Formulation and estimation of a correctly specified abatement cost function would be central to policy formulation regarding imposing taxes or user-fees as well as of sharing social cost in the presence of environmental pollution. Often in research, the output of an abatement activity for water pollution appears to us not to have been clearly specified. This activity is very distinct from whatever is the actual product of the plant. We propose in this paper that the output is only and exclusively the reduction in the level of the pollutant in the outflow from the plant and illustrate this with primary data for small-scale factories in Nandesari Industrial Estate in Gujarat, India. The cost function estimates provide evidence of significant scale economies and high marginal abatement cost in wastewater treatment by small-scale factories.

We have drawn two propositions, critical from a developing country viewpoint, from the trade and environment literature and assessed them for cloth and leather production in Pakistan. The first is that trade liberalization will result in export by developing countries of their environmental capital. The second is that the costs of mitigating these damaging environmental effects in the South are very high. We find that, given the state of implementation of environmental laws in Pakistan, exports induced by trade liberalization can indeed have major negative environmental impacts. However, we do not find support for the proposition that the costs of mitigation are very high. We also find that the social benefits far exceed the costs of mitigation.

Wetlands provide a variety of important environmental services including flood control, wildlife habitat, waste treatment, and recreational opportunities. Because most of these services are public goods, the value of wetland preservation cannot be directly obtained from market prices but may be estimated using revealed-preference or stated-preference methods. We estimate the value to local residents of protecting the Kuantu wetland in Taiwan using contingent valuation. Estimates are sensitive to question format, with estimates using a double-bounded dichotomous-choice format about three times larger than estimates using a single open-ended question. Using the open-ended format, the estimated annual mean household willingness to pay to preserve the Kuantu wetland is about US$21. Using the dichotomous-choice questions, the value is about US$65. These estimates suggest the total present-value willingness to pay to preserve Kuantu wetland is about US$200 million to US$1.2 billion (discounted at 5–10%).

This study combines hydrological modeling with applied micro-econometric techniques to value a complex ecosystem service: drought mitigation provided by tropical forested watersheds to agrarian communities. Spatial variation in current baseflow allows estimation of drought mitigation values as the marginal profit accruing to agricultural households. The paper shows that this uncommon focus on producer (not consumer) surplus measures is appropriate for valuation as long as markets for commodities related to the environmental services are complete. For the typical household, the estimated marginal profit is positive, validating the central hypothesis that baseflow makes positive contributions to agricultural profits. There is some evidence, however, that increased watershed protection will increase profits through greater baseflow only in watersheds with a unique mix of physio-graphic and climatic features. The paper evaluates and provides some support for the hypothesis, put forward by hydrological science and the Indonesian Government, that protected watersheds can supply latent and unrecognized ecosystem services to local people.