We explore the effectiveness of regulatory inspections in promoting compliance with environmental protection standards and the variations influenced by institutional trust and corruption. We utilize a nationally representative dataset of manufacturing micro, small and medium enterprises (MSMEs) in Zimbabwe using the Inverse Probability Weighted Regression Adjusting estimation method. We find that, first, regulatory inspections promote MSMEs’ compliance with environmental protection standards. Second, the impact of regulatory inspections on compliance is stronger when MSME owners have trust in regulatory institutions compared to when they do not. Third, regardless of entrepreneurs’ trust levels in institutions, the possibility of bribing regulatory agency officers dilutes the effectiveness of regulatory inspections in fostering compliance. Finally, in cases where entrepreneurs lack trust in institutions, regulatory inspections have no statistically significant effect on compliance for corrupt entrepreneurs.

This study treats the selection of land conservation and intensive use model counties as a quasi-natural experiment. Using Chinese county-level panel data, we evaluate the multidimensional impacts of the land conservation and intensive use policy (LCIUP). We find that LCIUP reduced PM2.5 concentrations in counties while simultaneously lowering per capita GDP, exerting a positive effect on environmental quality but a negative inhibitory effect on economic growth, showing a distinct environment–economy asymmetry. LCIUP restricts industrial land supply and curbs the entry of polluting enterprises, but fails to facilitate industrial transformation and upgrading. Counties reliant on secondary industries face significant industrial transformation lock-in challenges, while those with substantial market potential can achieve dual economic and environmental goals. Green finance policies effectively complement LCIUP to promote industrial transformation and upgrading, whereas technological innovation and talent attraction policies currently lack such synergy. Cost–benefit analysis confirms that LCIUP’s marginal environmental benefits outweigh economic losses.

Using the synthetic difference-in-differences method, this study evaluates the comprehensive effects of the ‘coal-to-gas’ policy in China following its complete implementation in 2017. We propose four channels through which the policy could affect the air quality in untreated cities. The findings reveal a significant decrease in air pollution levels, as measured by PM10, in both the treated and untreated areas. However, the net spillover effect in the treated and untreated areas exhibits heterogeneous spatial distribution patterns due to different mechanisms. These differences could be related to the political economy and natural geography of China.

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.

With rising environmental awareness, public attention has become an important external force shaping corporate green behaviour. Using Baidu search data to measure public green attention (PGA), this paper examines its impact on green technological innovation (GTI) among 1543 Chinese listed firms from 2011 to 2022. Employing a high-dimensional fixed-effects model, we find that PGA significantly promotes GTI, and the conclusion holds under alternative specifications. Heterogeneity analysis shows that this effect is stronger in firms and regions with more favourable conditions. Mechanism analysis indicates that PGA stimulates GTI mainly by strengthening environmental regulation, enhancing corporate social responsibility and reducing agency costs. Further analysis reveals that PGA-induced GTI leads to better Environmental, Social and Governance performance, lower business risk and improved operational outcomes. Overall, the results highlight the important role of public attention in advancing corporate green innovation and sustainability.

We augment an overlapping generations endogenous credit cycle model with environmental externalities and two regulatory authorities to study how fiscal and financial environmental regulation together shape environmental quality, macroeconomic stability, and income distribution. Environmental quality depends on pollution from the brown sector, regulated either through environmental haircuts on collateral or via tax-financed abatement and environmental improvements. We find that haircuts and taxes affect emissions, income distribution, and system stability in distinct ways, with interaction effects that create trade-offs between environmental outcomes and macroeconomic stability. Compared to scenarios with only financial regulation, introducing an environmental tax maintains similar environmental quality but achieves higher aggregate income and capital per worker. However, we uncover intergenerational trade-offs as environmental regulation improves environmental quality and raises incomes for younger agents and investors but lowers and destabilizes the returns of older generations reliant on capital income.

Air pollution remains a major challenge, especially in developing countries, requiring joint efforts from governments and society. This study examines how mass media, through its emotional tone, functions as an informal regulator of air pollution in China’s “war on air pollution”. Using daily data on media sentiment, air quality and related variables across Chinese cities, we find that negative emotional tones in environmental news are significantly associated with lower pollution levels. We identify mechanisms through which media influence public awareness, trigger government responses and pressure firms to reduce emissions. Our findings highlight the media’s role beyond information dissemination to shape agendas and social norms, even in contexts with restricted press freedom. This study offers new insights into how emotional framing in mass media contributes to environmental governance in developing countries.

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.

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.

In this study, we provide ex post empirical analysis of the effects of climate policies on carbon emissions at the aggregate national level, using a comprehensive database of 121 countries. Carbon taxes and emissions trading systems (ETS), and the overall stringency of climate policies are considered. We use dynamic panel regressions, controlling for macroeconomic factors (economic development, GDP growth, urbanisation and the energy mix). Higher carbon taxes and ETS prices reduce carbon emissions. An increase in carbon taxes by $10 per ton of CO2 reduces CO2 emissions per capita by 1.3% in the short run and by 4.6% in the long run.

This paper uses a dynamic general equilibrium approach that takes into account the macroeconomic implications of the green transition and its consequences for public finances. It shows that when the government relies too heavily on expenditure-based measures, it threatens the sustainability of public debt, by increasing the probability of sovereign default, leading to higher interest rates on government bonds. This higher public default risk has potentially significant repercussions on investment financing conditions for the private sector, and increases the cost of the transition to a net-zero economy. On the other hand, carbon pricing policies make the transition more viable for public finances, at the expenses of similarly high economic costs, while remaining effective in reducing greenhouse gas emissions. The welfare-maximizing optimal policy mix results in a balanced approach, with the public sector’s contribution to the total mitigation effort increasing gradually, ranging from 25% to 40% between 2030 and 2050.

Public authorities often enforce pollution abatement through monitoring and penalties. However, monitoring is costly and only a small percentage of firms are monitored. Inspectors may be corrupt and permit evasion for a bribe. For firms in developing countries, it is expensive to enter formally and install costly abatement technologies, which are accessible only to formal firms. This paper studies a framework where firms, depending on abatement cost, the probability of inspection, the likelihood of a corrupt inspector and the bribe, choose whether to organize formally or informally and whether to abate before inspection. Firms that do not abate beforehand are liable to either pay a penalty and abate or close down post-inspection. Greater monitoring and lower abatement costs encourage firms to move towards formal organization, while excessively high penalties may discourage entry.

This paper studies the dynamic relationship between economic growth, pollution, and government intervention. To do so, we develop a model that links pollution to the economy’s productive capacity, thereby capturing the feedback loops between economic activity, environmental degradation, and fiscal policy intervention. The model incorporates a pollution-sensitive damage function, taxes, and government spending while analyzing economic growth under different levels of government intervention. Therefore, the main paper’s contributions reveal that economies can achieve favorable outcomes with low or moderate government intervention, and that our results underscore the vital role of pollution mitigation policy in dynamically balancing economic growth with environmental sustainability.

Climate change, partly driven by rising emissions, has damaging and often irreversible impacts on entire economies. In this context, production processes play a crucial role, as they affect the level of pollution, causing environmental degradation, and affecting human health. Sustainable production methods and stricter environmental regulations can help mitigate these effects. However, their effectiveness depends on many factors as, for instance, the attitude towards greenery by firms and their convenience in breaking the rules. In the present work, we propose a dynamic framework to describe how and in which measure the production processes influence the environmental quality, considering the presence of non-compliant firms and the attitude toward greenery. We obtain a 3D piecewise-smooth dynamical system describing the evolution of the fraction of polluting firms, the monitoring level by the State, and the environmental quality over time. By analyzing the effects on environmental quality of the environmental regulation enforcement for different greenery propensities, we show that: (1) if the propensity for greenery is high, the system will converge towards a good equilibrium, that is, with high environmental quality and absence of dishonest companies; (2) if the propensity for greenery is at an intermediate level, the system may converge towards good or bad equilibria; (3) if the propensity for greenery is low, further internal attractors may emerge.

This paper investigates the impact of environmental regulations on inward foreign direct investment (FDI) using a novel index that distinguishes between the implementation and enforcement of environmental policy across 111 countries from 2001 to 2018. Leveraging bilateral FDI data and a structural gravity model, we find robust evidence of a Pollution Haven Effect: weaker environmental regulations in host countries are associated with higher levels of inward FDI. The effect is more pronounced in emerging markets and in environments with higher corruption. Importantly, we show that FDI responds more strongly to policy implementation, capturing formal regulatory commitment, than to enforcement, measured as deviations between predicted and actual emissions. In addition, bilateral FDI patterns are shaped by the environmental stringency gap between source and host countries, consistent with regulatory arbitrage behavior.

Policy making in areas of scientific uncertainty may be shaped by the public’s stated preferences (SP). SP surveys provide respondents with information about the scenario, typically from expert sources. Here, we tested whether respondents’ pre-existing confidence in the ability of experts in general to provide reliable information was associated with (a) status quo bias, (b) response certainty and (c) willingness to pay (WTP) estimates. Using 670 responses to a 2020 choice experiment on microplastic restrictions in the UK, we show that being ex ante more confident was significantly related to less frequent status quo choices and higher response certainty. However, we only observed differences in mean WTP for our ‘microplastics released’ attribute. Our findings suggest that confidence in expert-provided information shapes how respondents engage with SP surveys, particularly in contexts of scientific uncertainty. Future work to further understand determinants and consequences of perceived expert trustworthiness would be insightful.

In this paper, we adopt an evolutionary model to describe the coevolution of technological transition and pollution in a country, where the choice of technology does not only give firms access to cleaner (but more expensive) or dirtier (cheaper and illegal) forms of production, but also access to social groups and information. Firms’ activity may be harmful to the environment and, due to the existence of ambient pollution charges, economic activity is affected by the level of pollution in the country. Our analysis describes how the evolution of the transition to clean technology and pollution generates a rich set of possible equilibria, which include stable pure strategies (where all firms choose the same technology) and inner equilibria (where both technologies could be adopted in the long run). We also observe more complex behavior and coexistence of different attractors as well as highlight the importance of initial conditions and uncover how the regulator may face possible pollution traps.

Government procurement is a highly important area to explore in seeking to advance the capacity of enterprises to achieve green technological innovation and promote green development more broadly. Research for this article focused on A-share listed manufacturing enterprises in Shanghai and Shenzhen as samples, and used the government procurement contract data published by the China Government Procurement Network to explore the effect on technological innovation in the manufacturing industry. The results show that government procurement has a significant and positive effect on green technology innovation. Moreover, the larger the scale of government procurement, the more obvious is the promotion effect on green innovation. A mechanism test found that government procurement can promote corporate green technology innovation by raising awareness of climate change (especially in the eastern regions of China), while a heterogeneity analysis found that government procurement promotes green invention patents more significantly than green utility model patents. Government procurement was also found to have a greater effect on enterprises without ISO14001 certification. Further analysis revealed that overall demand-side innovation procurement and supply-side innovation subsidies have a mutually reinforcing synergistic effect on firm innovation. While government synergies vary significantly depending on the policy implementation sequence, this article provides an important reference in identifying further ways to improve government procurement policies.

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.

Historical ambiguity on how cover crop use influences future crop insurance eligibility has been proposed as one explanation for low cover crop adoption rates. However, explicit guidance on cover crop use for crop insurance participants was added in the 2018 Farm Bill. This study uses farm level data from the Agricultural Resource Management Survey to ascertain whether crop insurance participation influenced adoption of cover crops and to what degree that influence persisted after the 2018 Farm Bill. Estimation of a double hurdle model, combined with a control function approach to address endogeneity, suggests statistically and economically significant effects between crop insurance expenditures and cover crop use at the “extensive margin,” but no statistically significant effect at the “intensive margin.” Estimation on subsets of the data defined by before and after the 2018 Farm Bill suggest that the effect is primarily attributable to participation trends prior to the 2018 Farm Bill. Following the 2018 Farm Bill, no statistically significant effects are observed between cover crop use and crop insurance expenditures.