The Hartwick–Solow rule for sustainability requires that depletion of natural capital be offset by a compensating increase in other forms of capital capable of generating as much income as the natural capital they replace. Many countries have not been successful in transforming natural capital into other forms of wealth. This paper investigates the process of wealth transformation for Botswana, one of the most successful resource-rich countries. Using an expanded measure of wealth that includes manufactured capital, natural capital and net foreign financial assets, Botswana's per capita wealth has increased over the past 20 years. Government has recovered and reinvested rent. However, examination of the public sector capital budget reveals considerable unproductive investment. While correction for unproductive investments still indicates sustainable development, results suggest that aggregate indicators such as national wealth or genuine savings may be misleading without further attention to the process by which natural capital is transformed into other forms of wealth.

We demonstrate a new approach to understanding the role of fuelwood in the rural household economy by applying insights from travel cost modeling to author-compiled household survey data and meso-scale environmental statistics from Ruteng Park in Flores, Indonesia. We characterize Manggarai farming households' fuelwood collection trips as inputs into household production of the utility yielding service of cooking and heating. The number of trips taken by households depends on the shadow price of fuelwood collection or the travel cost, which is endogenous. Econometric analyses using truncated negative binomial regression models and correcting for endogeneity show that the Manggarai are ‘economically rational’ about fuelwood collection and access to the forests for fuelwood makes substantial contributions to household welfare. Increasing cost of forest access, wealth, use of alternative fuels, ownership of kerosene stoves, trees on farm, park staff activity, primary schools and roads, and overall development could all reduce dependence on collecting fuelwood from forests.

The policy discussions for sharing the global responsibility for abatement of greenhouse gas (GHG) emissions by individual countries take account neither of the pattern of their final consumption nor of the role of globalization through trade in the leakage of GHGs across national boundaries. This paper gives the methodology of estimating the total emissions of a GHG, which is imputable to the consumption pattern of a country and the effect of trade on the net leakage of such gas. The paper estimates the effect of trade on the net leakage of carbon dioxide and methane from India. It shows a significant net leakage of carbon dioxide from India for the observed consumption pattern in the 1990s. In spite of the difficulty of application of the method of estimating the leakage due to data constraints regarding regularly updated input–output tables for the different countries, the results point to the necessity of using some policy measure to influence globally the preference structure of the people in favour of eco-friendly consumption patterns.

When continuous monitoring of individual emissions is not feasible, policy makers need to investigate what other options are available and how best to provide appropriate incentives for pollution reduction. This paper offers an analysis of some such options with a view to identifying and suggesting appropriate policy measures for emission control from automobiles in Delhi.

This paper while attempting to estimate the social benefits of cleaning the Ganges river in India highlights some of the emerging environmental and development issues in the river cleaning programmes. Methods involving the market and non-market valuation of environmental goods are used to estimate the benefits. The benefits estimated include user and non-user benefits, health benefits to the poor households living along the river, and agricultural benefits to farmers among other benefits. However, the benefits from fisheries, one of the important components of benefits from the river cleaning, could not be quantified in this paper. With the benefits that could be quantified, the program of cleaning the Ganges has positive net present social benefits at a 10 per cent social rate of discount and an internal rate of return as high as 15 per cent. Furthermore the estimates of benefits of river cleaning obtained in this paper provide guidance for designing the policy instruments to raise revenue for sustaining the river cleaning processes in India. A number of different mechanisms are considered to raise the resources for sustaining the cleaning of Ganges. They are a polluter-pays principle, a user-pays principle (with government involvement), a user-pays principle (without government involvement), and funding from the general tax system.

Global tropical deforestation continues to be a critical environmental issue and nowhere in the world is the issue more pronounced than in Brazil. This paper examines the land-use choices of small-scale farmers in Ouro Preto do Oeste, Rondônia, Brazil and investigates how agricultural production impacts deforestation levels. The data used to explore these issues consist of a panel collected from 152 households in 1996 and 2000. Overall, the empirical models indicate that access to credit, wealth, lot size, product markets, and off-farm labor opportunities, largely influence deforestation and production decisions. Among other things, the results suggest that more sustainable production methods are unlikely to be adopted by a majority of households under current conditions because the production of milk has rapidly advanced due to its moderate labor requirements and existing market infrastructure. Households with greater levels of wealth have focused on milk while those with access to credit have focused on crops. Since the production of crops is largely influenced by access to credit, similar incentives may be proposed to support more sustainable production activities to help reduce deforestation.

The relationship between per capita income and a number of pollution indicators has been found to display an inverted U-shaped or downward-sloping pattern. Corruption may affect this relationship in two distinct ways: by raising pollution at given income levels (direct effect) and by reducing per capita income (indirect effect). The total effect is ambiguous a priori. Using cross-section data for several indicators of pollution, the paper estimates the direct and the indirect effect of corruption on pollution. The indirect effect via income is positive or negative depending on the income level. If negative, the indirect effect is dominated by the positive direct effect. Overall, our measures of pollution are monotonically increasing in corruption. Because this relationship is particularly strong at low income levels, developing countries can considerably improve both their economic and environmental performance by reducing corruption.

This paper addresses the existence of an Environmental Kuznets Curve for China, using a sample of 30 regions, covering the period 1982–1997. The types of pollution included are wastewater, waste gas, and solid waste. We consider the development of the sources of pollution in a pooled cross-section analysis with pollution in absolute levels, in per capita terms, and relative to real Gross Regional Product (GRP). At intermediate levels of GRP per capita, the increase of solid and gas emissions tends to decelerate, but it accelerates again at high levels of GRP per capita. Water pollution decreases with per capita GRP. We also predict future waste gas emissions.

It has been recognized that extra incentives for firms' compliance with pollution regulations would be created under state-dependent enforcement as Harrington (1988) has shown theoretically. However, the extent of the overall improvement in compliance is expected to be different according to the pollution control costs and industrial structures of any given country. This paper empirically examines, for the first time, the effectiveness of an imposition of higher fines for repeated violations and state-dependent enforcement in terms of the reduction of violation days, by simulating emitting behavior for 65 sub-industries in the Korean manufacturing industry over the period 1987–1989. State-dependent enforcement was found to be more effective than an imposition of higher non-compliance fines for repeated violations in regard to the number of sub-industries exhibiting persistent non-compliance. However, the number of fully complying sub-industries was found to be slightly higher under an imposition of higher non-compliance fines for repeated violations. In Korea, it would therefore be desirable to discriminate against certain industries with enforcement systems of different intensity based on their abatement cost structures rather than uniformly introducing a state-dependent approach.

The management of the Matang Mangrove Wetlands in Perak State, Malaysia is under review. To assist decision makers in determining the optimal management strategy, a choice modelling application was undertaken to estimate the non-market values provided under different management options. Implicit prices for environmental attributes including the area of environmental forest protected, the number of bird species protected and the recreation use of the area were estimated. In addition, the implicit price of a social, non-market attribute, the employment of local people in wetland based extractive industries, was estimated. Compensating surplus estimates for a number of alternative wetland management scenarios were also calculated.

Programs that provide incentives to induce conservation are often ineffective, leading farmers to abandon conservation once assistance is withdrawn. An alternative to incentives is to offer conservation technologies in conjunction with measures that enhance the short-term profitability of agriculture. Our results indicate that CARE, an international non-governmental organization, has used this approach successfully to promote resource conservation in the Ecuadorian Andes. In particular, the adoption of terraces was found to increase significantly when accompanied by alterations to the agricultural system, such as new crops, biological barriers, and improved agricultural production.

This paper examines coping strategies in response to covariate flood shocks and idiosyncratic health shocks among riverine peasant households in the Amazonian tropical forests. An assessment of coping strategies reveals that although precautionary savings (food stock and livestock) are important for both types of shocks, ex post labor supply responses in the form of upland cropping and resource extraction (fishing and non-timber forest product gathering) are more common to cope with the flood shock depending on local environments. A bivariate probit model examines what factors shape households' adoption decisions of gathering and fishing as a coping strategy. The analysis reveals an important insurance role of non-timber forest product gathering for the asset poor who have limited options for coping with flood risk. Targeted interventions and programs for the poor to promote sustainable forest resource use are discussed.

This study compares the management performance of timber production among three management systems in Nepal: private forestry, community forestry with collective management, and community forestry with centralized management. While collective management relies entirely on community labor for the whole management, centralized management uses community labor for the protection of forests and hired labor for silvicultural operations, for example weeding, pruning, and thinning. We found that collective community management is less costly for the protection of planted trees but allocates less labor for the management of trees than private management. We also found that centralized management of natural forests leads to higher revenue and profit than collective management. These findings support the hypothesis that, while collective management is more efficient than private management for the protection of trees due to effective mutual supervision, profit-seeking private management or centralized management is more efficient than collective management for silvicultural operations due to superior work incentives. This study, however, failed to compare efficiency of private and centralized management.

Decentralization and people's participation have been key features of government environmental policy since the 1990s. In Madagascar, the policy of Secured Local Management of Natural Resources, known as the GELOSE act, has created a framework for the transfer of rights from central government to local communities. This article analyses the practical implementation of this policy by focusing on the nature of the rights transferred and on the nature of the contracts and incentives developed. The Aghion and Tirole model for allocation of formal and real authority in an organization is used to shed light on the contractual definition process and on the trade-offs between giving responsibilities to local communities and losing control over natural resources management. It is shown that a congruence of interests between the parties is crucial for effective delegation of authority to local communities and that this congruence may emerge in relation to the transfer of exclusion rights.

This paper reports the results of an empirical analysis of the relationship between income and the rate of deforestation of tropical natural forests. The inverted U-shaped relationship known as the environmental Kuznets curve is confirmed. The study focuses on the role of institutions and macroeconomic policy in the deforestation process. Results indicate that the quality of governance is an important determinant of forest resource preservation, and that rural population pressure is not as important as suggested by other studies. Agricultural technology improvement and enhanced educational attainment also lead to reductions of deforestation rates.

Diarrhoeal diseases are endemic in Delhi. The causes of diarrhoeal illness involve both the household and the public sector as a provider of a public good, namely water supplies. Questions of both adequacy and quality of the water supply available to the household for drinking purposes are of crucial importance. The present study conducts an objective assessment of the health damages incurred by urban households by adopting a health production function approach. A model for valuing the damages from contaminated water supplies, based on the theory of utility-maximizing consumer behaviour is developed for estimating the probability of illness for a household. An estimate for the predicted probability of observing illness in a household is obtained. This probability measure is subsequently used along with data on illness to derive treatment costs and the wage-loss arising from the illness. Thus, a measure of the total costs of illness is obtained.

This paper addresses factors influencing agricultural land use in rural households in El Salvador, with particular attention paid to the effects of income. Two linkages between the area a household farms and income per capita are critical. First, there is a precautionary demand for land that can be used for subsistence agriculture and this demand declines as income rises. Second, the area a household is able to farm goes up as income increases. Together, these two linkages imply that the relationship between agricultural land use and per capita income takes the shape of an Environmental Kuznets Curve (EKC).

Using panel data collected since 1995 in four biennial surveys of a nationally representative sample of rural households, we have analyzed agricultural land use at the household level. Evidence of an EKC relating farmed area to per capita income has been obtained. In addition, other factors influencing a household's use of natural resources have been examined.

The growing disenchantment with state management of natural resources has led to increasing reliance on co-management. This involves devolution of the rights to manage and control access to the resource from the state to the resource appropriators. Co-management has been introduced in many Third World countries with varying success. Co-management programmes have typically assumed that the resource community wants to conserve the resource and is prevented from doing so by their inability to form a collective choice arena. Hence such programmes have attempted to provide a collective choice arena. However, these attempts overlook the need to change the attitudes of resource users and create a demand for the resource regime. In this paper we have presented two case studies of Joint Forest Management in India to illustrate this point.

Many conflicts in many parts of the developing world can be traced to disputes over land ownership, land use and land degradation. In this paper, we test the hypothesis that information asymmetries among various principals within these countries in land tenure and market systems have caused marginalization of some principals by the others. A sustained process of marginalization driven by these asymmetries has inevitably caused the disadvantaged to revolt resulting in many cases in violent clashes. In this paper, we develop a game theoretic model to test our hypothesis by analyzing the complex interdependencies existing among the various principals in the Narok District in Kenya. Violent clashes have been increasing in the district since the first outbreak in 1993. Preliminary results seem to confirm our hypothesis that asymmetrical information structures among the various principals over land and agricultural markets could have been the catalytic forces for these conflicts. In order to reduce these discrepancies, we recommend two institutional reforms. The first involves the adoption of a hybrid land tenure system whereby land ownership is based on individual titles while the use and sale of the land is governed by communal rules established by a community participatory proceeds. The second recommendation involves the formation of an information network comprising of all principals with the main objective of it being a forum for exchange of ideas and information pertaining to land use options and the opportunities offered by the market system.