This paper proposes a theoretical analysis of the joint impact of foreign aid and oil taxes on the revenues of a rich oil importing country (North) and a two-class, oil exporting country (South). Without coordination, oil taxes are strictly higher in the North and the global allocation of oil is inefficient. Moreover, oil taxes in the North extract some of the South's oil rents, undoing the revenue transfers from foreign aid. We show that a policy coordination mechanism reduces inefficiencies and improves global welfare.

This study predicts the impact of climate change on African agriculture. We use a generalized linear model (GLM) framework to estimate the relationship between the proportion of various Agro-Ecological Zones (AEZs) in a district and climate. Using three climate scenarios, we project how climate change will cause AEZs to shift, causing changes in acreage and net revenue per hectare of cropland. Our results predict that Africa will suffer heavy annual welfare losses by 2070–2100, ranging between US$14 billion and US$70 billion, depending on the climate scenario and cropland measure considered.

Where joint forest management has been introduced into Tanzania, ‘volunteer’ patrollers take responsibility for enforcing restrictions over the harvesting of forest resources, often receiving as an incentive a share of the collected fine revenue. Using an optimal enforcement model, we explore how that share, and whether villagers have alternative sources of forest products, determines the effort patrollers put into enforcement and whether they choose to take a bribe rather than honestly reporting the illegal collection of forest resources. Without funds for paying and monitoring patrollers, policy makers face tradeoffs over illegal extraction, forest protection and revenue generation through fine collection.

Gasoline and diesel fuel are heavily taxed in many developed and some emerging and developing countries. Outside the United States and Europe, however, there has been little attempt to quantify the external costs of vehicle use, so policy makers lack guidance on whether prevailing tax rates are economically efficient. This paper develops a general approach for estimating motor vehicle externalities, and hence corrective taxes on gasoline and diesel, based on pooling local data with extrapolations from US evidence. The analysis is illustrated for the case of Chile, although it could be applied to other countries.

Much of the population in developing countries uses firewood for cooking. The resulting indoor air pollution has severe health consequences for children who are close to the fire while their mothers cook. We use survey data from Guatemala to examine the effects of firewood consumption on the health of children up to five years of age. We also investigate the impact of cooking inside the home, the importance of a mother cooking while caring for her children and the role played by the smoke permeability of housing construction materials. We find that children living in households that use more wood, and where exposure to indoor air pollution is higher because the mother cooks while caring for children or because cooking takes place inside, are more likely to have symptoms of respiratory infection. Simulations indicate that policies that target cooking habits in order to directly reduce exposure, particularly by reducing the number of women who simultaneously cook and care for children, may be more effective for improving young children's health than policies to accelerate the adoption of gas stoves.

This introductory paper summarizes the policy context, methodological approach, and key results from the set of papers contained in this special edition derived from a FAO-led project on seed sourcing in local markets and its farm-level impacts. The introduction provides the conceptual framework used in the papers for considering the relationship between sourcing seed from market and rural household decision-making as well as the effects this has on two key farm outcomes: on-farm diversity and household welfare. Approaches for data collection and study site selection are described, with a focus on how methodological issues were addressed in the different studies. Lastly, the paper summarizes the results of the individual papers and draws broad conclusions and policy implications for promoting the sustainable utilization of crop genetic resources through increasing market access and in a manner that supports agricultural production.

Although farmers in the Malian Sahel depend on millet for survival, demand and supply constraints have impeded their use of certified seed. We use data collected from households, vendors and seed samples to test the way market purchases of grain and seed affect household food consumption and millet genetic diversity. Purchase of millet grain in markets contributes to food security, but reduces dietary diversity – suggesting that scarce cash was directed toward meeting staple food needs first. Farmers purchased millet grain for seed only in the site with riskier rainfall and smaller market fairs. Although they were more likely to purchase in markets where the genetic dissimilarity of seed was higher, purchasing seed in markets was negatively associated with on-farm diversity. Seed shortage rather than variety experimentation appears to be the motivation for seed purchase. Introducing certified seed in rural markets through small-scale traders will require the provision of market services and promotional efforts.

This paper examines future energy and emissions scenarios in China generated by the Integrated Assessment Model WITCH. A Business-as-Usual scenario is compared with five scenarios in which greenhouse gases emissions are taxed, at different levels. The elasticity of China's emissions is estimated by pooling observations from all scenarios and comparing them with the elasticity of emissions in OECD countries. China has a higher elasticity than the OECD for a carbon tax lower than US$50 per ton of CO2-eq. For higher taxes, emissions in OECD economies are more elastic than in China. Our best guess indicates that China would need to introduce a tax equal to about US$750 per ton of CO2-eq in 2050 to achieve the Major Economies Forum goal set for mid-century. In our preferred estimates, the discounted cost of following the 2°C trajectory is equal to 5.4 per cent and to 2.7 per cent of GDP in China and the OECD, respectively.

Reducing emissions from deforestation and degradation (REDD) has been proposed as an economic and extensive source of emission abatement to supplement other long-term climate policies. However, critics suggest an excess supply of REDD credits may disrupt emerging carbon markets and raise north–south equity concerns. In this context, we investigate the economic implications of REDD regulations and future emissions reduction commitments. Numerical model simulations show that unrestricted exchange of REDD units reduces the international carbon price by half and cuts compliance costs by roughly one-third. Developed nations’ requirements for policy supplementarity, which restrict demand for REDD credits, reduce such price impacts but go at the expense of both economic efficiency and benefits to rainforest areas. Instead, unlimited REDD access facilitates climate policy targets to be tightened by almost a quarter at constant compliance cost, tripling the environmental ambition of the Kyoto Protocol and providing considerable wealth transfers to developing countries.

Land is an essential factor of production. Institutions that govern its efficient use determine the sustainability of this essential resource. In Ethiopia all land is publicly owned. Such an institutional setting is said to have resulted in the major degradation of Ethiopia's land resources and dissipation of the resource rent. An alternative to this is assigning a private property institution. In this paper, we examine the consumer welfare effects of a change in the institutional setting on communal forest and grazing lands, using a cross-section data set of 200 households in Northern Ethiopia. Findings suggest that changing the current institutional setting could indeed be welfare reducing.

Fishers in developing countries do not have the resources to acquire advanced technologies to exploit offshore fish stocks. As a result, the United Nations Convention on the Law of the Sea requires countries to sign partnership agreements with distant water fishing nations to exploit offshore stocks. However, for migratory stocks, the offshore may serve as a natural marine reserve (i.e., a source) to the inshore (i.e., sink); hence these partnership agreements generate a spatial externality. In this paper, we present a bioeconomic model in which a social planner uses a landing tax (ad valorem tax) to internalize this spatial externality. We found that the tax must reflect the biological connectivity between the two patches, intrinsic growth rate, the price of fish and cost per unit effort. The results are empirically illustrated using data on Ghana.

To reduce plastic bag litter, China introduced a nationwide regulation requiring all retailers to charge for plastic shopping bags on 1 June 2008. By using the policy implementation as a natural experiment and collecting individual-level data before and after the implementation, we investigate the impacts of the regulation on consumers’ bag use. We find that the regulation implementation caused a 49 per cent reduction in the use of new bags. Besides regulation enforcement, consumers’ attitude toward the regulation and some consumers’ socioeconomic characteristics also affected bag consumption. However, the regulation effects differ largely among consumer groups and among regions and shopping occasions.

The paper presents an analysis of the role of two forms of social capital – linking and bonding – on two key farm outcomes: on-farm crop diversity and household wellbeing. Where market transactions are limited, social capital is an important household asset for accessing seed and channelling information. The study is set in a drought-prone region of Ethiopia, with high rates of food insecurity and dependency on agriculture for livelihoods. The region is very rich in crop genetic diversity, particularly for sorghum. The data were collected for a production year that experienced a major drought shock. Results of the analysis indicate that social capital is an important determinant of farm level diversity and wellbeing, with opposing effects related to the two different forms of social capital. This suggests possible trade-offs between the two forms of social capital in terms of food security, production and diversity, which need to be considered in planning interventions.

It is well known that an efficient pollution taxation scheme should charge each source according to its specific marginal contribution to social damages. Despite significant advances in environmental assessment, geographic information systems and data analysis, this requirement would impose technical, informational and administrative expenses that most regulators – notably in developing countries – seem unable to afford. This paper shows that it can actually be less demanding than it seems. If polluters are price-takers, for instance, in a context where the affected population concentrates at a given location, then the optimal emission tax will disregard a source's location. Otherwise, the adjustment of the optimal tax to location will depend on the extent of a polluter's market power.

The rise of globalization has directed the attention of economists to the effect of trade and multinational production on the environment. We explore whether multinational firms, frequently the target of environmentalists, are harmful for a host country's environment. We introduce environmental regulation in a two-country model of heterogeneous firms with monopolistic competition. Using plant-level data from Chile, we test the model implications. We find that foreign firms are cleaner than domestic plants even after controlling for productivity that is likely to be negatively correlated with emissions. We also show that increasing the stringency of environmental regulations in a previously unregulated market affects the domestic firms more than the multinationals.

An energy-focused macro-micro approach is used to assess the poverty implications of government policy response to increases in international oil prices in South Africa. The first scenario assumes that increases in international oil prices are passed on to end users with no changes in government policy instruments. In this scenario, poverty indicators increase. The second scenario assumes that the world price increases are nullified by a price subsidy by the government. This scenario still leads to an increase in poverty as the beneficial price effect is cancelled out by a decline in households’ income induced by the financing method used. While revenue generated from a 50 per cent tax on windfall profit of the petroleum industry helps to minimize the loss in government revenue, it does not contribute to mitigating the increasing poverty trend, since the decline in saving and investment under this scenario restricts the country's growth, employment and income distribution perspectives.

Self-governance of natural resources has started to gain increasing attention as an alternative to command-and-control and market-based tools. However, a fundamental question remains: is self-governance economically beneficial, allowing it to serve as an alternative management tool? This paper uses a unique set of survey data from a territorial-user-right-based South Korean inshore (maul) fishery and applies an empirical strategy to provide some of the first quantitative evidence that self-governance benefits maul fishermen. We find that members of the self-governance group perceive the management system as having had a positive impact on four out of the eight criteria we tested: stock recovery, curtailed fishing effort, reduced disputes among fishermen and declining incidents of illegal fishing. Considering that these groups have been in existence on average for less than seven years, these results indicate that the management scheme has made good progress overall.

The effects of four environmental policy options for the reduction of pollution emissions, i.e. taxes, emission standards, auctioned permits and freely allocated permits, are analyzed. The setup is a real option model where the amount of emissions is determined by solving the firm's profit maximization problem under each policy instrument. The regulator solves an optimal stopping problem in order to find the critical threshold for policy adoptions taking into account revenues from taxes and auctioned permits and government spending. In this framework we find the ranking of the alternative policy options in terms of their adoption lag and social welfare. We show that when the output demand is elastic, emission standards are preferred to freely allocated permits. Taxes and auctioned permits are always equivalent in terms of their adoption lag and social welfare, and also equivalent to emission standards when the regulator redistributes revenues.

This article formulates an empirical model that measures the short- and long-run effects of political stability, corruption control and economic growth on CO2 emissions from deforestation. Political stability and corruption have significant effects on forest cover in the short run and have lingering long-run effects. We derive a U-shaped forest–income curve where forest cover initially declines as per capita income increases, but starts to rise after an income turning point. Political stability and corruption control do not significantly affect the income turning point but both variables shift the forest–income curve up or down. The resulting CO2 emission–income curve is downward sloping and is based on changes in the levels of variables affecting forest cover. Increased political stability flattens the CO2 emissions–income curve, leading to smaller changes of CO2 emissions per unit change in income.