This paper considers a model of household demand for water in a theoretical framework consistent with fundamental principles of consumer behaviour. It applies this model to individual household data to estimate the price and income elasticities of residential demand for water in Cyprus and evaluate the welfare effects associated with changes in the water pricing system. We find that the current regionally heterogeneous, increasing block-pricing system introduces gross price distortions that are not justified on efficiency grounds. A shift towards uniform marginal cost pricing will eliminate the deadweight loss of the current system. However, its benefits will be distributed in favour of the better-off households.

Institutions and organizations are regarded as being important in determining the efficiency of economic agents and public units. This study first reviews the economic reforms in silvicultural activities in China's state-owned forestry bureaux, then empirically examines the impact of economic reforms. Panel data from 40 forestry bureaux in Heilongjiang Province, and two different economic regimes: from the pre-reform and economic transition periods, are analyzed by Data Envelopment Analysis (DEA). The technical efficiency has been decomposed into pure technical efficiency and scale efficiency and then examined. Our results show that the economic reforms have increased efficiency on average by about 25 per cent. Moreover, the study qualitatively analyses the sources of improvement and argues that the efficiency gain is a result of reductions in labour shirking and administration costs.

This paper examines the dynamic effects of forest conservation measures. Both short-term and long-term impacts on timber markets are studied using a Finnish example. Forest conservation is interpreted as an exogenous negative shock in the standing timber growth owned by private forest owners, and its effects are retrieved through an impulse response analysis based on a dynamic demand–supply and timber stock model. The results show that timber markets are influenced by forest conservation. The conservation of forest assets reduces traded quantities and increases timber prices. These effects are of the same relative magnitude, thus leaving the annual timber-selling income of private forest owners unchanged. The results suggest that some of the negative short-run impacts of conservation on commercial timber stock will be compensated in the long run by intensified use of the remaining stock. This may to some extent reduce the ecological usefulness of the conservation policies. While the timber markets converge in the long run towards a new post-conservation state the short-term interruptions suggest that caution should be used in establishing set-asides in privately owned forestland.

This paper investigates the possibility of using public works to stimulate farmers' fertiliser use in India's SAT. Inadequate replenishment of removed nutrients and organic matter has reduced fertility and increased erosion rates. Fertiliser use, along with other complementary measures, can help reverse this process, which ultimately leads to poverty, hunger, and further environmental degradation. In a high-risk environment like India's SAT, there may be a strong relation between off-farm income and smallholder fertiliser use. Farmers can use the main source of off-farm income, wage income, to manage risk as well as to finance inputs. Consequently, the introduction of public works programmes in areas with high dry-season unemployment may affect fertiliser use. This study confirms the relevance of risk for decisions regarding fertiliser use in two Indian villages. Nevertheless, governments cannot use employment policies to stimulate fertiliser use. Public works even decrease fertiliser use in the survey setting.

This paper examines the effects of the Brazilian governments' title granting policies on the efficiency of agricultural and timber production in the Brazilian Amazon. A two-stage procedure is used that combines Data Envelopment Analysis (DEA) and a Tobit regression. Provision of private land titles before 1995 is found to positively affect the technical efficiency of agricultural and joint agriculture–timber production in 1995. Governmental expenditures, including expenditures to secure property rights, also are found to increase technical efficiency in the agricultural industry. The analysis indicates that revenue efficiency can be improved by producing more roundwood and less agricultural product. Land-granting policies may favorably affect environmental conservation by intensifying land use in agriculture, but they also may harm development by discouraging timber production.

The degree to which prevailing land tenure arrangements constrain agricultural productivity, and the sources of inefficiency associated with land tenure systems in sub-Saharan Africa are unresolved. Using a stochastic frontier production function, this paper examines the economic efficiency and the determinants of inefficiency of alternative land tenure arrangements in Ethiopia. The results show that sharecropping and borrowing are less technically efficient than owner-cultivation or fixed rentals due to restrictions imposed on them by landowners and the interactions of the land market with other imperfect and absent input markets. Thus, a policy to facilitate more efficient transactions of land between farmers and functioning of input markets are expected to reduce inefficiencies associated with these tenure systems.

If children contribute to the household by using their time to collect natural resources from common property sources—such as collecting firewood, fetching water, collecting fodder, grazing animals—then local depletion of these resources could potentially increase the demand for children. This feedback could create a dynamically unstable ‘vicious circle’ between population growth and resource depletion. We empirically examine several elements of such a ‘vicious circle’ hypothesis using data from Pakistan with unusually rich detail on both child time use and firewood collection activities. We find that collection activities do absorb a substantial part of household resources; that children's tasks are relatively devoted to collection activities; that child time is a significant, but not a dominant, portion of collection activities; and the presence of older children in the household reduces the time that women devote to household tasks. Exploratory multivariate regressions show a partial correlation between indicators of firewood scarcity and fertility—a relationship that varies across regions of Pakistan.

Privatization of public water utilities is increasingly being viewed as a strategic solution to the observed inefficiency of the water sector in developing countries. However the link between private ownership and efficiency is unclear in the water sector, given the monopolistic nature of the service and the need for public regulation. This study poses the question whether public sector reforms could improve the operational efficiency of water utilities as an alternative to privatization.

Using Data Envelopment Analysis we find that neither the decentralization of the responsibility for water operations to the municipal level nor the establishment of an autonomous regulator had a positive impact on the efficiency of Mexican water utilities. We conclude that the enacted reforms should have been combined with reforms that introduce competition and reduce the informational asymmetries in the urban water sector.

The risks associated with increasing climate variability pose technological and economic challenges to societies which are dependent on agriculture for their livelihood. In Southwestern Cameroon the natural variability of rainfall and temperatures contribute to variability in agricultural production and food insecurity. This paper explores the impact of climate variability in Southwestern Cameroon on food availability. It examines farm household's vulnerability to food availability relating to climate, and reviews the interplay of climate, agriculture, and prospects for food security in the region. An econometric function directly relates farm income and precipitation, in order to statistically estimate the significance of farm-level adaptation methods. The results reveal that precipitation during growing and adaptation methods through changes in soil tillage and crop rotation practices have significant effects on farm returns. An essential precondition for food security and overall agricultural development in Southwestern Cameroon is a dynamic agricultural sector brought about both by steady increase in agricultural production and by greater efforts in farmer support, to enable farm households to take advantage of the opportunities and to minimize the negative impacts of climate variation on agriculture.

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.

A contingent valuation study measured citizen willingness to pay (WTP) for an improvement in surface water quality in Latvia. The average respondent was willing to pay 0.7 per cent of household income for the environmental improvement, but that amount was much less than needed to finance the required investments in treatment facilities. While the income elasticity of WTP for the average resident was low (0.56), it increases as income increases, reaching 0.9 at an income level double the current average. As real incomes increase in Latvia, the demand for environmental quality by citizens can be expected to increase substantially.

Mitigating the harmful effects of development projects and industries (negative environmentalism) is inadequate, especially in resource-dependent economies whose resources are at risk from other forces. While positive environmentalism includes conservation projects, the non-market benefits of such projects are difficult to evaluate. This paper provides and illustrates a method for evaluating the indirect, watershed benefits of a tropical forest, without resorting to survey methods. The conservation of trees prevents a reapportionment from groundwater recharge to runoff that would otherwise occur. The value of the water saved is then valued at the shadow prices obtained from an optimizing model. An illustration of the model shows that watershed conservation projects may have very high payoffs, even before assessing existence values and other forest amenities.

The analysis demonstrates the importance of multilateral cooperation for water managers to tackle wastewater pollution along an international border. A differential game is applied empirically with data of abatement costs, environmental damages, trade flows and pollution dynamics. The framework offers a way to compare pollution control when the US and Mexico coordinate efforts and when they act independently. Results show that trade liberalization and cooperation are useful for dealing with transboundary pollution in a shared waterway. In order to investigate further the nature of cooperation along the entire border, an econometric estimation is performed that investigates the factors influencing Mexico and the US to initiate environmental improvement projects. Results show that cooperation depends on whether the project addresses transboundary wastewater pollution. Other types of pollution are not significant, nor are attributes such as how much a project costs. A project's ability to generate revenues to sustain itself significantly disadvantages the project for cooperative approval.

This paper examines ways in which development policies interact and influence incentives for agricultural expansion in frontier areas. We develop a model of household response to economic and technical stimuli, conditional on agronomic and household characteristics. We evaluate the model empirically using survey data gathered from low-income corn and vegetable farms near a national park in the southern Philippines. We find that within farms, land allocation is responsive to relative crop prices and yields. However, different crops elicit different responses. In particular, some crop expansion takes place primarily through land substitution and intensified input use, while changes in prices or yields of other crops induce an expansion of total farm area. Land and family labor constraint bind at different points for different crops. These results suggest that because multiple policies interact, environmental policies must have multiple strands in order to replace incentives to further land expansion.

JEL codes: Q12, Q24, O13.

The purpose of this paper is to discuss the greenhouse gases (GHG) emission target adopted by Argentina. It contains a summary of the process that led to the formulation of the emission target, including GHG inventories, macroeconomic and sectoral projections, and mitigation options. Fixed and dynamic indexes such as the Carbon Intensity Index are discussed, concluding that the latter is not appropriate for most developing countries. This is the case, in particular, for countries whose GHG emissions are not solely dependent on GDP growth, but also on other variables, such as international prices and market conditions for their agricultural products. The index recommended for Argentina was based on the square root of GDP. It went a step further by producing, for the chosen level of reduction, not only a positive relation between GDP and allowable emissions, but also a relation of the same sign between GDP and emission reductions.

This research uses field-level data from Burkina Faso to ask what determines farmers' investment in two well-known soil and water conservation techniques: field bunds (barriers to soil and water runoff), and microcatchments (small holes in which seeds and fertilizers are placed). Survey data for 1993 and 1994 are used to estimate Tobit functions, compute elasticities of adoption and intensity of use, perform robustness tests and estimate alternative models. Controlling for land and labor abundance and other factors we find that those who have more ownership rights over farmland, and who do more controlled feeding of livestock, tend to invest more in both technologies. The result suggests that responding to land scarcity with clearer property rights over cropland and pasture could help promote investment in soil conservation, and raise the productivity of factors applied to land.

Water scarcity is a constraint on economic activity in many regions, and improving the allocation of water is an important part of the process of economic development. Economists have advocated water markets as a way to increase efficiency and to cope with environmental problems. Unfortunately, actual water markets, including those in developed countries, usually fall far short of this ideal. The paper considers the allocation of water by markets that are only imperfectly developed, in which prices are not publicly known and in which there is no centralized trading location. These limitations impose transaction costs on buyers and sellers, that is costs associated with completing a transaction. A conceptual model of the effect of transaction costs on trading patterns is developed. Stylized results are tested using data from an informal water market in California. The paper concludes with a description of the importance of transaction costs, comments on the transition to more formal water markets, and policy recommendations.

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.