We describe the main insights from the papers included in this special issue, Challenges for the Development of Latin America in the Anthropocene: Current Research in Environmental Economics. The contributions are organized around three themes: the economic and welfare impacts of temperature variability, the role of institutions and user rights in shaping environmental governance and the effectiveness of regulatory instruments for managing ambient and atmospheric pollution. Together, these papers show that environmental outcomes in Latin America are deeply shaped by institutional capacity, governance quality and social inequality. By combining rigorous empirical analysis with attention to local contexts, they demonstrate how environmental economics can inform policy responses to the triple planetary crisis of climate change, biodiversity loss and pollution.

We estimate the effect of temperature on the economic activity of Mexico utilizing 42 years of quarterly panel data of economic growth at the state level. Our findings elicit a concave relationship between economic growth and temperature that is maximized at around 20°C. Temperatures below or above this level are associated with lower growth rates. Temperature affects aggregate economic activity mainly through the effect it has on the growth of the primary and secondary sectors. In addition, the estimated sensitivity of economic growth to temperature has not decreased within our sample period which indicates that adaptation to climate change has been limited. When combining our panel estimates with temperature projections by the year 2100, our results suggest that quarterly economic growth might be reduced by 0.4 percentage points, on average, under an intermediate scenario of climate change with reductions as large as 1.0 percentage point during the spring and summer quarters.

Will rising temperatures from climate change affect labour markets? This paper examines the impact of temperature on hours worked, using panel data from Peru covering the period from 2007 to 2015. We combine information on hours worked from household surveys with weather reanalysis data. Our findings show that high temperatures reduce hours worked, with the effect concentrated in informal jobs rather than in weather-exposed industries. These results suggest that labour market segmentation may shape how climate change affects labour outcomes in developing countries.

This study examines the impact of temperature on human well-being using approximately 80 million geo-tagged tweets from Argentina spanning 2017–2022. Employing text mining techniques, we derive two quantitative estimators: sentiments and a social media aggression index. The Hedonometer Index measures overall sentiment, distinguishing positive and negative ones, while social media aggressive behavior is assessed through profanity frequency. Non-linear fixed effects panel regressions reveal a notable negative causal association between extreme heat and the overall sentiment index, with a weaker relationship found for extreme cold. Our results highlight that, while heat strongly influences negative sentiments, it has no significant effect on positive ones. Consequently, the overall impact of extremely high temperatures on sentiment is predominantly driven by heightened negative feelings in hot conditions. Moreover, our profanity index exhibits a similar pattern to that observed for negative sentiments.

Governments offer resource user rights, such as individual and collective agricultural land rights, fishing quotas, and territorial user rights in marine activities, to induce economic development and efficient resource use. Yet, user rights and improved incomes do not always lead to project uptake, as in rural-rural migration. Marine user rights may differ from land tenure rights, especially when rights are individual or collective. We explore household survey data from Chile about participation in projects linking marine resource activities with user rights across payoff levels and commute/relocation ‘disruption’ costs. Households are more likely to participate in projects with low disruption costs and high incomes, yet many households reject lucrative projects. The household's existing user rights and the project's activity–rights pairs affect project participation levels, with differences across collective and individually-held rights. These results inform policy aimed at increasing incomes and resource use efficiency through marine resource projects with user rights.

We study monitoring and enforcement for environmental compliance in the context of a transitional economy. We estimate the factors correlated with inspections carried out by the Chilean Superintendence of Environment, the imposition of fines to detected violators and the compliance behaviour of regulated facilities. The analysis considers 6,670 facilities from different economic sectors between 2013 and 2019. We find evidence of targeted monitoring and enforcement actions based on past facilities’ behaviour and individual specific characteristics. The size of the implemented fines on detected violators correlates positively with the severity and recurrence of the violation and larger fines are imposed on facilities in the energy and mining sector. We also find that the imposition of fines is transmitted as a spillover effect on the compliance behaviour of facilities sharing the same firm owner. We discuss the policy implications for improving monitoring and enforcement strategies under budget constraints.

Artisanal-and-small-scale gold mining supports millions of livelihoods in the Global South but is the largest anthropogenic source of mercury emissions. Many initiatives promote mercury-free technologies that small miners could employ. Few document mercury impacts. We study an alternative: instead of processing themselves, small miners sell their ore to plants employing larger-scale, mercury-free technologies that also raise gold yields. Some ore-selling occurs without policy intervention, yet impacts on incomes and mercury use remain unclear. We assess ore-selling preferences of female waste-rock collectors (jancheras) in Ecuador, using a discrete-choice experiment. Results demonstrate that jancheras generally are open to ore-selling, yet often reject options similar to a recent pilot intervention. Offers that address formalization hurdles (invoicing), inabilities to meet quantity minima (given limits upon association, storage, and credit), and constraints on trust (including in plants’ ore testing) could increase adoption by tailoring related interventions to the preferences of and challenges for defined populations.

This paper presents a macroeconomic framework for carbon markets. We set up a global climate-economy with carbon-intensive energy inputs, renewable energy, natural carbon sinks, and a carbon capture technology to show that (i) within a comprehensive carbon pricing system, a carbon tax alone implements any given path of carbon emissions; (ii) ‘additionality’ is not a property of the optimal carbon pricing system; and (iii) without a carbon tax, renewable subsidies, preservation of carbon sinks and a price for carbon capture are needed.

Despite the substantial evidence linking particulate matter exposure to adverse health outcomes, a large portion of the global population, particularly in low-income countries, continues to rely on highly polluting fuels, such as wood, for cooking and heating. This study evaluates the immediate effects of wood-burning restrictions, which are triggered by air quality warnings, on levels of fine (PM2.5) and coarse (PM10) particulate matter in southern Chile. Using a difference-in-differences design that incorporates pre-policy data, we provide plausible causal estimates indicating that wood-burning restrictions lead to significant reductions in hourly PM10 and PM2.5 concentrations during the most severe air quality warning. Additional analyses, including a regression discontinuity design, further support these findings. While our analysis suggests that wood-burning restrictions are effective, they may not be sufficient to reduce air pollution concentrations to levels that are considered safe for public health.

Market-based instruments are increasingly incorporated into developing countries’ environmental regulation, which has historically been dominated by command-and-control (CAC). To discover whether this shift can enhance efficiency, the two policy instruments are compared in the context of agricultural fire regulation. We unveil optimal policy principles, such as incentivizing compliance proportionally to non-compliance’s net benefit. A simulation based on data from Brazilian Amazon municipalities accounts for ambiguous land tenure, indirect deforestation and non-additionality. The results reveal that CAC, when perfectly sanctioned, is more efficient than market-based policy. Such primacy is exacerbated in the realistic case where sanctions are likely to be cancelled on appeal to the judicial power and legally limited in size, because of the opportunities to better address adverse selection and to generate revenue with fines. Therefore, we show that market-based policy is not necessarily superior to CAC and that imperfect sanctioning does not inevitably lead to inefficiency.