This paper reviews recent developments in the study of the so-called ‘double dividend’, i.e. the possibility of improving the environment and, at the same time, reducing the distortions of the tax system through revenue-neutral green taxes. The main goal of the analysis is to identify the relationship between the modeling strategy and the double dividend results. Recent modeling advances are considered at both the theoretical and the empirical levels. In particular, we note that the most significant theoretical advances have been made in the direction of allowing for imperfectly competitive markets, especially the market for labor. At the same time, we argue that empirical work, particularly on the ‘employment double dividend’, is still relatively scant and that much more needs to be done both in the direction of more realistic empirical models and of an extended sensitivity analysis of the main findings.

A major issue in international multilateral negotiations is the creation of a fund for the fair and equitable sharing of benefits arising out of the utilization of plant genetic resources for food and agriculture (PGRFA). This paper provides a conceptual understanding of the economic value of PGRFA, identifies proxies for this value that can be used to determine the relative contribution of each country to the benefit-sharing fund, and evaluates the suitability of each proxy to this task.

This paper estimates the historic relationship between carbon emissions and GDP using data across countries and across time. We combine this relationship with plausible projections for GDP and population growth to construct a model that offers insights into the likely path of global emissions in the next century. In addition, we experiment with a method for incorporating oil prices into the model. Our analysis provides independent confirmation of the business-as-usual forecasts generated by the larger structural models.

This paper examines whether a country's stage of development affects its climate sensitivity. The paper begins with a model of agriculture that shows that the effect of development on climate sensitivity is ambiguous, depending on the substitution between capital and climate. To resolve this issue, the climate sensitivity of agriculture in the United States, Brazil, and India is measured using a Ricardian approach. Relying on both intertemporal as well as cross-country comparisons, the empirical analysis suggests that increasing development reduces climate sensitivity.

Formulation and estimation of a correctly specified abatement cost function would be central to policy formulation regarding imposing taxes or user-fees as well as of sharing social cost in the presence of environmental pollution. Often in research, the output of an abatement activity for water pollution appears to us not to have been clearly specified. This activity is very distinct from whatever is the actual product of the plant. We propose in this paper that the output is only and exclusively the reduction in the level of the pollutant in the outflow from the plant and illustrate this with primary data for small-scale factories in Nandesari Industrial Estate in Gujarat, India. The cost function estimates provide evidence of significant scale economies and high marginal abatement cost in wastewater treatment by small-scale factories.

This study combines hydrological modeling with applied micro-econometric techniques to value a complex ecosystem service: drought mitigation provided by tropical forested watersheds to agrarian communities. Spatial variation in current baseflow allows estimation of drought mitigation values as the marginal profit accruing to agricultural households. The paper shows that this uncommon focus on producer (not consumer) surplus measures is appropriate for valuation as long as markets for commodities related to the environmental services are complete. For the typical household, the estimated marginal profit is positive, validating the central hypothesis that baseflow makes positive contributions to agricultural profits. There is some evidence, however, that increased watershed protection will increase profits through greater baseflow only in watersheds with a unique mix of physio-graphic and climatic features. The paper evaluates and provides some support for the hypothesis, put forward by hydrological science and the Indonesian Government, that protected watersheds can supply latent and unrecognized ecosystem services to local people.