Under a General Equilibrium model of International Trade, industrialized countries export capital intensive goods, while developing countries export natural resource intensive goods. Biodiversity is viewed as the number of species conserved while producing these goods. Higher conservation increases demand, but lowers goods supply. Consumers value biodiversity as the weighted sum of all the different species. If producers of both goods conserve more species, the South's terms of trade will rise in relation to the North's. Furthermore, we believe that a switch in consumer preferences, to a more homogeneous valuation of the species, is likely. This change would drop the South's terms of trade. Therefore, under these circumstances, this region is facing a risk. In conserving additional species, the South would be better off, both because its terms of trade increases and because the risk associated with a switch in preferences decreases.

In this project, an attempt is made to estimate the costs and benefits of managing forested catchments in Malaysia. Three land use options are simulated for four selected catchments in the Hulu Langat Forest Reserves (HLFR), Selangor, Malaysia. These options are no logging or catchment protection (CP), reduced impact logging (RIL) and conventional logging (CL). The potential sedimentation impacts of each option on the dam and water intake ponds in the catchments are calculated. The benefits derived from logging, hydro-electric power (HEP) generation and the water regulatory dam for water treatment and the external costs emanating from the sedimentation under the three options are estimated. The computations are based on data collected from previous studies conducted in adjacent areas with similar hydrological parameters, secondary data from published reports by various departmental agencies and from on-site personnel surveys.

This paper examines the causes of agricultural land expansion and deforestation in Tanzania. In the theoretical section, two different—and partly contradicting—sets of hypotheses are outlined. These are based on a subsistence approach, emphasising the food or income requirements of farm households, and a market approach, focussing on the relative profitability of agriculture. The statistical analysis shows that increased agricultural output prices, in particular for annual crops, is a major factor behind agricultural expansion. An increase of 1 per cent in output prices leads to about 1 per cent increase in agricultural area. Other factors such as input prices, technology and economic growth are tested and discussed, but the conclusions are less robust. The controversial role of population growth in explaining deforestation is addressed. Generally the results lend support to the market rather than the subsistence approach. JEL classification code: Q12, Q23, C23

This paper adopts soil scientific models of soil productivity and degradation in Tanzania into an intertemporal optimisation framework. The farmers choose labour input, capital investment and fertiliser input to maximise soil wealth, i.e., the present value of soil rent. First we focus exclusively on soil mining, considering the nutrient stocks as determinants of land productivity. Next, we focus on soil erosion, and include rooting depth as determinant of land productivity. We compute the soil wealth under the assumption that the opportunity cost of labour is equal to current wages, or alternatively equal to zero. Our estimates suggest that the potential gains from change in agricultural management are considerable. Moreover, the shadow price on root depth and hence the returns to land conservation investments are highly sensitive to our labour market assumptions. We also find that the value of the eroded soil amounts to 12–17 per cent of the value of Hicksian income, and the savings required to maintain consumption amounts to 13–29 per cent of the contribution to GDP.

This study examines the environmental impacts of trade liberalization in Costa Rica. A CGE model is constructed which includes eight environmental indicators covering deforestation, pesticides, overfishing, hazardous wastes, inorganic wastes, organic wastes, greenhouse gases, and air pollution. Three trade liberalization scenarios are examined. Two sets of analyses are conducted for each scenario, one in which technologies do not change in response to trade liberalization and the other in which total factor productivity in each sector changes in response to changes in imports of machinery and equipment. To account for uncertainty regarding values of the model's parameters, a Monte Carlo experiment is conducted for each policy option. The impacts of trade liberalization on the environmental indicators are generally negative in sign but small or moderate in magnitude, both when technology is constant and when technology is allowed to vary.

Located in a high Andean valley, Ecuador's capital city suffers from severe air pollution, emitted by manufacturing plants as well as motor vehicles. Improving air quality would result in diminished respiratory illness, which currently costs Quito's residents several millions of dollars annually in lost earnings and medical expenditures. Technology transfer has succeeded in reducing industrial emissions at a modest cost. But diesel-fueled trucks and buses, which are a major source of various pollutants, have been the primary focus of the local government's strategy for air quality improvement. To date, that strategy has met with some success, although future initiatives will involve higher abatement expenses and therefore will test the commitment of municipal authorities and the citizens they represent to pollution control.