Understanding the extent to which agriculture can adapt to climate change and the determinants of farmers' adaptive capacity are of paramount importance from a policy perspective. Based on household survey data from a large sample in rural China, the present article adopts a panel approach to estimate the potential benefits of long-run adaptation and to identify the determinants of farmers' adaptive capacity. The empirical results suggest that, for various model settings and climate change scenarios, long-run adaptations should mitigate one-third to one-half of the damages of warming on crop profits by the end of this century. These findings support the basic argument of the hedonic approach that omitting long-run adaptations will dramatically overestimate the potential damage of climate change. The paper also finds that household-level capital intensity and farmland size have significant effects on farmers' adaptive capacities.

In the epidemiological literature, the eradication of a wildlife disease through culling is usually described in terms of a constant hunting rate to simulate the selective removal of animals from the population. By using simple SI (susceptible–infected) models, it is easy to prove that, if the hunting rate is high enough, the population eventually drops below a critical threshold level under which the pathogen is deemed to be extinct. However, hunting costs as well as the monetary benefits of disease control are almost systematically neglected. Moreover, the hunting rate is usually assumed to be constant over time, while in reality health authorities can implement more flexible culling policies. In this work we examine a class of more realistic time-variant culling strategies in a cost–benefit framework. Culling strategies differ in the way decisions are made about when and how much to cull; that is, whether hunting occurs when disease prevalence, host population density, or the number of carcasses exceeds (or is below) a given threshold. For each culling strategy, the optimal value of the control parameters and the hunting rate are those that minimize the sum of the culling costs and the sanitary costs associated with infection over a specific period of time. Classical swine fever (CSF) in wild boar populations has been taken as a reference example because of its potential economic impact on industrialized and developing countries.

We show that the optimal time-flexible culling strategy is invariably more efficient than the best traditional strategy in which the hunting rate is held constant through time. We also show that the type of hunting strategy that is selected as optimal depends on the shape of the cost functions.

Conservation practitioners are increasingly turning to incentive-based approaches to encourage local resource users to change behaviors that impact on biodiversity and natural habitat. Three such approaches are buyouts, conservation agreements and alternative livelihoods. We assess the design and performance of these types of marine conservation interventions through an analysis of 27 case studies from around the world. Here we focus on cases that are particularly relevant to designing incentives for Small Island Developing States. Many more opportunities exist for interventions that combine the strengths of these approaches, such as through performance-based agreements that provide funds for education or alternative livelihood development.

This study examines how human capital develops in response to early-life weather and pollution exposures in the Philippines. Both pollution and weather are examined in relation to short- and long-term human capital outcomes. We combine a three-decade longitudinal survey measuring human capital development, a database of historical weather, and multiple databases characterizing carbon monoxide and ozone in the Philippines during the 1980s. We find evidence that extreme precipitation and temperature affect short-term anthropometric outcomes, but long-term outcomes appear unaffected. For long-term cognitive outcomes, we find that early-life pollution exposures negatively affect test scores and schooling. These long-term responses to early-life pollution exposures extend to the labor market with reduced hours worked and earnings. The implication is that a 25 per cent reduction in early-life ozone exposure would increase per person discounted lifetime earnings by $1,367, which would scale to $2.05 billion at the national level (or 2 per cent of 2005 GDP).

We study the economic performance of Benthic Resource Management Areas (BRMAs) in central-southern Chile. The analysis considers 26 managed areas with Agreements of Use declaring Chilean abalone (Concholepas concholepas) to be the main exploited benthic resource from 2001 to 2003. Our analysis explores the role played by several characteristics thought to be potential BRMA performance determinants. These variables were defined and grouped into four types: economic, environmental–biological, institutional–organizational, and organizational leader. Our results indicate that the price of Chilean abalone, the size of the habitable area, the target resource density, the density of other resources, and leader experience are determinant factors for the economic performance of the BRMAs under study.

This article provides an economic investigation into the underlying causes of industrial wastewater emissions. We examine the direct and the structural break-induced effect of national environmental regulation on industrial wastewater emissions. The results show that strict environmental regulation can partially offset the energy-induced effects imposed by the scale effects of foreign direct inflows and cause positive behavioral responses by either limiting coal usage or improving upon coal usage technology and shift towards clean energy sources. We find the absence of scale economies in the provision of environmental services in the industrial sector due to the poor nature of the technical processes of industries. We further highlight the importance of raising the investment in environmental treatment and embracing trade liberalization in the improvement of industrial wastewater management.

Policies to influence land use decisions in agriculture or grazing can increase the ability of invasive species to out-compete native species and thereby disrupt seemingly stable ecological-economic systems. Building off of models of interdependent resources, invasive species and soil fertility, this paper develops a model of shifting cultivation decisions for two types of farmers, one who sees the threat of invasive grasses and one who does not. The paper uses numerical solutions to this dynamic decision problem to examine the impact of various policies on farmer welfare and on the stability of the economic-ecological system. Some policies undermine the resilience of the system, while other policies augment the system's ability to withstand species invasions.

There is a new international policy focus on reducing emissions from deforestation and forest degradation (REDD), as well as promoting forest conservation, the sustainable management of forests and the enhancement of forest carbon stocks (REDD-plus). The recent Conference of Parties meeting of 196 countries of the United Nations Framework Convention on Climate Change (UNFCCC) in Cancun, Mexico (December 2010) was able to advance initiatives on REDD-plus even while there was limited progress on fossil fuel related aspects of an international climate change agreement. The Cancun meeting recognised that there was strong and broad support for REDD-plus and was able to agree to the development of a formal Mechanism under the UNFCCC for incentivizing REDD-plus activities. Implementing the Mechanism is another matter, and will require the development and coordination of country REDD-plus readiness and financing, including detailed consideration of country reference levels, measurement, reporting and verification methodologies, and sub-national and national program coordination.

There is ample evidence that canal systems often fail to reach their design capacity. This study argues that inefficient allocation of water within canals is one cause. This study collects precise measures of farm-level water withdrawals using flow meters in a canal in Pakistan. These data reveal that farmers near the head of the canal get more canal water than farmers near the tail, even accounting for conveyance efficiency. The results suggest that improvements in canal water management would yield efficiency gains for the canal.

Analysis of a new Mexican database reveals that air-borne, suspended particulate emissions per employee by plants with 20 or less employees are significantly greater than by larger plants within the same manufacturing sector. From a second, new data set on manufacturing plants in Brazil, it is shown that industry in lower-income areas displays a higher concentration of the dirtiest industrial sectors and of smaller plants (which are dirtier). However, harm to humans from industrial air pollution in Brazil is found to be greater in higher-income areas and most of this harm derives from larger plants. This is not simply a reflection of the greater prevalence of manufacturing in urban areas, for the rising projections of human mortality among higher wage municipalities hold, even controlling for population density. Resolution of this apparent paradox hinges on the distinction between emission intensities and total emissions, the latter determining the level of harm, a distinction that has not always been made clear in the course of debate.

Climate regulations tend to target energy-intensive sectors whose products are widely used in industrial production as intermediate inputs, and carbon abatement may be partially offset by intermediate input-led leakage. This paper aims to examine the impact of intermediate input linkages on carbon leakage both theoretically and empirically. The theoretical part develops a Harberger-type model with an input-output linkage structure, identifies four leakage effects and derives closed-form solutions for these leakage effects. Its empirical part builds a computable general equilibrium model of China's economy and introduces structural decomposition analysis to link the theoretical and empirical models. When imposing a carbon price on the electricity generation sector, our results show significant sectoral carbon leakage. Our decomposition analysis further suggests that such leakage is mainly through the production substitution effect and the multiplier effect. Our results highlight the importance of sectoral linkage when discussing the carbon leakage issue of climate policies.

This paper studies the effects of global warming in a descriptive model of endogenous growth. It is assumed that deviations from the pre-industrial global surface temperature negatively affect aggregate output. The paper studies the effects of varying the tax rate and of different abatement activities on the emission of greenhouse gases and on the growth rate. We study both effects for the long-run balanced growth rate and for the growth rate of GDP on the transition path. Using simulations, it is demonstrated that higher abatement activities may both reduce greenhouse gas emissions and lead to higher growth. Further, the second-best abatement share is computed and the corresponding growth rate as well as the social optimum.

Economic instruments offer the potential to reach pre-determined environmental goals at a lower aggregate cost than less incentive-based measures, but administrative underpinnings crucial to the effective functioning of economic instruments may be lacking in developing countries. For this reason, pragmatic analysts and policymakers often advocate the use of so-called ‘mixed’ instruments that combine incentive mechanisms with improved administrative arrangements. This paper explores such possibilities with reference to intensive shrimp aquaculture, which dominates shrimp farming and is an important economic sector in Thailand. This activity has been cited as a major contributor to environmental degradation in Thailand and several other countries through destruction of mangrove forests, salinization of land, sludge disposal, and, in particular, water pollution. An analytical model is presented that highlights some of the key opportunities and limitations of mixed instruments applied to shrimp aquaculture. Mixed instruments are then proposed and evaluated.

The local effects of mining might simply come and go with mine production. In this paper we revisit Aragón and Rud's (2013) study of the Yanacocha mine, frequently cited to account for local economic effects and backward linkages, but we offer a more nuanced interpretation: first, effects fade with the mine exhaustion; and second, impacts are the result of consumption boom-and-bust dynamics. While we find it more conceptually accurate to reserve the concept of backward linkages for effects of a productive nature, our evidence reveals that unskilled services is the one sector that benefits, in contrast to manufactures and skilled services. We stress that impact evaluations of mines are contingent to time and place, and contend that exploring the extent to which multipliers generate spillovers is central. The short-run effects of a mine might in fact give little indication of how to tell or make a blessing from a curse.

Changes in climatic patterns are expected to have significant effects on health and wellbeing. However, the literature on the effect of climate on subjective wellbeing remains scant and existing studies focus mostly on developed countries or cross-country analyses. This paper aims to identify the relationship between climate conditions on happiness after controlling for individual and social characteristics. Ecuador, a geographically fragmented country with varying climate conditions across municipalities, constitutes an ideal case study to assess the effect of climate variables on happiness. We employ a cross-section analysis to identify the effect of temperature, precipitation and humidity on happiness. The paper shows that climate conditions constitute an important determinant of people's subjective wellbeing. The results also suggest that income and education attenuate the effect of temperature on happiness and that substantial differences are observed depending on whether places are hot/humid or cold/dry.

Well-defined and enforceable property rights are usually seen as a prerequisite for optimal resource management. However, the interaction effects between different renewable resource pools with different ownership structures are often not well recognized. In this paper we introduce these interaction effects in optimal fishery management theory. Various property rights regimes and market structures for fisheries are analyzed. Furthermore, we perform a sensitivity analysis with respect to the carrying capacity of a fish lake for the different agents. We describe various approach paths towards the new equilibrium after opening up to a common market. We show that a decline in market power leads to a lower stock and a higher supply. Furthermore we identify conditions under which market power might reduce profits.

Building on the extensive theoretical and empirical work regarding the cost-minimizing properties of economic instruments, this article describes and analyses the Mexican legislation relevant to the treatment/disposal of pig slurry in the state of Yucatán. Using a linear programming model to determine the optimal level of pig production and abatement processes simultaneously, different policy instruments and scenarios are compared. Serious shortcomings associated with the recently introduced command-and-control (CAC) legislation, which establishes concentration-based standards for discharges, are identified. It is shown that it will be extremely difficult and expensive to comply with (cost: US$41.8 million per annum). An alternative mass-based CAC approach, which instead regulates nitrogen applications to land, has compliance costs of US$3.5–US$9.4 million per annum, depending on the strictness of the standard. By contrast, an environmentally equivalent economic instrument approach results in additional cost savings of 22–25 per cent. The results are of relevance to Mexican policy makers, extensionists, researchers, and farmers.

The article describes and quantifies the financial benefits of small-scale community forestry, conducted on an ecologically sustainable basis—‘eco-forestry’, by customary landowners in Papua New Guinea. Through economic modelling the article also attempts to quantify the global benefits generated. Eco-forestry is subsidized by donors directly and through NGOs in its setting up and certification. Financial modelling suggests that, with a subsidy, eco-forestry is capable of generating a return to landowners that is comparable to industrial logging. While the return to logging followed by conversion to agriculture is much more attractive than eco-forestry, agriculture is an option available only in some locations. Economic modelling finds that the external economic benefits emanating from tropical forest conservation that replaces logging in Papua New Guinea are far greater in scale than the financial benefits to landowners. However, the lack of reliable data on the environmental benefits of forest conservation means that economic analysis is somewhat inconclusive. The need for further research to quantify environmental benefits is thus highlighted. The subsidization of forest conservation directly, instead of indirectly through small-scale forestry, is investigated and found to generate a similar level of economic benefits to eco-forestry. However, the cost of direct subsidization is greater. Moreover, mechanisms for direct subsidy are undeveloped in Papua New Guinea. Donors may prefer to continue to subsidize small-scale forestry where it replaces logging because of its apparent conservation and side benefits and because it is operational, while at the same time exploring and extending cost-effective models of direct conservation that have the advantage over eco-forestry of being applicable in more remote areas. Compared with industrial logging, eco-forestry contributes little to consolidated revenue. Therefore it is to be expected that eco-forestry will meet government resistance if it makes significant inroads into the allocation of logging concessions.