Policymakers frequently voice concerns that carbon pricing could impair economic development in the short run, especially in low-income countries such as Uganda. Using a consumer demand system for energy and food items, we assess how households’ welfare, and demand for food and energy, would respond to a carbon price of USD40/tCO2. We find welfare losses of 0.2–12 per cent of household expenditure on food and fuel, due to the carbon price. Average demand for electricity and kerosene decline by 11 and 20 per cent respectively, while firewood demand rises by 10 per cent on average. We observe shifts within food consumption baskets, with declines in the demand for meat & fish, and vegetables, alongside an increase in cereal consumption. Household nutrition is adversely impacted, with declines in protein and micronutrient intake across the population. Complementary social protection policies such as cash transfers are therefore required to ease adverse effects on economic development in Uganda.

Almost 40 per cent of Brazil's native vegetation is located on over five million private properties. This study assesses the potential of agricultural land taxes and tradable forest certificates for conserving Brazil's fragmented native vegetation across commercial farms, using micro census data from 2006 and 2017. We explore the variability of optimal tax rates and market prices for forest certificates, revealing a supply-demand imbalance in the Amazon and high sensitivity of conservation outcomes to changes in farmland opportunity costs, especially in productive areas. Despite a more positively skewed distribution of opportunity costs by 2017, market outcomes remained unaffected. Notably, expanding the market to include the Amazon's agricultural frontier microregions could achieve 45 per cent of the conservation target. Our analysis underscores the interplay between market-based conservation mechanisms and regional agricultural economics, highlighting the need for tailored approaches to optimize conservation efforts.

Stunting, a manifestation of chronic malnutrition, is widespread in India. This, coupled with biased preferences of parents towards their eldest sons, has led to stunting and underweight among girls that grows sharply with increasing birth order. We study the impact of an environmental water pollutant on child growth outcomes in arsenic contaminated regions of India. Using a large, nationally representative household survey and exploiting variation in soil textures across districts as an instrument for arsenic, we find that arsenic exposure beyond the safe threshold level is negatively associated with height-for-age and weight-for-age. Negative effects are larger for girls who are born at higher birth orders relative to the eldest. This, we argue, suggests that the lack of adequate nutrition and health care during early childhood can make girls more vulnerable to external environmental hazards due to their lower immunity and underdeveloped bodies.

Energy inefficiency and environmental damages caused by this inefficiency are increasingly common in developing countries. As the largest developing country, China is experiencing a rapid growth in outward foreign direct investment (OFDI). Do OFDI firms have higher energy efficiency in the same sector? After OFDI, how does the energy efficiency of the firms change? In this study, we employ the data from Chinese industrial firms to empirically investigate these questions. Our results show that OFDI firms have higher energy efficiency and total factor energy efficiency (TFEE) relative to non-OFDI firms in the same sector. After OFDI, firms improve energy efficiency and TFEE through expanding output scale. In addition, these effects are found to be heterogeneous in terms of energy types as well as OFDI motivations and destinations. In general, this study provides some initial evidence for the relationship between OFDI and energy performance at the firm level.

We study household fuel choice in rural China through the lens of social interactions, deploying a structural discrete choice interaction model to explain peer-dependence in household fuel choice. The data comes from the China Family Panel Studies 2010–2020, and we use multiple strategies to examine the robustness of the social interaction effects. We find a significant endogenous social effect, meaning that whether a household chooses non-solid clean fuel for cooking is directly affected by the choice in cooking fuel made by its neighbors in the village. Households with lower non-farm income are more sensitive to the choices of others, and the fuel choices of households with a higher education and/or a higher income attracts more attention from others. Modern communication technologies facilitate information exchange among rural residents, thereby strengthening the endogenous social effect. We suggest that public policies can accelerate rural energy transition by stimulating positive social spillovers.

This paper analyzes inequities in the distribution of air pollution in Mexico at the detailed scale of localities. We find that air pollution increases in areas that experience a decline in socioeconomic status. We utilize 15 years of remote sensing data on fine particulate matter (smaller than 2.5 microns) for more than 116,500 localities across Mexico. Our panel data models show that localities that face a decline in socioeconomic status experience a 0.24–0.83 per cent increase in annual mean pollution concentrations. Our results hold up to controlling for changes within each municipality and instrumenting with broader municipality level socioeconomic status to test for ecological fallacy. We find that local air pollution inequities are reduced by political participation channels, but not as much by increased share of manufacturing activities due to polluters locating in poorer neighborhoods. Highly dense, urban municipalities witness higher inequities most likely due to traffic, construction, and agricultural fires.

We explore the theoretical conditions in which natural capital improves explanations of aggregate income growth from factor changes. With positive total factor productivity (TFP) growth, including natural capital better explains growth if natural capital growth rates exceed physical capital growth rates. With negative TFP growth and higher natural capital growth rates, natural capital worsens explanations of growth. Using a comprehensive dataset on natural resource stocks and income shares in GDP, we perform an empirical analysis with 99 countries over three time periods between 2001 and 2015 and find that 41 per cent of country-time periods meet the conditions for improved growth explanation with natural capital. Of these, 59 per cent occur because TFP growth is negative, and physical capital growth exceeds that of natural capital. In these cases, including natural capital simultaneously reduces bias in factor shares and TFP estimates and improves the share of growth explained by changes in factors.

The so-called credibility revolution dominates empirical economics, with its promise of causal identification to improve scientific knowledge and ultimately policy. By examining the case of rural electrification in the Global South, this opinion paper exposes the limits of this evidence-based policy paradigm. The electrification literature boasts many studies using the credibility revolution toolkit, but at the same time, several systematic reviews demonstrate that the evidence is divided between very positive and muted effects. This bifurcation presents a challenge to the science-policy interface, where policymakers, lacking the resources to sift through the evidence, may be drawn to the results that serve their (agency's) interests. The interpretation is furthermore complicated by unresolved methodological debates circling around external validity as well as selective reporting and publication decisions. These features, we argue, are not particular to the electrification literature but inherent to the credibility revolution toolkit.