The growing evidence that increased levels of carbon dioxide in the atmosphere are related to global warming has prompted several countries to consider options for reducing and offsetting current carbon dioxide emissions. Opportunities for carbon sequestration with forestry activities have been analysed in detail primarily in industrialized nations, mainly because of data availability. This article presents a model that simulates a tropical forest stand in its role as a source of income and as a carbon store, and quantifies the potential for and cost-effectiveness of carbon sequestration through modifications of management practices. Results suggest that financing modifications of forestry practices may achieve net carbon sequestration in a relatively cost-effective way. Tropical countries with extensive forest resources may be in a position to offer cost-effective net carbon sequestration options.

The reduced-form approach to the income–environment relationship has been a useful first step towards answering the question of how economic growth affects the environment. However, without an explicit consideration of the underlying determinants of environmental quality, the scope for policy intervention is unduly circumscribed. In this paper a modest attempt is made to incorporate explicit policy considerations into the income–environment relationship and to explore its determinants as a step towards a better understanding of this relationship and its potential as a policy tool. The role of the rate of economic growth and population density is also explored. A main finding is that at least in the case of ambient SO2 levels, policies and institutions can significantly reduce environmental degradation at low income levels and speed up improvements at higher income levels, thereby flattening the EKC and reducing the environmental price of economic growth.

The sudden collapse of the centrally planned economies of Central andEastern Europe (CEE) and the former Soviet Union (FSU), has createdeconomic and environmental disequilibria of historically unprecedenteddimensions throughout the region, as well as a process of gradual transitionfrom plan to market. This historical ‘experiment’ provides a uniqueopportunity to study economyÐenvironment interactions and the adjustmentprocess towards a new equilibrium, as well as the implications forconventional and novel policy instruments under transitional conditions.The changes that have taken place have been so many and so large thatthey defy many of the tools of marginal analysis. Privatization, industrialrestructuring, market competition, price reform, and trade liberalizationamong others have suddenly been introduced where none existed andhave so radically altered the fundamentals of these economies that theycould be considered as new economies rather than simply reformedeconomies. However, underlying these radical changes, are many legaciesof the centrally planned economy that persist or change only gradually.Furthermore, not all countries in CEE and the FSU have reformed theireconomies at the same pace. The northern tier countries of CEE movedfaster than the southern tier and the latter faster than most FSU republics.