We analyse the relationship between individuals' subjective wellbeing (SWB) and measures of their country's sustainability. SWB data are sourced from the World Values Survey; sustainability is measured by ecological footprint (EF) and by components of the World Bank's adjusted net savings (ANS) series. ANS, a measure of weak sustainability, represents changes in a country's capital stock including financial, physical, human and natural capital. We show that an increase in strong sustainability, measured by EF and by ANS's natural capital component, is associated with reductions in SWB over the next decade followed by a rebound in SWB over the subsequent decade. We show also that the perfect substitutability assumptions on which ANS is calculated do not hold. Our findings highlight an important political challenge: governments that run sustainable policies may decrease the near-term wellbeing of citizens. This can reduce government's short-term popularity even though the improved sustainability may raise future wellbeing.

Coral bleaching is associated with large income shocks and a substantial decrease in protein consumption among the affected fishery households in Indonesia [Chaijaroen (2019) Long-lasting income shocks and adaptations: evidence from coral bleaching in Indonesia. Journal of Development Economics136, 119–136]. According to the health and economics literature, early childhood exposures to shocks such as those from coral bleaching can have long-lasting effects on health, schooling, and other later-life outcomes. This paper explores how the mass coral bleaching in 1998 affected household decisions on fertility and child development. Using the Indonesian Family Life Survey (IFLS) and a triple differences approach, results from 2000 suggest an increase in fertility and an increased likelihood of severe childhood stunting among the affected households. For comparison, rainfall shocks are associated with a decrease in fertility and smaller adverse effects on child health and schooling outcomes. This study suggests that the effects of coral bleaching might have been underestimated, and our findings yield more targeted policy recommendations on climate shock mitigation.

The water purification functions of forests represent one of the most frequently invoked examples of nonmarket ecosystem services that are economically valuable. This study quantifies the monetary value of forests' water purification services in the form of the ensuing cost savings of municipal drinking water treatment, using a rich panel dataset from China's Sichuan province. Moreover, this study has undertaken a novel spatial piecewise approach to investigate the spatial patterns of such cost savings delivered by forests at different distances from the water intake point. The estimation results find that forests within a 2 km radius upstream from the water intake point have the most sizeable and statistically significant cost saving effect. For forests within a 3 km radius, this effect becomes somewhat smaller but remains statistically significant. Beyond a 4 km radius, this effect becomes notably smaller and statistically equal to zero. Our analysis facilitates the optimal spatial targeting of forest conservation.

Environmental policies are characterized by salient short-term costs and long-term benefits that are difficult to observe and to attribute to the government's efforts. These characteristics imply that citizens’ support for environmental policies is highly dependent on their trust in the government's capability to implement solutions and commitment to investments in those policies. Using novel survey data from Mexico City, we show that trust in the government is positively correlated with citizens’ willingness to support an additional tax approximately equal to a day's minimum wage to improve air quality and greater preference for government retention of revenues from fees collected from polluting firms. We find similar correlations using the perceived quality of public goods as a measure of government competence. These results provide evidence that mistrust can be an obstacle to better environmental outcomes.

This paper offers a quantitative assessment of the impacts of the COVID-19 pandemic-induced lockdown and government fiscal plan, containing ‘green’ elements on the economy and the environment of South Africa. The analysis uses a dynamic computable general equilibrium model operationalised using a social accounting matrix coupled with a greenhouse gas balance and emissions data. We find that while the economy is harshly impacted by the pandemic in the short term, the government fiscal package ameliorates and cushions the negative effects on poor households. Importantly, an adaptation of the fiscal package towards a ‘greener’ policy achieves the same economic outcome and reduces unemployment. Carbon dioxide emissions decrease in the short run due to economic slowdown. This improvement persists until 2030. These results can be used as decision support for policy makers on how to orient the post COVID-19 policies to be pro-poor and pro-environment, and thus, ‘build back better and fairer’.

Well-functioning factor markets play an important role in improving the performance of the agricultural sector. Our paper examines both technical and allocative efficiencies at the household level, with an application to a cross-section sample of rural households in three provinces of China in 2009. In a first step, we use nonparametric methods to estimate household efficiency. In a second step, we examine econometrically the role of land rental market and its linkages with household-level efficiencies. We find that participation in the land rental market does not affect technical efficiency but has large positive effects on allocative efficiency. This stresses the need to distinguish between technical efficiency and allocative efficiency in the analysis of land tenure issues. The improvements in allocative efficiency from land-leasing contribute to significant increases in household income in rural China.

In this study we investigate the effectiveness of environmental regulation in a large developing country. We construct a panel of 3,436 major toxics polluters from 2004 to 2015 using detailed plant-specific data on toxics releases, inspections, and fines, across Mexico. Our results show that regulators target polluters who are significantly non-compliant and impose higher fines on them. This has implications for the cost efficiency of monitoring and regulatory enforcement. An additional priority violation increases current toxics inspections, fines, and amount of fines by 7, 5 and 18 per cent, respectively. An additional priority violation followed by fines imposed on the plant results in a reduction in annual toxics releases by more than 50 per cent. Higher fines imposed on other major facilities in the same municipality induce plants to reduce the annual release of toxic pollutants by 0.1 per cent. Finally, inspections and fines increase the likelihood of reporting toxics releases.

Outdoor air pollution continues to be a challenging health issue, even as countries experience economic growth. By exploiting a unique transboundary setting in East Asia, we study the impact of an increase in particulate matter (PM) concentrations on fetal deaths. Due to the westerlies in the mid-latitudes, residents in South Korea at times experience intermittent exposure to high levels of air pollution. Using such atmospheric setting, we estimate a reduced-form impact of high PM events on fetal deaths, which captures in utero exposure to pollution. Controlling for local weather and pollution trends, regression results indicate that high PM events in Beijing lead to a significant increase in daily fetal mortality rates in Korea, by approximately 7.4 per cent. This research finding provides lower-bound estimates of not only negative spillovers manifested in fetal health but also the impact of pollution on the health of the Chinese population and calls for a need to tackle transboundary air pollution via international cooperation.

This paper investigates how poverty reduction and natural resource preservation can be simultaneously achieved in a small open dual economy with urban wage rigidity, open access rural resources, and rural-urban migration. An increase in the export tax rate on the rural resource good increases urban unemployment in both the short run and the long run with resource dynamics. Given the institutional failures, the first-best policy is an urban wage subsidy combined with either a rural wage subsidy at a lower rate or, if the urban output price is sufficiently high, a rural tax. When the institutional failures can be resolved endogenously, an increase in the export tax on the resource good can induce rural institutional change away from open access. However, tariff protection of urban manufacturing hinders such a rural institutional change.

Advocated across the international community for more than 15 years, the Extractive Industries Transparency Initiative (EITI) is now widely recognised as a hallmark anti-corruption scheme in the extractive sector. This study presents an assessment of the relationship between EITI membership and countries’ progress in tackling corruption. It provides the first study that looks at this issue using a ‘state-of-the-art’ indicator called the Bayesian Corruption Indicator. It also introduces an innovative estimation strategy combining entropy balancing with a difference-in-difference framework to address the baseline inequalities that exist between member and non-member countries. Contrary to the findings of many leading studies, this analysis finds corruption scores have improved significantly among EITI member countries. In particular, the evidence is strongest when we examine a sub-group of EITI members designated fully compliant with the initiative's transparency standards.

This article develops a non-cooperative game with managerial quantity-setting firms in which owners choose whether to delegate output and abatement decisions to managers through a contract based on emissions (conventionally denoted as ‘green’ delegation, GD) instead of sales (sales delegation, SD), and the government levies an emissions tax to incentivise firms’ emissions-reduction actions. First, it compares the Nash equilibrium outcomes between GD and SD and then contrasts them also with profit maximisation (PM). A plethora of Nash equilibria emerges, especially in the case GD versus PM (the ‘green delegation game’), depending on the public awareness toward environmental quality, ranging from the coordination game to the ‘green’ prisoner's dilemma. Second, though the contract under GD incentivises managers for emissions, the environmental damage is lower than under SD. This is because the optimal tax more than compensates the incentive for emissions. These findings suggest that designing GD contracts paradoxically favours environmental quality.

This paper evaluates the short-term health effects of in utero drought shock using repeated cross-section household data on Malawi. The main finding reveals that the effects of in utero harvest variability caused by rainfall shocks on child growth indices are driven by the deleterious effects of negative rainfall deviations, namely droughts. Negative rainfall deviation during the agricultural season prior to the gestational period of a child leads to a 21.8 per cent average local level reduction in age-standardized height scores, with the counterpart positive rainfall deviation having no apparent effect. The paper also uses harvest and consumption patterns to establish an important link between early-life malnutrition and growth serving as a precursor for the fetal period programming hypothesis in the literature. The direct impact of embryonic period shocks on growth provides supportive evidence on potential interaction between nutritional and environmental pathways.

This paper examines green alliances between environmental groups (EGs) and polluting firms, which have become more common in the last decades, and analyzes how they affect policy design. We first show that the activities of regulators and EGs are strategic substitutes, giving rise to free-riding incentives on both agents. Nonetheless, the presence of the EG yields smaller welfare benefits when firms are subject to regulation than when they are not. In addition, the introduction of environmental policy yields large welfare gains when the EG is absent but small benefits when the EG is already present.

The outcome of environmental actions from participation in the export market are examined by unpacking some mechanisms that explain the estimated relationship. The empirical strategy utilizes the variation in the distance between the location of the sampled enterprises and the top 25 destinations of Vietnamese exports across sectors, and the weight of each sampled export to total exports in each period, to obtain exogenous variation in the enterprise's export market participation. The result shows a positive relationship between the enterprise's export participation and its overall engagement in environmental actions (such as the sum of its environmental actions, the sum of actions in the investments in equipment towards environmental issues, and total expenditure for the purchase of equipment for environmental actions). Possible mechanisms are international standardization, national certification, and strong enforcement of environmental regulations from export market engagement.

Changes in climatic patterns are expected to have significant effects on health and wellbeing. However, the literature on the effect of climate on subjective wellbeing remains scant and existing studies focus mostly on developed countries or cross-country analyses. This paper aims to identify the relationship between climate conditions on happiness after controlling for individual and social characteristics. Ecuador, a geographically fragmented country with varying climate conditions across municipalities, constitutes an ideal case study to assess the effect of climate variables on happiness. We employ a cross-section analysis to identify the effect of temperature, precipitation and humidity on happiness. The paper shows that climate conditions constitute an important determinant of people's subjective wellbeing. The results also suggest that income and education attenuate the effect of temperature on happiness and that substantial differences are observed depending on whether places are hot/humid or cold/dry.

Developing countries experience both household air pollution resulting from the use of biomass fuels for cooking and industrial air pollution. We conceptualise and estimate simultaneous exposure to both outdoor and household air pollution by adapting the Total Exposure Assessment model from environmental health sciences. To study the relationship between total exposure and health, we collected comprehensive data from a region (Goa) in India that had extensive mining activity. Our data allowed us to apportion individuals’ exposure to pollution in micro-environments: indoor, outdoor, kitchen, and at work. We find that higher cumulative exposure to air pollution is positively associated with both self-reported and clinically- diagnosed respiratory health issues. Households in regions with higher economic (mining) activity had higher incomes and had switched to cleaner cooking fuels. In other words, household air pollution due to higher biomass use had been substituted away for outdoor air pollution in regions with economic activity.

We examine how the composition of residential energy consumption and its sensitivity with respect to income changes. The paper characterizes the energy transition, analyzing the behavior of income elasticity of energy demand along the economic development stages by fuel types. The results indicate a nonlinear relationship between income and domestic energy consumption that can be explained by two factors. First, along the income distribution, consumption of modern fuels increases, replacing traditional and transitional fuels until modern fuels drive all of the growth in domestic energy demand. Second, at the highest income levels, income elasticity starts to decrease, leading to concavity in energy consumption. That is, the income elasticity of residential energy demand follows an inverse U-shape along the world income distribution. This finding suggests that at high income levels, residential energy consumption shows satiation and net energy-saving effects.

This paper seeks to understand the link between resource governance and investor expectations in resource-rich countries. We test whether voluntary membership in the Extractive Industries Transparency Initiative (EITI), a public-private partnership that promotes transparency and accountability in the extractives sector, behaves as a credible signalling mechanism to investors that governments in resource-rich countries can manage resource revenue and adhere to sustainable fiscal policies in the medium and long run. Using an interrupted time series analysis coupled with a fixed effects model, we examine whether investor expectations on the price of sovereign debt behave as a credible signalling mechanism in the presence of certain conditions. Results indicate that in some cases there is a significant change in spread on the default price of sovereign debt as a result of announcement of either EITI candidacy or EITI compliance. However, it is clear that EITI membership alone is not a sufficient signal to investors that a country can effectively manage its resource revenues in the long run because the result of EITI implementation is heavily influenced by country-specific conditions.

The concern for inequality, growth and development is undoubtedly crucial in the context of climate change mitigation and adaptation. However, most studies either rely on the nation-state estimates of carbon emissions to propose a uniform nation-wide growth (or degrowth) strategy, or they tailor the method to assess the inequality of one country at a time, making a cross-country cross-income comparison difficult. To fill this analytical gap, we synthesize the existing methods of emission calculations and calculate the level of carbon emissions associated with given income deciles of household consumption in five countries, namely China, Germany, India, the UK and USA. We find that the within-country inequality varies among countries, with the ratio between the top and bottom income deciles ranging from three to nine at the household level. We also find that the carbon emissions of the top income group in urban China is almost comparable to that of their peer group in the US, UK and Germany. Based on these results, we discuss the use of the remaining global carbon budget in the context of development and inequality.

Environmental incentives are characterized by two distinct features: (1) a benefit-cost trade-off; and (2) private information about the trade-off. This suggests a degree of freedom of where to attach the private information, either to the benefit or the costs, as long as these choices imply the same behavior absent incentives (‘observation equivalent’). However, we show that different observation equivalent specifications can lead to different incentives. This is demonstrated for two cases: rainforest protection and contributions to a public good. Therefore, the choice of a private information parameter must be justified against observation equivalent alternatives.