Many poor countries remain trapped in a cycle of poverty and environmental degradation. Understanding how people react to existing and proposed solutions most likely can be improved using the methods of experimental economics. Experiments provide researchers a method to test theory, look for patterns of behavior, testbed economic institutions and incentives, and to educate people. Herein we explore how experimental economics has been used and could be used to help guide decision making to increase prosperity without overexploiting the resource base and environmental assets needed for basic survival.

The Pollution Haven Hypothesis (PHH) states that with weak environmental policies a country can create comparative advantage in the polluting sector. This paper formulates a 3-good-3-factor model where the abatement input is a pure intermediate good. In our model, the PHH as well as the neoclassical trade theorems are valid only when environmental policies are distribution neutral. Inspired by the US Clean Air Act, we develop and estimate a dynamic panel model. We find that US environmental policies are consistent with distribution neutrality. Our results indicate that lowering abatement standards in all industries is the only way the US can become a pollution haven. In the context of our model, the PHH has damaging implications for the world environment.

This paper measures environmental efficiency (EE) and environmental productivity (EP) in 38 countries over the period 1971–92 and analyzes differences in these across countries. It explores several macro-economic factors that could explain these differences, such as income levels and the degree of openness in these countries. The average EE and EP indexes are found to be almost steady over the period 1971–92. In the annex-I countries, an increase in income levels initially leads to an increase in the average EE but subsequently to a decline in EE. In non-annex I countries, EE is increasing over the range of income in these countries. This study also finds an EKC type relationship between EP and per capita GDP in annex-I countries. The degree of openness has a significant positive impact on EE in annex-I countries.

Lake Victoria fisheries are important to Tanzanian food security, employment, and foreign exchange, but they have experienced declining performance, largely due to overfishing. This paper studies technical efficiency and skipper skill using Tanzanian fishery data for the two major species, Nile perch and dagaa. The relative level of efficiency is high in both fisheries and several observable variables linked to skipper skill significantly explain the efficiency level.

Maize originated in Mexico, where it is typically grown in association with other crops in the milpa system. This ancient mode of production is practiced today in ways that vary by cultural context and agro-environment. We use a choice experiment to estimate farmers' valuation of three components of agrobiodiversity (crop species richness, maize variety richness, and maize landraces) in the milpa system, and examine their interest in cultivating genetically modified (GM) maize. We apply a latent class model to data collected from 382 farm households in the states of Jalisco, Oaxaca, and Michoacán to analyze the heterogeneity of farmer preferences. We identify the characteristics of farmers who are most likely to continue growing maize landraces, as well as those least likely to accept GM maize. Findings have implications for debates concerning the introduction of GM maize and the design of in situ conservation programs in these sites.