Showing papers in "Environment and Development Economics in 2012"
TL;DR: This paper developed and applied a consistent and comprehensive theoretical frame-work for assessing whether economic growth is compatible with sustaining wellbeing over time, and demonstrated that a properly defined comprehensive measure of wealth is maintained through time.
Abstract: We develop and apply a consistent and comprehensive theoretical frame- work for assessing whether economic growth is compatible with sustaining wellbeing over time. Our approach differs from earlier approaches by concentrating on wealth rather than income. Sustainability is demonstrated by showing that a properly defined comprehensive measure of wealth is maintained through time. Our wealth measure is unusually comprehensive, capturing not only reproducible and human capital but also natural capital, health improvements and technological change. We apply the framework to five countries: the United States, China, Brazil, India and Venezuela. We show that the often-neglected contributors to wealth - technological change, natural capital and health capital - fundamentally affect the conclusions one draws about whether given nations are achieving sustainability. Indeed, even countries that display sustainability differ considerably in the kinds of capital that contribute to it.
426 citations
TL;DR: Abadie et al. as mentioned in this paper used a synthetic control methodology to estimate the long-term impacts of a 1992 hurricane on the Hawaiian island of Kauai and showed that the island's current population was 12 percent smaller than it would have been had the hurricane not occurred.
Abstract: The long-term impacts of disasters are ‘hidden’ as it becomes increasingly difficult over time to attribute them to a singular event. We use a synthetic control methodology, formalized in Abadie, A. et al. (2010), Synthetic control methods for comparative case studies: estimating the effect of California's tobacco control program, Journal of the American Statistical Association105(490): 493–505, to estimate the long-term impacts of a 1992 hurricane on the Hawaiian island of Kauai. Hurricane Iniki, the strongest storm to hit Hawaii in many years, wrought an estimated US$ 7.4 billion (2008) in direct damages. Since the unaffected Hawaiian Islands provide a control group, the case of Iniki is uniquely suited to provide insight into the long-term impact of natural disasters. We show that Kauai's economy has yet to recover, 18 years after this event. We estimate the island's current population to be 12 per cent smaller than it would have been had the hurricane not occurred. Similarly, aggregate personal income and the number of private sector jobs are proportionally lower.
168 citations
TL;DR: In this paper, the authors report on the development and results of an agent-based model of the migration dynamics that may arise in Bangladesh as a result of climate change, which predicts between 3 and 10 million internal migrants over the next 40 years, depending on the severity of the hazards.
Abstract: Bangladesh is one of the countries most vulnerable to climate change impacts such as extreme weather events, due to its low-lying topography, high population density and widespread poverty. In this paper, we report on the development and results of an agent-based model of the migration dynamics that may arise in Bangladesh as a result of climate change. The main modules are each calibrated with data on relevant indicators, such as the incidences of extreme poverty, socioeconomic vulnerability, demography, and historical drought, cyclone and flood patterns. The results suggest likely changes in population densities across Bangladesh due to migration from the drought-prone western districts and areas vulnerable to cyclones and floods in the south, towards northern and eastern districts. The model predicts between 3 and 10 million internal migrants over the next 40 years, depending on the severity of the hazards. Some associated policy considerations are also discussed.
124 citations
95 citations
TL;DR: Wang et al. as discussed by the authors investigated the impacts of the regulation on consumers' bag use and found that the regulation implementation caused a 49 percent reduction in the use of new bags.
Abstract: To reduce plastic bag litter, China introduced a nationwide regulation requiring all retailers to charge for plastic shopping bags on 1 June 2008. By using the policy implementation as a natural experiment and collecting individual-level data before and after the implementation, we investigate the impacts of the regulation on consumers' bag use. We find that the regulation implementation caused a 49 per cent reduction in the use of new bags. Besides regulation enforcement, consumers' attitude toward the regulation and some consumers' socioeconomic characteristics also affected bag consumption. However, the regulation effects differ largely among consumer groups and among regions and shopping occasions.
64 citations
TL;DR: In this paper, the authors examined the effects of firewood consumption on the health of children up to five years of age and found that children living in households that use more wood, and where exposure to indoor air pollution is higher because the mother cooks while caring for children or because cooking takes place inside, are more likely to have symptoms of respiratory infection.
Abstract: Much of the population in developing countries uses firewood for cooking. The resulting indoor air pollution has severe health consequences for children who are close to the fire while their mothers cook. We use survey data from Guatemala to examine the effects of firewood consumption on the health of children up to five years of age. We also investigate the impact of cooking inside the home, the importance of a mother cooking while caring for her children and the role played by the smoke permeability of housing construction materials. We find that children living in households that use more wood, and where exposure to indoor air pollution is higher because the mother cooks while caring for children or because cooking takes place inside, are more likely to have symptoms of respiratory infection. Simulations indicate that policies that target cooking habits in order to directly reduce exposure, particularly by reducing the number of women who simultaneously cook and care for children, may be more effective for improving young children's health than policies to accelerate the adoption of gas stoves.
51 citations
TL;DR: In this article, the authors derived a U-shaped forest-income curve where forest cover initially declines as per capita income increases, but starts to rise after an income turning point.
Abstract: This article formulates an empirical model that measures the short- and long-run effects of political stability, corruption control and economic growth on CO2 emissions from deforestation. Political stability and corruption have significant effects on forest cover in the short run and have lingering long-run effects. We derive a U-shaped forest–income curve where forest cover initially declines as per capita income increases, but starts to rise after an income turning point. Political stability and corruption control do not significantly affect the income turning point but both variables shift the forest–income curve up or down. The resulting CO2 emission–income curve is downward sloping and is based on changes in the levels of variables affecting forest cover. Increased political stability flattens the CO2 emissions–income curve, leading to smaller changes of CO2 emissions per unit change in income.
46 citations
TL;DR: In this paper, the authors explore how that share, and whether villagers have alternative sources of forest products, determines the effort patrollers put into enforcement and whether they choose to take a bribe rather than honestly reporting the illegal collection of forest resources.
Abstract: Where joint forest management has been introduced into Tanzania, ‘volunteer’ patrollers take responsibility for enforcing restrictions over the harvesting of forest resources, often receiving as an incentive a share of the collected fine revenue. Using an optimal enforcement model, we explore how that share, and whether villagers have alternative sources of forest products, determines the effort patrollers put into enforcement and whether they choose to take a bribe rather than honestly reporting the illegal collection of forest resources. Without funds for paying and monitoring patrollers, policy makers face tradeoffs over illegal extraction, forest protection and revenue generation through fine collection.
39 citations
TL;DR: The notion of sustainable development and the call for going beyond just material wealth to gauge our wellbeing has long featured in much of the sustainable development, environmental and ecological economics literature as discussed by the authors.
Abstract: The world's leaders, business leaders and the public at large are beginning to question, amidst the multiple social, environmental and economic crises, whether our present trajectory of economic growth is sustainable. We seem to force ourselves to believe that we can grow ourselves out of the multiple crises we face today. The notion of sustainable development and the call for going beyond just material wealth to gauge our wellbeing has long featured in much of the sustainable development, environmental and ecological economics literature. We are afraid the present preoccupation with the green economy will not provide the change we are looking for if we don't address the fundamental problem of what we are aiming to achieve and how we measure our progress towards achieving those goals. We fall into the trap many international agencies have made over the past six decades, where the means become the ends and the ends become an academic exercise (Chang, 2001).
36 citations
TL;DR: In this article, a linked hydro-economic model is presented to examine the regional effects of water use regulations and product price changes on the agriculture of the Sao Francisco River Basin, Brazil.
Abstract: This paper presents a linked hydro-economic model and uses it to examine the regional effects of water use regulations and product price changes on the agriculture of the Sao Francisco River Basin, Brazil. The effects of weather on surface water availability are explicitly addressed using the hydrological model MIKE-Basin. Farmers’ adjustments to changes in precipitation, surface water availability, and other factors are quantified using an economic model based on non-linear programming techniques. The models are externally linked. Results show that regional impacts, at the sub-basin level, vary depending on the location of each sub-basin relative to river flows. The effects of water use regulations and of exogenous price shocks on agriculture depend on weather, location, product mix and production technology. Implications of these results for policies designed to manage agriculture and water use are discussed.
33 citations
TL;DR: This paper developed a general approach for estimating motor vehicle externalities, and hence corrective taxes on gasoline and diesel, based on pooling local data with extrapolations from US evidence, for the case of Chile.
Abstract: Gasoline and diesel fuel are heavily taxed in many developed and some emerging and developing countries. Outside the United States and Europe, however, there has been little attempt to quantify the external costs of vehicle use, so policy makers lack guidance on whether prevailing tax rates are economically efficient. This paper develops a general approach for estimating motor vehicle externalities, and hence corrective taxes on gasoline and diesel, based on pooling local data with extrapolations from US evidence. The analysis is illustrated for the case of Chile, although it could be applied to other countries.
TL;DR: The authors used a generalized linear model (GLM) framework to estimate the relationship between the proportion of various Agro-Ecological Zones (AEZs) in a district and climate, and projected how climate change will cause AEZs to shift, causing changes in acreage and net revenue per hectare of cropland.
Abstract: This study predicts the impact of climate change on African agriculture. We use a generalized linear model (GLM) framework to estimate the relationship between the proportion of various Agro-Ecological Zones (AEZs) in a district and climate. Using three climate scenarios, we project how climate change will cause AEZs to shift, causing changes in acreage and net revenue per hectare of cropland. Our results predict that Africa will suffer heavy annual welfare losses by 2070–2100, ranging between US70 billion, depending on the climate scenario and cropland measure considered.
TL;DR: The authors assess whether the investments we make today will be sufficient to provide future generations with the means to cope with imminent disasters like the exhaustion of minerals and vital resources, or other problems like increasing population pressure and climate change.
Abstract: How sustainable is the growth pattern of a national economy? At first, answering this question seems almost impossible, since this would require knowing what happens and what can happen in the future. One needs to assess whether the investments we make today will be sufficient to provide future generations with the means to cope with imminent disasters like the exhaustion of minerals and vital resources, or other problems like increasing population pressure and climate change. One also needs to assess which combination of investment leads to the desired result. If entrepreneurs, managers and households already have problems in finding out what is the best mix of investment for them in their micro-environment, how can we answer the aggregate question that needs so much more information?
TL;DR: In this article, the impact of market participation on pigeonpea diversity and household welfare was evaluated using propensity score matching techniques, using cross-sectional data of 333 households from Kenya.
Abstract: This paper examines determinants of output and input market participation. It employs propensity score matching techniques to evaluate the impact of market participation on pigeonpea diversity and household welfare, using cross-sectional data of 333 households from Kenya. Results show that input and output market participation decisions are quite distinct. Output market participation is influenced by household demographics, farm size and radio ownership, while input market participation is determined by farm size, bicycle ownership and access to a salaried income. The findings reveal a positive and significant impact of output market participation on pigeonpea diversity, while input market participation had a negative and significant impact on diversity. The results indicate that output market participants have significantly higher food security status than non-participants, in line with the general findings of the literature. However, no significant impact is found between indicators of household welfare and input market participation.
TL;DR: In this article, the authors explore whether multinational firms, frequently the target of environmentalists, are harmful for a host country's environment and find that foreign firms are cleaner than domestic plants even after controlling for productivity that is likely to be negatively correlated with emissions.
Abstract: The rise of globalization has directed the attention of economists to the effect of trade and multinational production on the environment. We explore whether multinational firms, frequently the target of environmentalists, are harmful for a host country's environment. We introduce environmental regulation in a two-country model of heterogeneous firms with monopolistic competition. Using plant-level data from Chile, we test the model implications. We find that foreign firms are cleaner than domestic plants even after controlling for productivity that is likely to be negatively correlated with emissions. We also show that increasing the stringency of environmental regulations in a previously unregulated market affects the domestic firms more than the multinationals.
TL;DR: In this paper, the authors describe the courage exhibited in going out on a limb like this, especially because the acrobats are sophisticated and understand how many chances to go wrong they have.
Abstract: You have to admire the courage exhibited in going out on a limb like this, especially because the acrobats are sophisticated and understand how many chances to go wrong they have. Of course one can stand back and admire courage and dexterity without actually believing in the results, and without any feeling that one could do better.
TL;DR: In this article, the authors use data collected from households, vendors and seed samples to test the way market purchases of grain and seed affect household food consumption and millet genetic diversity.
Abstract: Although farmers in the Malian Sahel depend on millet for survival, demand and supply constraints have impeded their use of certified seed. We use data collected from households, vendors and seed samples to test the way market purchases of grain and seed affect household food consumption and millet genetic diversity. Purchase of millet grain in markets contributes to food security, but reduces dietary diversity – suggesting that scarce cash was directed toward meeting staple food needs first. Farmers purchased millet grain for seed only in the site with riskier rainfall and smaller market fairs. Although they were more likely to purchase in markets where the genetic dissimilarity of seed was higher, purchasing seed in markets was negatively associated with on-farm diversity. Seed shortage rather than variety experimentation appears to be the motivation for seed purchase. Introducing certified seed in rural markets through small-scale traders will require the provision of market services and promotional efforts.
TL;DR: In this article, a tax/subsidy policy affects consumers' behavior when choosing between green (pollution-free goods) and conventional products, and its effects on welfare when a proportion of consumers have strong preferences for green goods.
Abstract: This paper analyzes how a tax/subsidy policy affects consumers' behavior when choosing between green (pollution-free goods) and conventional products, and its effects on welfare when a proportion of consumers have strong preferences for green goods. We analyze a Hotelling's linear city model where final products by two firms are symmetric in all dimensions except for the externality their production process generates. Our efficiency comparisons suggest that, under a setting of horizontal product differentiation, an environmental regulation (either on polluting firms or consumers buying their products) yields higher social welfare than the absence of policy. Moreover, the proportion of consumers who prefer green products affects the welfare gains from a subsidy or tax policy.
TL;DR: In this article, the authors present an analysis of the role of two forms of social capital (link and bonding) on two key farm outcomes: on-farm crop diversity and household wellbeing.
Abstract: The paper presents an analysis of the role of two forms of social capital – linking and bonding – on two key farm outcomes: on-farm crop diversity and household wellbeing. Where market transactions are limited, social capital is an important household asset for accessing seed and channelling information. The study is set in a drought-prone region of Ethiopia, with high rates of food insecurity and dependency on agriculture for livelihoods. The region is very rich in crop genetic diversity, particularly for sorghum. The data were collected for a production year that experienced a major drought shock. Results of the analysis indicate that social capital is an important determinant of farm level diversity and wellbeing, with opposing effects related to the two different forms of social capital. This suggests possible trade-offs between the two forms of social capital in terms of food security, production and diversity, which need to be considered in planning interventions.
TL;DR: In this article, Arrow et al. show how expanding the asset boundary beyond produced and natural goods could increase our measures of income, saving and wealth enormously, using selected World Bank figures as a basis for comparison.
Abstract: The Arrow et al. paper is a welcome addition to a large literature on the linkage between asset values and social welfare. This literature has its roots in the concern about ‘greening’ the national accounts, but the paper shows how expanding the asset boundary beyond produced and natural goods could increase our measures of income, saving and wealth enormously. I will comment in turn on the wealth accounts, investment accounts and the treatment of CO 2 emissions, using selected World Bank figures as a basis for comparison.
TL;DR: In this paper, the authors analyzed the effect of environmental standards on aggregate employment in the presence of a productivity effect in a multi-sector general equilibrium framework of an open economy, and identified the role of this productivity effect on the change in employment and show that it may actually improve the chances of an employment expansion.
Abstract: This paper analyses the effect of environmental standards on aggregate employment in the presence of a productivity effect in a multi-sector general equilibrium framework of an open economy. The productivity effect is generated among the skilled and unskilled workers as an improvement in the environmental quality improves their health, leading to an increase in their productivity. Though the productivity effect initially lowers labour demand as labour requirement per unit of production falls, a standard may raise employment depending on the parametric configurations. In this paper, we identify the role of this productivity effect on the change in employment and show that it may actually improve the chances of an employment expansion.
TL;DR: In this paper, the authors used survey data from a territorial-user-right-based South Korean inshore (maul) fishery and applied an empirical strategy to provide some of the first quantitative evidence that self-governance benefits maul fishermen.
Abstract: Self-governance of natural resources has started to gain increasing attention as an alternative to command-and-control and market-based tools. However, a fundamental question remains: is self-governance economically beneficial, allowing it to serve as an alternative management tool? This paper uses a unique set of survey data from a territorial-user-right-based South Korean inshore (maul) fishery and applies an empirical strategy to provide some of the first quantitative evidence that self-governance benefits maul fishermen. We find that members of the self-governance group perceive the management system as having had a positive impact on four out of the eight criteria we tested: stock recovery, curtailed fishing effort, reduced disputes among fishermen and declining incidents of illegal fishing. Considering that these groups have been in existence on average for less than seven years, these results indicate that the management scheme has made good progress overall.
TL;DR: In this article, the authors investigate household preferences for improved water services and decentralization levels (actual departmental administration vs. further decentralization to the municipality) in urban Matiguas, Nicaragua.
Abstract: Choice models and a referendum format contingent valuation survey are used to investigate household preferences for improved water services and decentralization levels (actual departmental administration vs. further decentralization to the municipality) in urban Matiguas, Nicaragua. Choice models suggest that households prefer the current departmental administration over municipal provision for service and capacity, but believe that the municipality would be more interested in improving services. Results also indicate that households are willing to pay an increment of at least 112 per cent above their current monthly water bill for reliable and safe drinking water services, regardless of administration type.
TL;DR: In this paper, an energy-focused macro-micro approach is used to assess the poverty implications of government policy response to increases in international oil prices in South Africa, which leads to an increase in poverty as the beneficial price effect is cancelled out by a decline in households' income induced by the financing method used.
Abstract: An energy-focused macro-micro approach is used to assess the poverty implications of government policy response to increases in international oil prices in South Africa. The first scenario assumes that increases in international oil prices are passed on to end users with no changes in government policy instruments. In this scenario, poverty indicators increase. The second scenario assumes that the world price increases are nullified by a price subsidy by the government. This scenario still leads to an increase in poverty as the beneficial price effect is cancelled out by a decline in households’ income induced by the financing method used. While revenue generated from a 50 per cent tax on windfall profit of the petroleum industry helps to minimize the loss in government revenue, it does not contribute to mitigating the increasing poverty trend, since the decline in saving and investment under this scenario restricts the country's growth, employment and income distribution perspectives.
TL;DR: In this article, the role of returns to selling farmyard manure and farmers' impatience on the propensity to allocate FARM to different uses was examined in a mixed farming system in which FARM is considered an important multipurpose renewable resource that can be used to enhance soil organic matter, provide additional income and supply household energy.
Abstract: In a mixed farming system in which farmyard manure (FYM) is considered an important multipurpose renewable resource that can be used to enhance soil organic matter, provide additional income, and supply household energy, soil fertility depletion could take place within the perspective of the allocation pattern of FYM. This paper estimates a system of FYM allocation regressions to examine the role of returns to FYM and farmers' impatience on the propensity to allocate FYM to different uses. We parameterize the model using data from a sample of 493 households in Ethiopia. Results indicate a heightened incentive for diverting FYM from farming to marketing for burning outside the household when returns to selling FYM and the farmer's discount rate are high. These reveal the need for policies that will help to reduce farmers' impatience and encourage the substitution of alternative energy sources to use FYM as a sustainable land management practice.
TL;DR: In this paper, the consumer welfare effects of a change in the institutional setting on communal forest and grazing lands, using a cross-section data set of 200 households in Northern Ethiopia, were examined.
Abstract: Land is an essential factor of production. Institutions that govern its efficient use determine the sustainability of this essential resource. In Ethiopia all land is publicly owned. Such an institutional setting is said to have resulted in the major degradation of Ethiopia's land resources and dissipation of the resource rent. An alternative to this is assigning a private property institution. In this paper, we examine the consumer welfare effects of a change in the institutional setting on communal forest and grazing lands, using a cross-section data set of 200 households in Northern Ethiopia. Findings suggest that changing the current institutional setting could indeed be welfare reducing.
TL;DR: In this article, the economic potential of payments for ecosystem services to conserve water through the conversion of land under irrigation into rain-fed land in the upper reaches of the Shiyang River basin, located in northwest China.
Abstract: In this paper, we conduct an investigation to assess the economic potential of payments for ecosystem services to conserve water through the conversion of land under irrigation into rain-fed land in the upper reaches of the Shiyang River basin, located in northwest China. We use an approach developed by Antle and Valdivia (2006, Australian Journal of Agricultural and Resource Economics, 50: 1-15) to estimate the supply of water. The analysis shows that it is theoretically possible to reduce agricultural water consumption and subsequently increase the water supply, which would aid the prevention of environmental degradation in the middle and lower reaches of the Shiyang River basin. In addition to the conservation of water, considerable income would be generated by local farmers, which would help to alleviate poverty. Furthermore, the analysis also suggests that more complete data on ecosystem services rates, transaction costs and other related factors would be of value for achieving a more comprehensive assessment.
TL;DR: In this paper, the authors show that an efficient pollution taxation scheme should charge each source according to its specific marginal contribution to social damages, and that this requirement would impose technical, informational and administrative expenses that most regulators seem unable to afford.
Abstract: It is well known that an efficient pollution taxation scheme should charge each source according to its specific marginal contribution to social damages. Despite significant advances in environmental assessment, geographic information systems and data analysis, this requirement would impose technical, informational and administrative expenses that most regulators – notably in developing countries – seem unable to afford. This paper shows that it can actually be less demanding than it seems. If polluters are price-takers, for instance, in a context where the affected population concentrates at a given location, then the optimal emission tax will disregard a source's location. Otherwise, the adjustment of the optimal tax to location will depend on the extent of a polluter's market power.
TL;DR: In this article, the authors show that market participation may actually encourage growers to increase on-farm diversity through better access to new varieties exchanged at local markets and higher returns from varieties already grown.
Abstract: Although farmer market participation raises income, it often also reduces on-farm varietal diversity. However, for under-utilized crops like minor millets, market participation may actually encourage growers to increase on-farm diversity through better access to new varieties exchanged at local markets and higher returns from varieties already grown. We test this hypothesis in two different agro-ecological niches, the Plains and the Hills in southern India. Empirical results based on propensity score matching indicate that, in the less fertile dryland plains, market participation improved on-farm varietal diversity of minor millets and increased net revenues – albeit with insignificant welfare effects on farm households. On the other hand, in the fertile hill ecosystems, market development had no effect on varietal diversity. Insights from such a comparison could help design suitable policy interventions for on-farm conservation of under-utilized crops in their own agro-ecosystems through active stakeholder participation.
TL;DR: In this paper, a bioeconomic model is presented in which a social planner uses a landing tax (ad valorem tax) to internalize the spatial externality of offshore fish stocks.
Abstract: Fishers in developing countries do not have the resources to acquire advanced technologies to exploit offshore fish stocks. As a result, the United Nations Convention on the Law of the Sea requires countries to sign partnership agreements with distant water fishing nations (DWFNs) to exploit offshore stocks. However, for migratory stocks, the offshore may serve as a natural marine reserve (i.e., a source) to the inshore (i.e., sink); hence these partnership agreements generate spatial externality. In this paper, we present a bioeconomic model in which a social planner uses a landing tax (ad valorem tax) to internalize this spatial externality. We found that the tax must reflect the biological connectivity between the two patches, intrinsic growth rate, the price of fish, cost per unit effort and social discount rate. The results are empirically illustrated using data on Ghana.