In response to the CITES ban on trade in elephant ivory, mammoth ivory began to be produced in post-Soviet Russia. We investigate how this substitute to elephant ivory has affected the poaching of elephants. We argue that the early success of the 1989 ivory ban at increasing the African elephant population was driven in part by increasing supply of mammoth ivory. The more recent increases in poaching appear to be driven by increasing demand and falling African institutional quality. We find that absent the 80 tonnes of Russian mammoth ivory exports per annum 2010–2012, elephant ivory prices would have doubled from their $ 100 per kilogram level and that the current poaching level of 34,000 elephants per year may have increased by as many as 55,000 elephants per year on a population of roughly half a million animals.

Climate change is one of the most significant and complex challenges facing the world's economies. The necessity to enlarge the knowledge base regarding climate change and its impacts and to design efficient policies is widely accepted by the scientific community, the decision makers and the general public. This special issue, which will be published in two parts in the current and subsequent issue of Environment and Development Economics, is a selection of papers related to the topic of the international workshop on ‘The Economics of Climate Change and Sustainability’ 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, which include endogenous growth and overlapping generation models; climate-related financing and green bonds; demographics; location decisions; technology diffusion; quantitative relationships and experimental approaches. We hope that this special issue will provide some new insights into the economics of climate change and help to identify new directions for future research.

In 2008, the Brazilian government blacklisted municipalities in the Amazon to better target efforts to repress deforestation. Not only were law enforcement and monitoring activities intensified, but also economic sanctions and political pressures were imposed on those municipalities. We use a differences-in differences approach to compare deforestation reduction in blacklisted municipalities and non-blacklisted municipalities. We find that: (i) the blacklisting has significantly reduced deforestation; and (ii) this effect was primarily driven by the monitoring and law enforcement channel – there is no effect on agricultural production or credit concessions.

This study examines conservation effects of wildlife trade using demand and supply data from caged-bird markets in Sumatra, Indonesia. When consumers have a strong preference for species rarity, trade could result in wildlife overexploitation and species extinction. Results from a choice experiment show that buyers of caged birds indeed value species rarity. However, not all rare species are equally preferred. Species that are frequently traded lose their rarity value, even if rare in the wild. Analysis of time-series data collected from traders over a period of 20 months between 2013 and 2015 reveals an inelastic supply function for rare species, with market arrivals being insensitive to price changes. This may be due to a declining stock of rare species in the wild. Bird trade together with habitat loss can lead to extinction of a number of rare species in Indonesia. Several policy approaches on regulating caged-bird markets are discussed.

This paper studies the role of middlemen in open-access fisheries and how the organization of the supply chains affects resource exploitation and the level and distribution of economic rent. Imperfect competition among middlemen can help ensure that fish stocks are not depleted, which is typically the case in open-access fisheries with competitive markets. Middlemen with market power can also induce higher economic rent for the supply chain in total, but these rents mainly benefit the middlemen. The supply chains of inshore anchovy and offshore skipjack tuna fisheries in Vietnam are used as empirical examples. The analysis shows that in the anchovy supply chain, the middlemen have insignificant market power and the stock is being overexploited. In the skipjack tuna supply chain, the middlemen have oligopsony power and the stock is higher than the level that produces maximum sustainable yield.

This paper analyses the implications of government control over public information about air pollution. First, we model the incentives for a local government with control over the media to affect popular perception concerning pollution. We argue that biased announcements can influence the inflows of labour force in a municipality beyond economic factors. Then, we examine some evidence on information misreporting in the context of Beijing, China. We show that official air pollution announcements diverge systematically from an alternative source of information, provided by the US Embassy. The results point at a manipulation of popular perception consistent with the motives indicated in our model. Furthermore, using an original household survey, we examine whether the distorted public signal affects agents' behaviour. We find that households that depend upon government-controlled media are significantly less responsive to pollution peaks.

This paper aims at assessing the determinants of Amazon deforestation, emphasizing the role played by off-farm income. Initially an economic model is provided which relates off-farm income to deforestation patterns. Subsequently, empirical implications are tested using data from the 2006 Brazilian Agricultural Census. Estimation results suggest that higher off-farm incomes are associated with reduced deforestation rates. In fact, higher off-farm incomes might increase the opportunity cost associated with agricultural activities. The latter option becomes less attractive and farmers dedicate less time to farm activities, thereby reducing deforestation pressure. Results also show that smallholders respond less to the increase in the returns from off-farm activities when compared to largeholders, which matches our hypothesis of labor market imperfections regarding off-farm activities.

The non-market values of changes in grassland management stimulated by changes in policies were estimated by choice modeling. Four-hundred twenty-seven residents of Hohhot city in Inner Mongolia were selected using the popular mobile phone application WeChat. Conditional logit (CL) and random parameter logit (RPL) models were estimated to analyze the preference of respondents for environmental and social attributes. Based on the preferred RPL model, the average per household willingness to pay over 10 years for the best policy outcome scenarios was estimated to be CNY892 (US$141). The total willingness to pay for this policy change, extrapolated to the population of Hohhot, was CNY208 million (US$33 million). The findings suggest that environmental and social outcomes are valuable to Chinese residents of a regional urban center. Such values should be viewed as a public financial base for market-based mechanisms for grassland protection both in China and internationally. WeChat proved to be convenient but required the application of extrapolation caveats relating to sample representation.

This article investigates whether residents of Mexico City value air quality. Our results suggest that air quality improvement in PM10 is equivalent to a marginal willingness to pay (MWTP) of US$440.31 per property for the period 2006–2013. The corresponding MWTP for PM2.5 is US$880.63, for O3 is US$623.78, and for SO2 is as much as US$2091.50. These estimates are considerably larger in magnitude compared to the few other studies in similar settings. As a percentage of annual household income, these represent 2.44 per cent for PM10, 4.88 per cent for PM2.5, 3.46 per cent for O3 and 11.59 per cent for SO2. Our estimates of land value–pollution elasticities for PM10 (−0.26 and − 0.58) are within range of hedonic estimates for total suspended particulate matter in US cities around the 1970s. The corresponding elasticities range from − 0.55 to − 0.84 for PM2.5, from − 0.06 to − 0.49 for O3 and from − 0.11 to − 0.34 for SO2.

A better understanding of the relative importance of factors related to climate change and to changes associated with economic growth would serve to inform water policy and to focus scarce public resources on anticipated problems arising from distinct sources of changes in water demand. This article investigates the determinants of residential water consumption in Chile, a developing country that has seen noteworthy changes in incomes, household size, poverty rates and levels of urbanization, and which is projected to experience significant climatic but varied changes, depending on the region of the country. Panel data for 1998-2010 at the municipal level is used to analyze the sensitivity of residential water demand to climate and development-related factors. In the case of Chile, the effect on water consumption of these development-related changes is estimated to be several times that of the changes associated with climate projections for 50 to 80 years in the future.

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.

Environmental economics models are often too complex to be communicated in an illustrative manner. For this reason, this paper develops the Basic Climate Economic (BCE) model that features core elements of macroeconomic and climate economic modelling, while allowing for an illustrative examination of the development path. The BCE model incorporates fossil stock depletion, pollution stock accumulation, endogenous growth, and climate-induced capital depreciation. We first use graphical analysis to show the effects of climate change and climate policy on economic development. Intuition for the different model mechanisms, the functional forms, and the effects of different climate policies is provided. We then show the model equations in mathematical terms to derive closed-form solutions and to run model simulations relating to the graphical part. Finally, we compare our setup to other models of climate economics.

Environmental protection is an issue that all developing countries must cope with when inviting foreign direct investment (FDI). However, the high correlation between FDI and pollution does not necessarily indicate that foreign firms are to blame. In this study, we apply firm-level panel data from Vietnam and unique information on waste discharge to demonstrate that foreign firms are actually more proactive in acquiring ISO14001 certification. ISO14001 is a voluntary environmental standard, the adoption of which improves a firm's performance in terms of waste control, and increases its welfare and productivity level. This study provides robust evidence that firms' efforts toward corporate social responsibility eventually benefit them as well.

Based on an unexplored data set on disasters in Brazil, the current study shows that the direct damage of natural disasters reduces the GDP growth rate of municipal economies in Ceará state, Northeast Brazil. The agriculture and service sectors are the most affected economic sectors, while the industrial sector remains unaffected by environmental shocks. Economic growth is particularly responsive to the occurrence of large natural disasters that lead municipalities to declare a state of emergency or public calamity. Regarding public policies, water supply infrastructure increases the resilience of the output growth of services to droughts, whereas disaster microinsurance helps to mitigate the effects of droughts and floods on the economic growth of agriculture in a Brazilian state where family farming is predominant and highly vulnerable to natural disasters.

Small landholders’ contribution to Amazon deforestation in Brazil has been persistent even after government actions have allowed a steep reduction in the overall annual deforestation area since 2004. We investigate land clearing and the incentives to comply versus not to comply with environmental legislation, allowing for selection into compliance or noncompliance due to unobserved perceptions of Forest Code enforcement. Our dynamic land clearing model is empirically tested through an endogenous switching regression method applied to data collected from households in the Transamazon-BR163 region between 2003 and 2014, when Forest Code enforcement supposedly increased. We show that smallholder compliance and noncompliance preferences lead to a selection problem that must be addressed in any land clearing behavior examination. We find that greater marginalization, longer land tenure and transitions to cattle grazing, but not agricultural rents, are major contributors to forest clearance and incentives not to comply with the Forest Code.

We analyze the impact of earthquakes on nighttime lights at a sub-national level, i.e., on grids of different size. We argue that existing studies on the impact of natural disasters on economic development have several important limitations, both at the level of the outcome variable as well as at the level of the independent variable, e.g., the timing of an event and the measuring of its intensity. We aim to overcome these limitations by using geophysical event data on earthquakes together with satellite nighttime lights. Using panel fixed effects regressions covering the entire world for the period 1992–2013, we find that earthquakes reduce both light growth rates and light levels significantly. The effects persist for approximately 5 years, but we find no long-run effects. Effects are stronger the smaller the area of a unit of observation. National institutions and economic conditions are relevant moderating factors.

The design of a Payment for Environmental Services (PES) scheme that involves setting a ‘pseudo market price’ per unit of environmental service requires the estimation of demand and supply. This paper presents the results of discrete choice experiments aimed at estimating the demand for environmental and social services generated by a wildlife protection PES scheme in two protected areas in Lao PDR. The discrete choice experiments targeted international tourists sampled at Vientiane airport and the urban Lao population sampled in Vientiane City as potential buyers of the environmental and social services provided by the PES scheme. The survey was customised to a developing country context to address diversity in respondents' literacy levels, language limitations of the interviewers, socio-cultural conventions, and limited trust in confidentiality and anonymity of the survey process. The marginal benefits of the environmental services so estimated were used to inform the development of a PES scheme.

In an overlapping generations model with multiple steady states, we analyse the impact of endogenous environmental policies on the relevance of history and expectations for the equilibrium selection. In a polluting regime, environmental preferences cause an increasing energy tax which raises the risk that the economy transitions to the inferior equilibrium under pessimistic expectations. However, higher environmental preferences imply an earlier switch to the clean energy regime. Then, the conflict between production and environmental preferences is resolved and the prospects of selecting the superior equilibrium improve, since positive expectations become more relevant. In an empirical analysis we find that people with environmental preferences tend to have more optimistic expectations about economic development. Using these findings to analyse the steady-state dynamics implies that agents with environmental preferences support higher energy taxes and switch to clean production more quickly. Due to their optimism, the likelihood of reaching the superior stable steady state increases.

Using remotely sensed land-cover data in 1994 and 2014, and cross-sectional survey data in 2014, this study examines the association between land use and cover change and agricultural productivity in northern Ghana. We document a significant expansion of crop land and settlements (productive use) at the expense of natural vegetation cover. Land areas converted from natural cover to productive use have higher maize yield (0.17 tons per hectare) and harvest value (1,021 Ghanaian Cedi) compared with those converted from bare soil to productive cover. Moreover, areas that were covered by shrubs or savannah in 1994 were more productive in 2014 relative to bare soils in 1994. Although our data do not allow us to establish causality, the evidence suggests the importance of past land-cover conditions in affecting current agricultural performance, especially in resource-stricken settings where conservation and restoration practices are not as common.

We study the welfare and energy poverty implications of energy price change scenarios in Indonesia. Our analysis extends previous analyses of energy price impacts at the household level in three ways. First, by employing a household energy demand system (QUAIDS), we are able to distinguish between first- and second-order welfare effects over the income distribution. Second, our results point to the ownership of energy-processing durables as another source of impact heterogeneity. Third, we extend the welfare analysis beyond the money-metric utility effects and look at energy poverty, which is understood as the absence of or imperfect access to reliable and clean modern energy services. The analysis indicates that energy prices may serve as an effective instrument to reduce energy use but also have important adverse welfare effects. The latter can, however, be mitigated by appropriate compensation policies.