This paper reviews and in part extends an emerging literature that integrates development and environmental thinking. It focuses on a small part of the literature: economic evaluation, and goes on to develop the notion of sustainable development and construct a unified language for sustainability and policy analyses.
In Rwanda, access to water is seen as a significant constraint to development in both urban and rural areas. The government and foreign donors give priority to improving access to water for agricultural use.
Using data spanning 15 years, we study subjective and consumption poverty in urban Ethiopia. Despite rapid economic growth and declining consumption poverty, subjective poverty remains largely unchanged.
Levels of trust are measured by asking standard survey questions on trust and by observing the behaviour in a trust game using a random sample in rural Bangladesh.
This book is about land tenure policies from an international perspective. It adds on the first book published by Holden and Otsuka entitled The Emergence of Land Markets in Africa: Assessing the Impacts on Poverty, Equity, and Efficiency (2009) in a much deeper way with a stronger and clearer focus on policy issues.
Behavioral Spillovers from Targeted Incentives: Losses from Excluded Individuals Can Counter Gains from Those Selected
Incentives conditioned on socially desired acts such as donating blood, departing conflict or mitigating climate change have increased in popularity. Many incentives are targeted, excluding some of the potential participants based upon characteristics or prior actions. We hypothesize that pro-sociality is reduced by exclusion, in of itself (i.e., fixing prices and income), and that the rationale for exclusion influences such 'behavioral spillovers'.
This is a PhD dissertation by Haileselassie Medhin and containing seven self-contained papers:
This article analyses the Total Factor Productivity (TFP) performance of fisheries in Iceland, Norway and Sweden during the period 1973 to 2003. We measure TFP growth using real gross value added as output and capital input, labour input and a stock input index based on the major fish stocks. In developed neighbouring countries, we expect rapid diffusion of fishing technology innovations contributing to productivity convergence. In addition, innovations in the public regulation and the industrial organization may also have influenced productivity growth during the period.
Cropping system diversification, conservation tillage and modern seed adoption in Ethiopia: Impacts on household income, agrochemical use and demand for labor
The type and combination of sustainable agricultural practices (SAPs) adopted have a significant effect on agricultural productivity and food security. This study develops a multinomial endogenous switching regression model of farmers' choice of combination of SAPs and impacts on maize income and agrochemicals and family labor use in rural Ethiopia.
Several previous studies have demonstrated the importance of relative consumption comparisons for public policy. Yet, almost all of them have ignored the role of leisure for status comparisons. Inspired by Veblen (The theory of the leisure class. Macmillan, New York, 1899), this paper assumes that people care about their relative consumption and that leisure has a displaying role in making relative consumption more visible, based on a two-type model of optimal income taxation.
Do people avoid opportunities to donate?: A natural field experiment on recycling and charitable giving
We use a natural field experiment to investigate the hypothesis that generosity is partly involuntary, by examining whether individuals tend to avoid opportunities to act generously.
We study household decision making in a high-stakes experiment with a random sample of households in rural China. Spouses have to choose between risky lotteries, first separately and then jointly.
This article is a good example of EfDs mission: combining policy advice and research. It is based on a consultancy for the US EPA who asked Maureen Cropper to lead a process with a panel of experts to help advise them on what discount rate to use for climate change – and specifically about falling discount rates. This paper (and a longer one in REEP that is forthcoming) is a byproduct of that work.
We examine the choice of policy instruments (price, quantity or a mix of the two) when two pollutants are regulated and firms’ abatement costs are private information.
This report presents the Environment for Development Initiative (EfD), its members and work during 2012/13. For a free hardcopy, please send an email to: email@example.com
A growing number of experimental studies focus on the differences between the lab and the field. One important difference between many lab and field experiments is how the endowment is obtained. By conducting a dictator game experiment, we investigate the influences of windfall and earned endowment on behavior in the laboratory and in the field.
Hypothetical bias is one of the main issues bedeviling the field of nonmarket valuation. The general criticism is that survey responses reflect how people would like to behave, rather than how they actually behave. In our study of climate change and carbon emissions reductions, based on the increasing bulk of evidence from psychology and economics regarding the effects of making promises, we investigate the effect of an oath script in a contingent valuation survey.
The world has experienced dramatic food price inflation in recent years, which sparked social unrest and riots in various developing countries. In this paper, we use a novel approach to measure the impact of food price inflation on subjective well-being of urban households in Ethiopia, a country which exhibited one of the highest rates of food price inflation during 2007–2008.
We explain the spatial concentration of economic activity when the cost of environmental policy – which is increasing in the concentration of pollution – acts as a centrifugal force, while positive knowledge spillovers and a site with natural cost advantage act as centripetal forces. We study the agglomeration effects caused by trade-offs between centripetal and centrifugal forces which eventually determine the distribution of economic activity across space.
This paper integrates soil science variables into an economic analysis of agricultural output among small-scale farmers in Kenya's highlands. The integration is valuable because farmers’ choice of inputs depends on both the status of the soil and socioeconomic conditions. The study uses a stochastic production frontier in which the individual farm's distance to the frontier depends systematically on individual factors.
A CO2 tax assures that different fossil fuels are taxed in a neutral way according to actual CO2 emissions. The Swedish experience can be summarized by increased tax levels over time and steps taken towards a more uniform national price on fossil CO2. Moreover, the CO2 tax base is only moderately elastic to price changes (particularly in the short run) when it comes to petrol and diesel implying quite stable tax revenues. On the other hand, the CO2 tax seems to have had a major impact on fuels used for heating purposes, where biofuels and other non-fossil energy sources (such as energy from waste and surplus heat from industrial processes) have significantly increased their shares.
Discounting has the dubious distinction of being the most controversial issue in social cost-benefit analysis. This is largely because choosing the discount rate will often dominate other choices a modeler makes. For example, consider how we might estimate future damages from greenhouse gas emissions.
A prevailing view in the literature is that social sanctions can support, in equilibrium, high levels of obedience to a costly norm. The reason is that social disapproval and stigmatization faced by the disobedient are highest when disobedience is the exception rather than the rule in society.
Concerns for environmental quality and its impact on people's welfare are fundamental arguments for the adoption of environmental legislation in most countries. In this paper, we analyze the relationship between air quality and subjective well-being in Europe. We use a unique dataset that merges three waves of the European Social Survey with a new dataset on environmental quality including SO2 concentrations and climate in Europe at the regional level. We find a robust negative impact of SO2 concentrations on self-reported life satisfaction.
A theoretical model of the ethical preferences of individuals is tested by conducting a choice experiment on safety-enhancing road investments.
Land conflicts can be detrimental. An important goal of development policy is to help define and instill respect for borders. This is often implemented through mandatory and expensive interventions that rely on the expansion of government land administration institutions.
Conspicuous Leisure: Optimal Income Taxation When Both Relative Consumption and Relative Leisure Matter
In previous studies on public policy under relative-consumption concerns, leisure comparisons have been ignored. In this paper, we consider a two-type optimal non-linear income tax model, in which people care about both their relative consumption and their relative leisure. Increased consumption positionality typically implies higher marginal income tax rates for both ability types, whereas leisure positionality has an offsetting role.
Using a sequential discrete choice experiment, we investigate preferences for distributing the economic burden of reducing CO2 emissions in the two largest CO2-emitting countries: the United States and China.
The present paper presents key sector research for the Namibian economy, based on input–output and Social Accounting Matrix (SAM) analyzes.
The Natural Forest Protection Program in China: A contingent valuation study in Heilongjiang province
In 1998 the Chinese government implemented the Natural Forest Protection Program, NFPP, which included logging restrictions, protected areas, replanting, and a range of other policies aimed at safeguarding the state of the country’s forests and reducing the risk of erosion and flooding.
The effect of religiosity and religious festivals on positional concerns – an experimental investigation of Ramadan
This article examines the effect of religion on positional concerns using survey experiments. We focus on two of the dimensions of religion – degree of religiosity and religious festivals. By conducting the experiments during both the most important day of Ramadan (the Night of Power) and a day outside Ramadan, we find that Ramadan overall has a small and negative impact on positional concerns.
In this paper, we study the current water pricing system practised in Kigali, Rwanda, and evaluate the potential for efficiency gains by moving to other alternatives.
This Brief presents a framework that can be used to assess the potential impact of Payments for Environmental Services (PES) schemes.
Incentives, Impacts, and Behavioral issues in the context of Payment for Ecosystem Services programs: lessons for REDD+
A framework that can be used to assess the potential impact of Payments for Environmental Services (PES) schemes.
Many economic decisions are made jointly within households. Running an experiment on intertemporal choice, we investigate the relative influence of spouses on joint household decisions. We let each spouse first decide individually and then jointly with the other spouse.
Deforestation and forest degradation are estimated to account for between 12 percent and 20 percent of annual greenhouse gas emissions. These activities, largely in the developing world, released about 5.8 Gt per year in the 1990s, which was more than all forms of transport combined. The idea behind REDD+ is that payments for sequestering carbon can tip the economic balance away from loss of forests and in the process yield climate benefits.
How does uncertainty about “dangerous” climate change affect the prospects for international cooperation? Climate negotiations usually are depicted as a prisoners’ dilemma game; collectively, countries are better off reducing their emissions, but self-interest impels them to keep on emitting. We provide experimental evidence, grounded in an analytical framework, showing that the fear of crossing a dangerous threshold can turn climate negotiations into a coordination game, making collective action to avoid a dangerous threshold virtually assured.
Hypothetical bias in stated-preference methods appears sometimes to be very large, and other times non-existent. This is here largely explained by a model where people derive utility from a positive self-image associated with morally commendable behavior.
The economics of climate change and the various measures that should be implemented to reduce future damages are highly tied to the use of cost-benefit analysis. Traditional approaches ignore the fact that environmental amenities do not experience the same growth rate as do most of the sectors in the economy, which leads to changing relative prices. Uncertainty should also be considered, especially when one is conducting cost-benefit analysis involving the long-run damages from climate change. This article reviews some theoretical approaches to the economics of discounting and discusses issues associated with unbalanced growth, uncertainty, and spatial discounting.
The concept that underlies the interventions of the Global Environment Facility (GEF) International Waters Program is adaptive management at the Large Marine Ecosystem (LME) scale across the sequence of interventions from assessment and analysis to development of regional strategic action programs and national implementation of action plans to address transboundary environmental concerns. The GEF has provided grants to recipient countries in the East Asian Seas region covering five LMEs since the early 1990s and amounting to about US$200 million. This paper analyses GEF support to the Seas of the East Asian Region to draw lessons for future investments in LME management.
The new fertilizer subsidies in sub-Saharan Africa are intended to increase agricultural production and ensure development of a fertilizer market. Fertilizer adoption requires complementary inputs, such as investment in soil and water conservation (SWC), for efficient and optimal nutrient uptake, and many fertilizer subsidy programs implicitly assume that fertilizer subsidies crowd in such investments.
Climate change and escalating degradation of ecosystem services place the need for greening economic growth on the international policy agenda. To make growth greener and more inclusive, it is crucial to change the institutions and incentive structures in national sector reforms and to involve poor and vulnerable groups in decision making.
This professional practice report reflects upon lessons learned from piloting and evaluating an innovative approach to policy strategic environmental assessment (SEA) in developing countries. The primary analytical focuses of the approach are institutions and governance characteristics, plus it places strong emphasis on learning. The piloting provides valuable insights about the conduct of SEA at the policy level and in socio-political where there is limited experience with SEA.
In this paper, we explore the synergies and tradeoffs between abatement of global and local pollution. We built a unique dataset of Swedish heat and power plants with detailed boiler-level data 2001-2009 on not only production and inputs but also emissions of CO2 and NOx.
We examine risk preferences in an urban setting in a low-income developing country with nonstudent subjects by adapting the experimental approach of Holt and Laury (HL; 2002). We conducted 22 group experiments with 404 participants and used in-kind payoffs. The average respondent was ‘riskaverse’ (the midpoint of Constant Relative Risk Aversion (CRRA) intervals among participants was 0.53, roughly in line with most similar studies in poor countries).
Twenty years ago, governments gathered for the United Nations Conference on Environment and Development in Rio de Janeiro. The “Rio Declaration” laid out several principles of sustainable development, including the central role of policy instruments. In this article, we take stock of where we stand today in implementing sound and effective environmental policy instruments throughout the world, particularly in developing and transitional economies.
Thomas Sterner's book is an attempt to encourage more widespread and careful use of economic policy instruments. The book compares the accumulated experiences of the use of economic policy instruments in the U.S. and Europe, as well as in rich and poor countries in Asia, Africa, and Latin America.
The purpose of the present article is to consider optimal trade policies for biofuels, taking into account the potential for carbon leakage and the complex set of policies used or discussed for biofuels. First, the authors consider the case of optimal trade policies and find that the combination of an import standard and a border carbon adjustment welfare dominates using only a border carbon adjustment (BCA).
This article provides an interpretive survey on implications of insights from behavioral economics for environmental policy. In particular, it discusses whether, and if so how, policy implications based on conventional economic theory have to be modified when insights from behavioral economics are considered.
We study how uncertainty about climate change severity affects the relative benefits of early abatement and a portfolio of research and development (R&D) in lowering future abatement costs. Optimal early abatement depends on the curvature of the marginal benefit and marginal abatement cost (MAC) functions and how the uncertain parameter affects marginal benefits.