Adaptation has the attributes of a private good that aims to protect a country from climate change, while mitigation, which contributes to the reduction of worldwide greenhouse gas emissions, has the properties of a public good. This paper attempts to investigate how the innovation of adaptation technology by a developed country (the North) may affect a developing country (the South) as well as the North through changes of mitigation in both countries. We show that the efficacy of adaptation determines the level of both countries' mitigation, and thereby causes them to be better or worse off. For both countries to be better off, it is required that the innovation be neither very effective nor very ineffective. Furthermore, we demonstrate that by introducing an international transfer system in which the North is taxed according to the level of adaptation, both countries can be better off even if the innovation is highly effective.

In this paper, we estimate the individual effects of natural openness and trade policy on air pollution. Natural openness is the component of the trade share (imports and exports as a percentage of GDP) attributable to population, geography and factor endowment differences. We find that natural openness reduces air pollution, while trade policy has a limited impact. The implication is that ‘natural’ geographic and endowment differences play a more important role than deliberate trade policy decisions in explaining the trade and environment link.

Dual discounting is a new approach under consideration for use in environmental cost–benefit analysis. This paper updates the literature on this subject and subjects it to the assessment of an international panel of experts on environmental discounting by means of a Delphi study. Subsequently, a case study provides some findings deriving from the practical application of this strategy as the choice of discounting scenario in the economic evaluation of a plant for the desalination of irrigation return water, aimed at halting the degradation of a wetland. There are theoretical and practical reasons to support the use of this discounting approach in relation to projects with intergenerational impact, where the environmental effects are considerable in relation to market effects. Although still under investigation, the dual discounting approach appears to provide an appropriate methodological platform enabling the quantification of the degree of intergenerational equity implicit in the project.

The design and implementation of environmental policy often involve more than one pollutant, and must consider pollution as a byproduct of the production of marketable output. In this paper, we test the implicit assumption in the empirical literature that (1) production of marketable output, pollution and abatement are separable, and (2) different pollutants can be abated separately. Using unique plant-level data in India, we reject the null hypotheses of separability between marketable output and pollutants, and between different pollutants. Firms must incur abatement costs for reducing pollution levels. In addition, complement and substitute relationships between water pollutants are demonstrated with statistical significance.

This study estimates the willingness-to-pay (WTP) of Beijing residents in order to maintain the improved air quality experienced during the Olympic Games. A double-bounded contingent valuation method is applied to a survey of 566 Beijing residents. The results indicate that the mean annual WTP per household is between CNY 22,000 and 24,000, and the median WTP is around CNY 1,700. The WTP for this actually experienced improvement is significantly higher than the results from previous hypothetical WTP surveys in China.

We use satellite remote sensing data of grassland cover in Inner Mongolia, China to test whether the existence of and the size of roads in 1995 is associated with the nature of the grassland in 2000 and/or if it affects the rate of change of the grassland between 1995 and 2000. The regression results show that the impact of roads on grassland cover depends on the nature of the resource. When the grassland is composed of relatively high quality grassland, roads lead to degradation, whereas when grassland resources are sparse, access to a road results in the restoration of the resource.