We estimate the impact of subsequent droughts on the revenues of farmers in Ethiopia factoring in their adaptive capacity. We find that after the first drought, there is no significant difference in the revenue of the farmers who experienced a drought, as compared to those who did not. However, there is a loss in revenue after the second drought, specifically for those farmers that are endowed with less assets. This finding underscores that a rise in the frequency of extreme events and shocks can potentially have significant local distributional implications, with wealth as a major distinguishing factor.

From any state of economic and environmental assets, the maximin value defines the highest level of utility that can be sustained forever. Along any development path, the maximin value evolves over time according to investment decisions. If the current level of utility is lower than this value, there is room for growth of both the utility level and the maximin value. For any resource allocation mechanism (ram) and economic dynamics, growth is limited by the long-run level of the maximin value, which is an endogenous dynamic sustainability constraint. If utility reaches this limit, sustainability imposes growth to stop, and the adoption of maximin decisions instead of the current ram. We illustrate this pattern in two canonical models, the simple fishery and a two-sector economy with a nonrenewable resource. We discuss what our results imply for the assessment of sustainability in the short and the long run in non-optimal economies.

In their article, Daily and Ehrlich have discussed a number of important recent trends associated with development and global change that appear to be reducing health security. Besides their immediate epidemiological implications, most issues raised in the paper have economic implications. However, from the point of view of the methodology of economics, despite the paper's being illuminating on the issues discussed, the immediate notable aspect is the lack of a model or framework with/within which those issues are being analysed. Indeed, it is very hard to think of a single framework which would be all-encompassing enough to be applicable to the analysis of all the issues raised in the paper. But I submit that these issues can be adequately addressed and analysed using the rather simplistic model of production and consumption,1 which is the core of all economic analysis. In what follows, I will pick only a few of the issues raised in the paper and put them within the context of this basic economic model, so as to examine their economic implications.

This paper analyzes inequities in the distribution of air pollution in Mexico at the detailed scale of localities. We find that air pollution increases in areas that experience a decline in socioeconomic status. We utilize 15 years of remote sensing data on fine particulate matter (smaller than 2.5 microns) for more than 116,500 localities across Mexico. Our panel data models show that localities that face a decline in socioeconomic status experience a 0.24–0.83 per cent increase in annual mean pollution concentrations. Our results hold up to controlling for changes within each municipality and instrumenting with broader municipality level socioeconomic status to test for ecological fallacy. We find that local air pollution inequities are reduced by political participation channels, but not as much by increased share of manufacturing activities due to polluters locating in poorer neighborhoods. Highly dense, urban municipalities witness higher inequities most likely due to traffic, construction, and agricultural fires.

We propose a model of international oligopoly with two countries, two vertically-differentiated goods, and heterogeneous consumers in terms of their willingness to pay for quality. Various sources of pollution are taken into account: consumption, production and the transportation of goods between the two countries. Green persuaded consumers display consumption home bias: they derive additional satisfaction when consuming a domestic good because buying locally abates transportation pollution. We investigate whether consumption home bias effectively curbs global emissions. Finally, we uncover the environmental role played by the globalization of markets.

Since 2007, Burkina Faso's mining sector has grown quickly, with gold replacing cotton as the country's biggest export. The decline in gold prices since 2012, however, has hit the Burkina Faso economy hard. Using a static computable general equilibrium model, we assess whether – in a context of gold-price decline and volatility – an increase in the tax burden on the mining sector, as implemented by the government of Burkina Faso, is the appropriate way to avoid the natural resource curse. The results show that a tax policy based solely on increasing taxes on the gold sector brings only limited economic benefits, notably in terms of employment, and fails to significantly mitigate the effects of gold-price volatility.

This paper models joint implementation (JI) for emission reduction between a developed and a developing country. When the per unit price of JI abatement is negotiated, the relative pay-offs deviate from the ratio of bargaining powers. When firms bargain, country-wise gains can increase with a greater abatement target. But if the governments bargain, the developing country's gains increase at the expense of the developed country as the target increases. However, the Pareto optimal JI can be achieved only when the governments negotiate over both abatement and transfer.

Finding the ways that work to deliver the innovation needed should be given parity of esteem with getting the prices right as a focus of the economics profession and policy systems. Learn from experience as regards carbon pricing and carbon-reducing innovation; insights from the latter coming mainly from the US, China and Europe; demographically relatively small countries – Denmark (wind) and Australia (solar PV) – can make outsize contributions. A carbon price ceiling is too low to drive innovation; generating carbon-reducing innovation requires that it be explicitly recognized as a priority, and nurtured accordingly: identify the priority area(s) where innovation at scale will be necessary to make progress; baseline the elements of the innovation ecosystem which are already in place, and the gaps that need to be filled. Key elements include institutions and incentives that promote innovation, a research and enterprise community that make it happen, and a supportive public.

Honduras is vulnerable to catastrophic losses associated with landslides and flooding in the aftermath of hurricanes (Fifi in 1974 and Mitch in 1998, most recently). Taking a watershed-scale approach to targeting conservation programs to promote stability on cropped steeplands in rural southern Honduras would reduce landslide and flooding risks, thus protecting export-earning downstream industries and investments. A case study of the Land Use and Productivity Enhancement project (1990–1998) was conducted to estimate the costs of extension programming to promote three conservation technologies – mulching, vetiver grass barriers, and rock walls – and to assess their efficacy (i.e., cost per ton of soil saved). Geographic Information System mapping tools were applied to suggest conservation priorities for steepland sites that are the most prone to landslides, both to maximize the soil saved per hectare protected and to minimize downstream damages.

A growing population and growing per capita consumption threaten the environment and the natural resource base. Where natural resources are at risk, the livelihoods of many are at risk as well. In May 2006 the Environmental Economics and Natural Resources Group of Wageningen University organized a conference on ‘Poverty, Environment and Natural Resource Use’ with the aim of contributing to a better understanding of the links between poverty and the natural resource base. The state of the environment affects people's living conditions – and poverty affects environmental quality. Environmental policies cannot be designed and natural resources cannot be managed without appropriate consideration of local people's reactions to those policies and management decisions.

There is increasing concern that the intensification of cereal production in northern Nigeria is threatening the sustainability of the agricultural environment. This article describes the effects of trade restrictions on grain imports and of fertilizer subsidy on households' decisions, and draws implications for degradation of the agricultural environment. It develops social accounting matrices (SAMs) for two household types as the basis for capturing the structure of resource allocation, cropping choices, and input use, and then uses the SAM to simulate household responses to changes in relative grain prices and fertilizer prices. Both simulations, but particularly the fertilizer price change, favour the shift from cereals to legumes. A third simulation reflecting technical change in legumes results in the largest shifts from cereals to legumes. It is concluded that appropriate policy reforms complemented by technical change will increase diversification of the cropping system and reduce inefficient fertilizer use. The cumulative effects of these changes will improve soil nitrogen and organic matter and help break the pest and disease complex, thereby improving the agricultural environment.

Climate change is considered to be one of the most significant and complex challenges facing the world in the twenty-first century. As such, it is essential to increase the knowledge base regarding climate change and how best to address its impacts through efficient policies. This special issue, which is divided into two parts – published in the previous and current issues of Environment and Development Economics – is a selection of papers related to ‘The Economics of Climate Change and Sustainability’, the topic of an international workshop organized by the Economics Department of the University of Bologna in April 2018. The papers in this special issue cover a wide range of climate-change-related topics, including endogenous growth and overlapping generation models; climate-related financing and green bonds; demography; location decisions and technology diffusion; quantitative relationships and experimental approaches. They aim at providing new insights into the economics of climate change and help to identify new directions for future research.

The deployment of cleaner production technologies is supposed to be crucial to mitigate the effect of climate change. The diffusion of technology from developed to developing countries can be done through different channels. It can be a business decision such as firms' relocation, opening of a subsidiary or the adoption of technology by southern firms, or it may be decided at the government level. This paper investigates, in a two-country model (North and South), the relationship between the diffusion of mitigation technologies, firms' relocation and the environment. We assume that both countries implement a carbon tax and there are two kinds of production technology used: a relatively clean technology and a dirty one. This paper theoretically shows that the technology diffusion by technology adoption, public transfer or subsidiary creation induces a decrease in relocation, while technology diffusion via purchasing dirty southern firms may increase the number of relocated firms. The paper also demonstrates that technology diffusion may have perverse effects in the long run. Indeed, total emissions may increase with technology diffusion since southern firms become more competitive.