The notion of intertemporal h-option value is introduced to extend to environmental decision-making problems of the concept of quasi-option value, defined by Arrow and Fisher and Henry, whenever an individual faces imprecise information, or hard uncertainty, represented by a non-additive measure over events. Under hard uncertainty and irreversibility, the decision-maker faces the intertemporal h-option value, that is an uncertainty premium of preservation, which represents the gain from being able to learn about the future consequences of irreversible actions. The intertemporal h-option value is a correction factor that has to be taken into account in evaluating the total economic value of feasible actions.

This paper presents different substitution mechanisms which determine, in a theoretical framework, the conditions for long-term sustainable development. In a one-sector approach and in two versions of a multi-sector endogenous growth model, the accumulation and the substitution of man-made inputs for natural resources are analysed. Assuming man-made capital to be an output of a specific sector of the economy, the elasticities of substitution between the different inputs play a more complex role than suggested by the one-sector approach. According to the multi-sector models, the prediction of growth becoming sustainable emerges as realistic, provided that the sectoral adjustment costs in the economy are not too high.

As environmental goods such as fuelwood and fodder become more scarce, rural households in developing countries spend more time in their collection. It has been suggested that as a result households may reallocate labor away from own-farm agricultural production. This paper examines whether this is the case for a sample of agricultural households from rural Nepal. Cross-sectional estimates of agricultural labor demand equations give some indication that reallocation away from farm work may occur as environmental products become more scarce. However, these results disappear in random-effects estimation suggesting that time is instead reallocated from other activities or leisure. What little evidence there is for a labor reallocation from agriculture suggests that policies to relieve environmental good collection labor burdens should focus on leaf fodder and grass used as livestock feed rather than on fuelwood.

Mangrove ecosystems provide a wide range of market and non-market benefits to coastal communities in the developing world, yet they remain undervalued and overexploited in most regions where they are found. This paper analyzes the use and value of mangroves in Kosrae, Micronesia, where the population is largely dependent on the swamps for fuelwood and other ecosystem services, such as erosion control, storm protection, and nutrient flows to shoreline fisheries. The results show that mangroves on the island are worth between $666 thousand and $1 million per year (1996 prices) based on the net value of marketable products alone. In addition, household survey data suggest that the local people are willing to pay between $1 million and $1.26 million per year to protect and use mangrove swamps indefinitely. The results thus indicate that the population places some premium on the existence and indirect ecosystem services of mangroves, over and above the direct use values. Moreover, respondents generally favored—and were willing to pay more for—a tax system designed to manage and preserve the mangroves' direct and indirect services over a permit system focused only the allocation of direct use over time. Valuation analyses using revealed preference and contingent valuation methods lead to additional conclusions regarding the distribution of benefits, with poor households deriving more direct benefits from—but willing to pay less to protect—mangrove ecosystems.