This paper empirically examines the factors that determine the incidence and extent of the Clean Development Mechanism (CDM) in developing countries. Estimation results show that the incidence and extent of the CDM is greater for the developing countries with larger mitigation potential and greater capacity to manage the projects. Developing countries with faster economic growth and past experience with activities implemented jointly (AIJ) projects are more likely to host renewable energy projects, although this is not the case for other project types. The incidence and extent of foreign investment projects in energy efficiency, CO2 reduction and non-CO2 gas reduction projects are higher for the countries with lower per capita GDP, most likely due to capital constraints. There is no evidence that the number of sub-regional projects impinged on investment flows. Countries in Sub-Saharan Africa appear to face special obstacles under the CDM even after the strength of institutions and energy-related mitigation opportunities are accounted for.

This paper estimates a theory-based regression model which studies the macro-economic impact of environmental and consumption risks on consumption growth in the Mediterranean region. The analysis is carried out using time series aggregate data for 13 Mediterranean countries over the period 1965–2008. The results indicate that both risks and their interaction significantly influence consumption dynamics. The estimates of the indices of relative risk aversion and relative prudence, as well as the relative preference for the quality of environment, suggest marked cross-country heterogeneity.

On 2 April 2013 a major flood struck the City of La Plata, Argentina, killing 89 people and displacing thousands of others. That event, the worst flood the city has suffered in the past 100 years, prompted plans for a new hydraulic infrastructure. Although such an investment is necessary, little is known about its benefits. This paper intends to shed some light on this issue by estimating the willingness to pay to avoid the risk of experiencing a flooding event. For this purpose, we have taken thousands of real estate prices in the La Plata Metropolitan Area and combined them with a high-resolution flood risks map to estimate spatial hedonic price models. The results show significant price discounting for properties in flood-prone areas.

In Rwanda, rural water supply is not uniformly distributed. Rural areas are characterized by differences in the distance to the nearest water point and in water quality for domestic water, by watering frequency and water availability for irrigation water, and by the price for both. A household's perception of further improvements in water supply will, therefore, depend heavily on the situation it currently faces. The authors used a choice experiment to model how the individual status quo (SQ) affects preferences. Accounting for individual SQ information improves model significance relative to simply using the generic SQ parameter in the model, and the willingness to pay increases. Not using this information leads to a downward bias – and, in some cases, statistical insignificance – in estimates of households’ valuation of health improvements linked to improved domestic water availability, as well as of increased watering frequency linked to the improved availability of irrigation water.

In low-income countries, grassroots collective action for the management of a common environmental resource is a well-known substitute for government provision of public goods. In our research we test experimentally what its effect is on social capital. To this purpose we structure a ‘sandwich’ experiment in which participants play a common pool resource game (CPRG) between two trust games in a Nairobi slum where social capital is scarce but informal rules regulating the commons are abundant. Our findings show that the change in trustworthiness between the two trust game rounds generated by the CPRG experience is crucially affected by the subjective satisfaction about the CPRG, rather than by standard objective measures related to CPRG players' behaviour. These results highlight that subjective satisfaction in a collective action has relevant predictive power on social capital creation, providing information which can be crucial to designing successful self-organized environmental resource regimes.

We propose an ‘allocate-and-trade’ institution to manage the eastern Nile River Basin for Ethiopia, Sudan and Egypt as the basin faces a new reality of the Grand Ethiopian Renaissance Dam (GERD). We find that a social planner could increase the region's economic welfare by assigning water rights to the riparian states. An alternative intrabasin water rights arrangement and trade could achieve more than 95 per cent of the welfare created by the social planner. GERD will change both the economic benefits and hydrological positions of the riparian countries. Economic benefits from alternative water use would be sufficient to make riparian countries better off compared with the status quo. Furthermore, riparian countries could raise more than US$680 m annually for protecting and conserving the natural resources of the region.