This paper conducts a novel empirical analysis of the effect of environmental regulation on local pollution emissions by taking 84 cases of local legislation among 31 provinces in China during 1990–2009. We combine the matching methodology and difference-in-difference method to estimate the causal effect of provincial environmental legislation. Our estimation uncovers that there is no significant pollution abatement effect, however, environmental legislation helps to decrease local pollution emission only for those provinces that have stricter enforcement. Such results remain robust while considering the time lag effect, different types of pollutants, choice of different comparison groups and using of synthetic control method. Generally, our study shows the importance of the enforcement for environmental legislation in China.

The present article describes the main insights deriving from the papers collected in this special issue which jointly provide a ‘room with a view’ on some of the most relevant issues in climate policy such as: the role of uncertainty, the distributional implications of climate change, the drivers and applications of decarbonizing innovation, the role of emissions trading and its interactions with companion policies. While looking at different issues and from different angles, all papers share a similar attention to policy aspects and implications, especially in developing countries. This is particularly important to evaluate whether and to what extent the climate policies adopted thus far in developed countries can be replicated in emerging economies.

Shocks related to weather variations have strong effects on developing countries’ economies. Climate change is expected to increase the occurrence and magnitude of extreme weather events such as droughts, floods or hurricanes that strongly affect agriculture and other activities. This special issue gathers literature reviews and case studies that aim to better understand heterogeneous impacts and their transmission channels, as well as to evaluate the impact of such weather shocks on developing economies, including Sub-Saharan African countries, India and Brazil.

Using the panel data of 89 economies from 1995–2012, this study examines the major drivers of agricultural emissions while considering affluence, energy intensity, agriculture value added and economic integration. We find long-run cointegration among the variables. Furthermore, our empirical results based on a dynamic fixed effects autoregressive distributed lag model show that the increases in income and economic integration – proxied by trade and foreign direct investment (FDI) – are the major contributors to higher greenhouse gas (GHG) emissions from agriculture in the short run. Additionally, the increases in income, agriculture value added and energy consumption are the major drivers of agricultural emissions in the long run. Notably, trade openness and FDI inflows have significantly negative effects on GHG emissions from agriculture in the long run. These results apply to methane and nitrous oxide emissions. The empirical findings vary across three subsamples of countries at different development stages.

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).

The importance of forest conservation in the fight against emissions from deforestation and forest degradation has led to reexamination of the deforestation and economic development relationship. For this purpose, we use the recent method of long-term growth rate developed by Stern et al. (2017) on 85 tropical developing countries over the period 1990–2010. Results show that the EKC is not significant. However, we find a beta convergence across developing countries in terms of deforestation per capita. In other words, these countries converge in terms of policies that prevent deforestation and forest degradation. This implies that, just as with growth effects, beta convergence effects are also important in explaining changes in forest cover in tropical developing countries. The convergence effect in forest cover change may be consistent with the forest transition hypothesis.

Climate change is predicted to increase the frequency of extreme weather events, increasing the vulnerability of smallholder farmers dependent on rain-fed agriculture. We evaluate the extent to which farmers in Malawi suffer crop production losses due to extreme weather, and whether sustainable land management (SLM) practices help shield crop production losses from extreme events. We use a three period panel dataset where widespread floods and droughts occurred in separate periods, offering a unique opportunity to evaluate impacts using data collected immediately following these events. Results show that crop production outcomes were severely hit by both floods and droughts, with average losses ranging between 32–48 per cent. Legume intercropping provided protection against both floods and droughts, while green belts provided protection against floods. However, we find limited evidence that SLM adoption decisions are driven by exposure to weather shocks; rather, farmers with more productive assets are more likely to adopt.

This paper explores the driving forces behind household waste generation in the Portuguese municipalities. The focus of the analysis is to empirically test the validity of the waste Kuznets curve (wKc) hypothesis, which postulates an inverted U-shaped relationship between waste generation and economic activity. Panel data is collected for 307 municipalities over the 2009–2018 period. Estimating the fixed-effects model and its dynamic versions of the waste generation equation, the decoupling hypothesis is confirmed, although it is only observed in the richest region of Lisbon and three other municipalities. Results suggest that the productive structure of the local economies is important for explaining waste generation behavior. Population ageing contributes negatively to waste generation, while population density and the development dichotomy are not important drivers in this process. Finally, tourism inflows have a positive effect on municipal waste generation, although the size of the impact is minimal.

With the increasing number of natural disasters, understanding the links between these events and child health has become timely and pertinent. Using a panel dataset, this paper empirically investigates the persistent effects on child health due to exposure to a series of natural disasters that occurred from 2002 to 2007 in Indonesia. We find that girls exposed to multiple disaster events are 0.19 standard deviations shorter and are 7 per cent more likely to be stunted when measured 7 to 12 years later. We find no persistent effect on boys. From a public policy perspective, we highlight the need for coping strategies beyond access to credit or remittances in order to mitigate growth retardation in children.

We study climate change policies using the novel pattern scaling approach of regional transient climate response in order to develop a regional economy–climate model under conditions of deep uncertainty. We associate welfare weights with regions and analyze cooperative outcomes derived by the social planner's solution at the regional scale. Recent literature indicates that damages are larger in low latitude (warmer) areas and are projected to become relatively even larger in low latitude areas than at temperate latitudes. Under deep uncertainty, robust control policies are more conservative regarding emissions and, when regional distributional weights are introduced, carbon taxes are lower in the relatively poorer region. Mild concerns for robustness are welfare improving for the poor region, while strong concerns have welfare cost for all regions. We show that increasing regional temperatures will increase resources devoted to learning, in order to reduce deep uncertainty.

Weather extremes which are accelerated by changing climate greatly decrease agricultural productivity, resulting in severe economic losses and losses of livelihood of the poorest marginal communities. The adoption of stress-tolerant rice varieties (STRVs) is recommended as a best technology fix for risk adaptation. Although STRVs provide better outcomes with no yield penalty, farmers' decisions to adopt new STRVs are influenced by a multitude of factors, most importantly information exposure. We used a sequential logit model to analyze the impact of information access and information quality on adoption decisions regarding STRVs in flood-risk areas. Over the years, we found that STRVs adoption has become scale neutral, but adopters have significantly higher access to information. The estimates showed that 48 per cent of the farmers having access to information decided to adopt STRVs. When information reaches 50 per cent of the rice farmers in flood-prone areas, the estimated additional annual income is US$235 million.

Equity and efficiency are crucial issues behind any tax reform, but they are particularly relevant in countries with high inequality and large shares of poverty. This paper provides a comprehensive socio-economic empirical assessment of Mexico's proposed (and partially implemented) tax reforms in the energy domain, and of a hypothetical partial removal of existing electricity subsidies. Using a rich household income and expenditure survey within the context of a demand system adjustment of non-durable goods, the article provides the public-revenue, environmental and distributional impacts from the simulation of different combinations of energy taxation, subsidy-removal and distributive offsets. The paper also provides detailed ex-ante evidence on the effects of compensatory devices that may contribute to the successful implementation of energy reform packages and significant poverty alleviation in Mexico.

Subsidies to promote tree plantations have been questioned because of negative impacts of the forestry industry. Quantitative evidence on the socioeconomic impacts of afforestation subsidies or of tree plantations is elusive, mainly due to data scarcity. We assess the overall impact of a tree plantation subsidy in Chile, using our original 20-year panel dataset that includes small area estimates of poverty and the subsidy assignment at the census-district scale. We show that forestry subsidies – on average – in fact, do increase poverty. More specifically, using difference in difference with matching techniques, and instrumental variables approaches, we show that there is an increase of about 2 per cent in the poverty rate of treated localities. We identify employment as a causal mechanism explaining this finding, since we found a negative effect of tree plantations on employment, and therefore, on poverty. We suggest reassessment of the distributional effects of the forest subsidy and forestry industry.

This paper addresses a serious environmental concern in Chile: PM2.5 concentration, a health threat especially affecting the population living in the central and southern communes of Chile. Using housing data for 312 spatial units, along with interpolation techniques to predict air pollution for communes with missing information, we find that, on average, 1 μg/m3 increase in PM2.5 produces a decrease of 4.1 per cent in housing rental prices. These estimates also show an important upward bias in the estimated coefficient when the endogeneity of air pollution is not addressed. An average Chilean household would be willing to pay US$12.31 per month for a one-unit reduction in PM2.5 concentration. Similar monetary values have been found in previous studies for both México and Chile. As with PM2.5 concentration, the average marginal willingness to pay exhibits marked differences across communes. From these results, the study addresses some policy implications and proposes avenues for future research.

The relationship between temperature and agriculture outcomes in Brazil has been widely explored, overlooking the fact that most of the country's labor force is employed in non-agriculture sectors. We use monthly individual-level panel data spanning the period from January 2015 to December 2016 to ask whether temperature shocks impact non-agriculture wages in formal labor markets. Our results show that additional days in a month that fall within high-temperature ranges have significant adverse effects on real wages. Assuming a uniform climate change scenario where the daily temperature distribution shifts by 2$^{\circ }$C, we calculate income losses for formal workers in non-agriculture markets equivalent to 0.12 per cent of 2015 GDP.

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.

Estuaries are water bodies, many of which contribute to the sustainable development of cities. Many of them are considered natural landscapes, offering various recreational services to the population. However, estuary degradation is a common problem in developing countries. Ecuador, for example, has a significant problem with the pollution of its estuaries. Machala is one of the most affected cities due to the contamination of these water bodies. This issue has generated negative externalities in the housing market. Thus, our central hypothesis is that rental prices of houses are revalued as their distance from polluted estuaries increases. Using the hedonic pricing approach, our results confirm that the price of a residence increases by US$9.45 for every 100 m farther it is from the closest estuary. This amount constitutes approximately 5.25 per cent of the average rental value in Machala.

There is growing evidence that early life conditions are important for outcomes during adolescence, including cognitive development and education. Economic conditions at the time children enter school are also important. We examine these relationships for young adolescents living in a low-income drought-prone pastoral setting in Kenya using historical rainfall patterns captured by remote sensing as exogenous shocks. Past rainfall shocks measured as deviations from local long-term averages have substantial negative effects on the cognitive development and educational achievement of girls. Results for the effects of rainfall shocks on grades attained, available for both girls and boys, support that finding. Consideration of additional outcomes suggests the effects of rainfall shocks on education are due to multiple underlying mechanisms including persistent effects on the health of children and the wealth of their households, underscoring the potential value of contemporaneous program and policy responses to such shocks.

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.

Having enterprises engaged in environmentally friendly behavior is an important part of reducing negative environmental impacts. This study makes a quantitative analysis against the backdrop of China's transitional economic system. The results show that politically-connected enterprises significantly reduce environmental expenditure, but this only holds for state-owned enterprises; private enterprises with political connections spend significantly more. Analysis of the efficiency of environmental expenditure indicates that, for private enterprises, environmental spending is used as a way to maintain political connections, with rent-seeking as the likely motivation. Politically-connected private enterprises have not reduced their emissions to the same extent as state-owned enterprises, despite increased expenditure. Given the scale of environmental degradation in China during a period of massive economic and social upheaval, the results of this analysis provide a quantitative case for policy change: governments should shift focus to the results that environmental spending produces.