Such investments often have long pay back periods and reduce short-term household incomes. The critical question is whether long-term benefits would be sufficient to compensate farmers' immediate costs. Lack of empirical data on crop responses to soil erosion has hindered policy-relevant research. This study uses empirical data from the Ethiopian highlands to estimate the damage from soil erosion and evaluate the profitability of proposed conservation investments. A farm-level model is developed to study economic incentives to implement proposed conservation methods. Results show that incentives to invest in conservation practices are very low except for low cost methods like grass strips. The yield penalty due to area loss and high investment costs contribute to this. Policies focusing on minimizing the area loss effect and subsidizing the initial investment costs are shown to improve farmers' incentives to conserve the soil. A preferred policy option in the short-term is supporting low cost technologies that provide short-term benefits to poor farmers.

Previous studies have examined the impact of an exogenous increase in population on the local resource base. In some recent theoretical work it has been proposed that resource scarcity, in turn, may affect fertility, and hence population growth rates. However, the sign and magnitude of this effect remains an open empirical question. In this paper we examine the impact of fuelwood and water scarcity on fertility rates using household data from rural South Africa. An individual choice model of fertility is estimated in which resource scarcity affects the demand for children through its effect on child mortality and productivity of children as resource collectors. Several alternative measures of resource scarcity are used, such as average distance traveled and time per trip for collecting water and fuelwood. We find wood scarcity to have a positive and significant effect on fertility. The effect of water scarcity is also positive, but not significant in general.

There have been few applications of the contingent valuation method (CVM) to forests in developing countries. When applied, the method is seldom utilized to improve the implementation of development projects. In this paper an application of CVM to the Orissa Social Forestry Project is reported. The results show considerable variation between villages and the analysis of the bid function shows underlying factors to project success that can be used in project planning. The policy implications are to plant new VWL where natural forests are inaccessible, where people have prior experience of VWL, and where fuel consumption relies heavily on market purchases. Such plantations are expected to give greatest benefit to families with few men and many women. An analysis of the reliability of the study concludes that many of the observed biases originate from the enumerators. The study also recommends that one should be careful with the use of a discrete design in a cultural context such as this that is prone to yea-saying, and that strategic bias can arise from an open ended question that follows up the start bid in a culture characterized by bargaining.

This paper examines whether a country's stage of development affects its climate sensitivity. The paper begins with a model of agriculture that shows that the effect of development on climate sensitivity is ambiguous, depending on the substitution between capital and climate. To resolve this issue, the climate sensitivity of agriculture in the United States, Brazil, and India is measured using a Ricardian approach. Relying on both intertemporal as well as cross-country comparisons, the empirical analysis suggests that increasing development reduces climate sensitivity.

Conventional wisdom amongst environmentalists holds that the cutting of tropical forest for livestock production is not only bad business but also bad for the environment. In particular, it is thought that conversion to pasture leads to a rise in the sedimentation of waterways and reservoirs, an increase in flooding and loss of dry season water supply. Using the case of the Rio Chiquito watershed (which drains into Lake Arenal, Costa Rica), the paper questions this conventional wisdom. The paper demonstrates that both livestock production and the associated downstream hydrological impacts represent important values to the local economy; values that significantly outweigh expected returns from options for reforestation or forest regeneration. Given that non-hydrological externalities associated with livestock production are expected to be of minimal importance in the watershed, there is little reason – as is often proposed – to foster large-scale reforestation of the watershed or to purchase land for protection. Instead efforts should focus on how to maximize the complementary returns from livestock and the support to hydroelectric power provided by water production.

Agroindustrialization and agricultural commercialization are both consequences of economic growth and urbanization. Commercialization of agricultural systems leads to greater market orientation; progressive substitution out of non-traded inputs for purchased inputs; and the decline of integrated farming systems. Agricultural commercialization can have both negative and positive impacts on the natural resource base. Higher opportunity cost of labor increases farmer reliance on herbicides for weed control, primarily for the staple crops. The use of insecticides and fungicides could also rise, especially for high value fruit and vegetable crops. Increased use of agricultural chemicals could lead to higher environmental and human health risks. On the other hand, global integration and the consequent rationalization of agricultural policies could have significant environmental benefits, especially in terms of a reduced rate of salinity build up and ground water depletion in irrigated environments. The extent to which positive environmental effects manifest themselves depends on both macroeconomic and microeconomic policy reforms.