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The paper conducts an empirical investigation on the complex relationship between biodiversity and the values of ecosystem goods and services that are supported by biodiversity and ecosystem functioning, aiming to produce an econometric quantification of the magnitudes involved. Furthermore, we operate this study at a in the context of global climate change, which is considered one of the major drivers today that alter the pattern of biodiversity distribution, affect the ecosystem functioning and change the flows of ecosystem goods and services to be provided by a healthy ecosystem. In the paper, we first built a composite biodiversity indicator on the concept of Natural Capital Index so as to integrate information regarding the quantitative and qualitative changes of ecosystems driven by warming climate conditions. Furthermore, the composite indicator is integrated into the econometric specification so as to capture the marginal impacts of changes in biodiversity on the value of ecosystem goods and services due to climate change. The econometric problem is solved in a structural simultaneous system using three-stage-least-squares (3SLS) to analyze climate change impacts on forest ecosystems and the respective ecosystem service values across 17 European countries.

The evidence of impending and serious climate and other consequences of an expanding world economy based on fossil carbon energy continues to accumulate. This two-part paper examines the potential contribution of the world view and insights of Buddhism to this search. It presents both a conceptual and practical case that Buddhism can help shape and move towards an alternative and effective paradigmatic basis for sustainable economies — one capable of bringing about and maintaining genuine, high welfare levels across the world's societies. The first paper outlined a comprehensive analytical framework to identify the fundamental nature of anthropogenic climate change. Based on the integration of two of the most influential environmental analysis tools of recent decades (the DPSIR model and IPAT equation), the framework was then broadened to facilitate ideas from the Buddhist world view by injecting two key missing aspects — the interrelated role of (1) beliefs and values (on goals and behavior) and (2) the nature of well-being or human happiness. Finally, the principal linkages between this climate change analysis framework and Buddhism were explored. In this concluding paper, the systems framework is used to demonstrate how Buddhist and related world views can feed into appropriate and effective responses to the impending challenges of climate change. This is undertaken by systematically presenting a specific, if indicative, list of relevant strategies informed by the understanding of interconnectedness and other basic principles about the nature of reality and human well-being as proposed in Buddhism.

The purpose of this paper is to analyze climate change and ecological destruction through the prism of the core general principles of political economy. The paper starts with the principle of historical specificity, and the various waves of climate change through successive cooler and warmer periods on planet Earth, including the most recent climate change escalation through the open circuit associated with the treadmill of production. Then we scrutinize the principle of contradiction associated with the disembedded economy, social costs, entropy and destructive creation. The principle of uneven development is then explored through core–periphery dynamics, ecologically unequal exchange, metabolic rift and asymmetric global (in)justice. The principles of circular and cumulative causation (CCC) and uncertainty are then related to climate change dynamics through non-linear transformations, complex interaction of dominant variables, and threshold effects. Climate change and ecological destruction are impacting on most areas, especially the periphery, earlier and more intensely than previously thought likely. A political economy approach to climate change is able to enrich the analysis of ecological economics and put many critical themes in a broad context.

Climate change and its consequences present one of the most important threats to biodiversity and the functions of ecosystems. The stress on biodiversity is far beyond the levels imposed by the natural global climatic changes occurring in the recent evolutionary past. It includes temperature increases, shifts of climate zones, melting of snow and ice, sea level rise, droughts, floods, and other extreme weather events. Natural systems are vulnerable to such changes due to their limited adaptive capacity. Based on an analysis using the DPSIR framework, this paper discusses some of the important socio-economic driving forces of climate change, with a focus on energy use and transportation. The paper also analyses observed and potential changes of climate and the pressures they exert on biodiversity, the changes in biodiversity, the resulting impacts on ecosystem functions, and possible policy responses. The latter can be divided into mitigation and adaptation measures. Both strategies are needed, mitigation in order to stabilise the greenhouse gas concentrations in the atmosphere, and adaptation in order to adjust to changes that have already occurred or cannot be avoided. One mitigation option, increased biofuel production, which is also a response to oil depletion, would change land use patterns and increase human appropriation of net primary production of biomass, thereby threatening biodiversity. By considering the first order and second order impacts of climate change on biodiversity when developing policy measures, it will be possible to integrate ecosystem and biodiversity protection into decision-making processes.

Proposals being considered by the U.S. Congress would establish a cap-and-trade system to cut greenhouse gas (GHG) emissions approximately 2% annually through 2050. Past cap-and-trade policies for other pollutants have distributed allowances free to the regulated companies, leaving consumers uncompensated for passed-through costs needed to achieve the required reductions. Social equity concerns were not a major issue because the total costs were relatively small. However, Americans currently spend about $1 trillion/year on energy, directly and indirectly via the goods and services they consume. If a cap on carbon emissions results in significant increases in energy prices, social equity concerns could quickly dominate the debate over climate policy. This paper confirms earlier studies that a traditional cap-and-trade policy is regressive and would cause the cost of reducing GHG emissions to fall disproportionately on low income households. This paper explores ways to ameliorate those effects, using highly disaggregated data available on consumer expenditures and energy-input–output analyses of the U.S. economy. Emissions are estimated based on direct and embodied energy use at the household level. Social equity concerns are taken into account and the consequences of cap-and-trade policies are assessed by quantifying the extent to which the expenditure patterns of the poor are significantly more energy intensive than those of the rich.

This paper examines the economic impact of climate change on livestock production in Kenya. We estimate a Ricardian model of net livestock incomes and further estimate the marginal impacts of climate change. We also simulate the impact of different climate scenarios on livestock incomes. The Ricardian results show that livestock production in Kenya is highly sensitive to climate change and that there is a non-linear relationship between climate change and livestock productivity. The estimated marginal impacts suggest modest gains from rising temperatures and losses from increased precipitation. The predictions from atmospheric ocean general circulation models suggest that livestock farmers in Kenya are likely to incur heavy losses from global warming. The highest and lowest losses are predicted from the Hadley Centre Coupled model (HADCM) and Parallel Climate Model (PCM) respectively, based on the Intergovernmental Panel on Climate Change A2 Special Report on Emissions Scenarios. The paper concludes that in the long term, climate change is likely to lead to increased poverty, vulnerability and loss of livelihoods. Several policy interventions are recommended to counter this impact.

The aim of this paper is to show that continued reliance on an unreconstructed neo-classical economic model for human progress is largely responsible for an economic development path which is both unsustainable and undemocratic. Using the topical issue of global warming as an illustration, it is argued that the ecological isation of the economics discipline challenges the foundations of this strategy and promises, among other benefits, a more democratic global economic organisation. The data analysed in this paper suggest that the damage of global warming is directly attributable to economic activity, the benefits of economic growth go to the economically articulate, and the disbenefits in terms of environmental damage are borne by the economically inarticulate. Mainstream economics gives no answer to, and becomes a method for evading, this moral problem. The data also show that huge increases in energy efficiency are required if a basically unchanged world economic system is to be sustainable. Nevertheless, the predominant goal of development policy is to ignore the problem of scale and to promote an economic model of urbanised development in the “developing” countries which carries the implication (and the promise) that the rates of resource consumption typical in “developed” countries can be achieved globally. An alternative development model is presented which includes the recognition that, in ecological terms, “developed” countries are in debt to “developing” countries, largely because of the way in which economic growth is measured gross of externalised social and environmental costs. A method is suggested for calculating part of this ecological debt for individual countries, thus going some way towards quantifying the extent of the distortions in the current global political economy and the unsustainability of the present economic order.

The combustion of fossil fuels emits a range of damaging pollutants, the emissions of which are reduced if fossil fuel use is reduced in order to achieve CO2 abatement. These reductions are termed the secondary benefits of such abatement. The paper reviews estimates of the size of these benefits. Although the estimates are few and uncertain, they uniformly suggest that the secondary benefits are of the same order of magnitude as the gross costs of medium to high levels of CO2 abatement, and are substantially larger than the (equally uncertain) estimates of the primary benefits of CO2 abatement, except where these benefits derive from consideration of damages from unabated global warming in the very long term. The paper concludes that the existence of significant secondary benefits greatly reinforces the economic case for an aggressive policy of CO2 abatement.

The deforestation and degradation of tropical forests are taking place at an extremely rapid pace. According to the Food and Agriculture Organization (FAO), the estimated annual rate of tropical deforestation during the 1981–1985 period was 113 846 square kilometers or 0.6% of the 1981 total forested area. The implications of the loss of these forests are staggering (Myers, N., 1989. Deforestation Rates in Tropical Forests and Their Climatic Implications. Friends of the Earth, London). Tropical forests are extremely rich ecosystems which support a disproportionately large share of the world's plant and animal species. Forests play a crucial role in both nutrient and hydrological cycling and may provide sustainable economic benefits through managed harvesting of timber and the collection of non-timber products such as fruits, nuts, and rubber. Also, deforestation is a significant source of global warming through its effects on the global carbon cycle. This paper focuses on the relationship between debt and deforestation, examining conceptual and empirical arguments that debt is a source of deforestation pressure. Our study develops a behavioral model which suggests that debt can lead to myopic behavior, leading to deforestation rates that may not be optimal in the long run, but are necessary in the short run to meet current constraints. Then, country-by-country data on debt, deforestation, and other variables are analyzed with regression analysis. It is shown that debt is significantly correlated with deforestation under a wide variety of assumptions and specifications. Our results indicate that debt is an important factor in the deforestation of tropical countries. There are certainly other sources of deforestation, both micro- and macroeconomic, which may vary significantly from country to country. However, we focus on debt because of its dominant role in the economies of developing countries, and because of the increased use of debt-for-nature swaps. The link between debt and deforestation that is suggested in this paper implies that debt-for-nature swaps may have a dual effect on deforestation. First, the contractual agreement is designed to preserve forests as part of the swap. Second, the reduction in debt may itself reduce the pressure to deforest, although this indirect effect is small. Our research provides evidence that reducing debt reduces deforestation, which may be an argument to offer deforesting third-world countries some form of debt relief, and to utilize more fully debt-for-nature swaps as a tool for preserving environmental quality.

This paper presents the results of a choice experiment survey of tourists in Mallorca, Spain, to elicit preferences for designed policies aimed at addressing the attractiveness losses of the destination in the face of global warming. The study is novel in two main ways. First, it introduces the uncertainty deriving from the stochastic nature of global warming, not as a policy attribute but as an inherent feature of the valuation scenario. For this reason, the expected temperature change and its probability of occurrence were kept constant across alternatives but not across different choice tasks. Second, it measures the willingness-to-pay for a set of pro-environmental policies under different framings. Results show that the inclusion of uncertainty shapes individuals' decisions.

This paper presents a macroeconomic model that combines the economic impact of climate change with the pivotal role of private debt. Using a Stock-Flow Consistent approach based on the Lotka–Volterra logic, we couple its nonlinear monetary dynamics of underemployment and income distribution with abatement costs. A calibration of our model at the scale of the world economy enables us to simulate various planetary scenarios. Our findings are threefold: 1) the +2 °C target is already out of reach, absent negative emissions; 2) the long-term (resp. short-term) results of climate change on economic fundamentals may lead to severe economic consequences without the implementation (resp. in case of too rapid an application) of proactive climate policies. Global warming (resp. too fast transition) forces the private sector to leverage in order to compensate for output and capital losses (resp. to lower carbon emissions), thus endangering financial stability; 3) Implementing an adequate carbon price trajectory, as well as increasing the wage share, fostering employment, and reducing private debt make it easier to avoid unintended degrowth and to reach a +2.5 °C target.

The ambitious goals to limit global warming can only be reached with a broad acceptance and participation of the general public. This paper relies on surveys among citizens in China, Germany and the U.S. and investigates the determinants of the acceptance of national and international adaptation and mitigation efforts. The empirical findings indicate that specific beliefs and environmental awareness are important drivers in all three countries, while political attitudes and socio-economic characteristics are the main sources of cross-country heterogeneity. The study thereby points at important starting points and target groups for raising the acceptance of national and international climate policy.

Climate change can adversely impact the quality of environmental services provided under Payments for Ecosystem Services (PES) programs, thereby reducing their effectiveness. In this paper, a modelling framework is developed to explore how PES negotiations between forestry and fishery-based communities may be affected when warming reduces the stock of fish as well as forest biomass growth rates. Under a PES arrangement, forestry-based communities afforest the lake's catchment region, which helps improve fish stock abundance through reduced sediment loading. When climate warming adversely impacts fish yields, the value of restoring degraded lands in the catchment region increases, making the negotiating powers of the fishing and forestry dependent communities dynamic. Results suggest that the prospect of a climate-driven negotiating power in the future calls for higher PES payments by the fishing community in order to incentivize early restoration. Warming could also affect forest biomass growth rates in the long run. However, findings from this study suggest that warming driven forest biomass growth rate decline may have a relatively lower impact on PES negotiations compared to the direct impact of warming on lake's fish productivity.

In integrated assessment models (IAMs) economic activity leads to global warming, which causes future economic costs. However, typical IAMs do not explicitly represent the role of natural capital. In this paper, the DICE model by Nordhaus (2008) is expanded with a natural capital variable that is affected both by climate change and by depletive effects of economic activity. Due to a synergy between the two effects, the optimal policy of the expanded model features more and earlier abatement of CO2 emissions than DICE. Interestingly, the policy implications are different from what follows if one tries to capture the depletive effects on natural capital by simply reducing factor productivity growth in DICE. Acknowledging considerable uncertainty, simulations show that climate- and savings rate policies from the expanded model are more robust in the long term than policies that do not consider non-climatic depletion effects on natural capital.

This paper examines the impact of government spending on the environment using a panel of 77 countries for the time period 1980–2000. We estimate both the direct and indirect effects of government spending on pollution. The indirect effect in particular operates through the impact of government spending on income and the subsequent effect of the income level on pollution. To take into account the dynamic nature and the potential endogeneity in the relationships examined, appropriate econometric methods are used. For SO2, government spending is estimated to have a negative direct impact on per capita emissions, while the direct effect is insignificant on CO2 pollution. The indirect effect on SO2 is negative for low income levels and becomes positive as income increases, while it remains negative for CO2 for the most part of the sample range. The resultant total effects follow the patterns of the indirect effects, which dominate their respective direct ones for each pollutant. Policy implications from the results vary depending on the income level of the considered countries.

This paper describes a new model, Climate and Regional Economics of Development (CRED), which is designed to analyze the economics of climate and development choices. Its principal innovations are the treatment of global equity, calculation of the optimum interregional flows of resources, and use of McKinsey marginal abatement cost curves to project the cost of mitigation. The model shows more equitable scenarios have better climate outcomes; the challenge of climate policy is to persuade high-income countries to accept the need for both international equity and climate protection.

The contemporaneous relationship between temperature and income is important because it enables economists to estimate the economic impact of global warming without assuming a structural model. Until recently, empirical evidence generally suggests that there is a negative relationship between temperature and income, and, therefore, global warming has an adverse impact on economic activity. However, Nordhaus (2006) argues that the temperature–income relationship depends on how income is measured. We show in this paper that the results of Nordhaus (2006) may be due to an omitted-variable problem. Based on a well-motivated temperature–income model, we find that the relationship between temperature and income is not dependent on income measurement. Our regression results show that the adverse impact of an increase of 1 °C in temperature can be as much as a 3% decrease in total income for the G-7 nations. Therefore, our results suggest an aggressive climate mitigation policy.

This paper examines how South American farmers' choices of livestock species vary across the range of climate and in turn infer from them as to what would happen under climate changes. We examine the choice of five primary species using a multinomial logit model with and without climate variability measures based on 1300 livestock farm surveys in seven countries. The results indicate that climate variables are highly significant determinants of primary species choice after controlling for soils, geography, household characteristics, and country fixed effects. We find the probability of adopting any livestock increases with warming, but decreases when it becomes too wet. The impacts of climate change would vary by species and climate scenarios. For example, under a hot and dry CCC scenario by 2060, beef cattle decrease by 3.2%, dairy cattle by 2.3%, pigs by 0.5%, and chickens by 0.9%, which is offset by a large increase in sheep by 7%. These adaptive changes vary again by country. Large changes are observed in the Andean countries. Under the hot dry scenario, dairy cattle increase in Uruguay and Argentina, but decrease elsewhere. The increase in sheep occurs mostly in the Andes mountain countries such as Chile, Colombia, Ecuador, and Venezuela. Under a milder and wetter scenario, beef cattle choice declines in Colombia, Ecuador, and Venezuela, but increases in Argentina and Chile. Sheep increase in Colombia and Venezuela, but decrease in the high mountains of Chile where chickens are chosen more frequently.

Under a scenario of global climate change, the water conservation function of Beijing's forest ecosystems has attracted considerable public attention. In this paper, the term of water conservation is described as a comprehensive regulation of forests on water resources through various hydrological processes, and grouped into three services, i.e., rainfall interception, soil water storage and fresh water provision. On the basis of Beijing's forest resource survey data and mathematical simulations, the function and the economic value of water conservation was estimated. The result showed that, the forest ecosystems of Beijing could intercept approximately 1.43 billion cubic meters of rainfall and 277.82 million cubic meters of soil water under ideal conditions, and supply 286.67 million cubic meters of fresh water, their economic values were estimated to be about 2.77 billion RMB(Chinese Currency, 8.28RMB=US$1), 2.15 billion RMB, and 315.33 million RMB, respectively. The total economic value of water conservation provided by Beijing's forests was 5.23 billion RMB, and the economic benefit per hectare was equal to 5704 RMB. Furthermore, the spatial variation of water conservation functions and the monetary values of the main forest ecosystems in different locations in Beijing were analyzed, and the effects of water conservation provided by the forest ecosystem on the development of society and economy in Beijing were discussed. This work contributes to the realization and preservation of forest resources in Beijing. (C) 2008 Elsevier B.V. All rights reserved.

This study uses a multi-part, split-sample contingent valuation method (CVM) and fair share (FS) survey to better understand the public's valuation of mitigating global climate change through its willingness to pay for biomass or “cellulosic” ethanol. In addition to a basic CVM question, a related scenario was developed that asked half of the survey respondents to state their fair share cost to lessen a potential food shortage in the next decade, also through the expanded use of cellulosic ethanol. Three alternative biomass feedstocks were assessed: farming residues, forestry residues and paper mill wastes, and municipal solid wastes. Overall a slightly larger proportion of respondents were WTP extra for cellulosic ethanol in the basic CVM scenario than in the FS scenario, though no significant differences were found in the WTP for the different feedstocks. Bid curve lognormal regression results for the two models were similar, supporting the idea that asking a FS rather than a conventional WTP question may be justifiable in some circumstances, such as in cases of a national emergency.

This paper studies the impact of pragmatic and optimal transfer schemes on the incentives for regions to join international climate agreements. With an applied model that comprises twelve world regions we investigate: (i) a benchmark without transfers, (ii) scenarios with allocation-based rules where coalition members receive tradable emission permits proportional to initial or future emissions, (iii) scenarios with outcome-based rules where the coalition surplus is distributed proportional to emissions, and (iv) a scenario based on an optimal sharing rule where the coalition surplus is distributed proportional to outside option payoffs. We find that well-designed transfer schemes can stabilise larger coalitions and increase global abatement levels. In our applied setting we find that for allocation-based and outcome-based rules only small coalitions are stable, and, in the case of grandfathered emission permits, there is no stable coalition at all. Some obstacles associated with grandfathered emission permits can be overcome by incorporating the expected growth of emissions in developing countries in the distribution of emission permits. For the optimal transfer scheme we find that larger coalitions, which include key players such as the United States and China, can be stable, but no transfer scheme is capable of stabilising the Grand Coalition.

This paper explores how South American farmers adapt to climate by changing crops. We develop a multinomial logit model of farmer's choice of crops. Estimating the model across 949 farmers in seven countries, we find that both temperature and precipitation affect the crops that South American farmers choose. Farmers choose fruits and vegetables in warmer locations and wheat and potatoes in cooler locations. Farms in wetter locations are more likely to grow rice, fruits, potatoes, and squash and in dryer locations maize and wheat. Global warming will cause South American farmers to switch away from maize, wheat, and potatoes towards squash, fruits and vegetables. Predictions of the impact of climate change on net revenue must reflect not only changes in yields per crop but also crop switching.

One of the key challenges in resolving global warming problem is how to induce developing countries to reduce emissions. The CDM was proposed in the Kyoto Protocol as a means of obtaining the cooperation of developing countries in controlling greenhouse gases, but it has some intrinsic problems and has generated considerable controversy. This paper presents an alternative mechanism — the Monetary Compensation Mechanism (MCM). I study the characteristics of this mechanism with a dynamic principal-agent model. By solving the model numerically, I obtain the optimal solution for a scenario based on 1990 data. The monetary compensation rate under the MCM is comparable to the price of CERs in the CDM, but the MCM has several advantages over the CDM.

Coastal disasters are increasing in frequency and magnitude—measured in terms of human lives lost, destroyed infrastructure, ecological damage and disrupted social networks. Hurricane Katrina and the Indian Ocean tsunami illustrate the severe and widespread impacts of such disasters on human well-being. The proximate cause of most of these disasters is “forces of nature”. However, human decisions, driven largely by economic forces, do much to aggravate these natural disasters—for example, coastal mangroves and wetlands protect coastal communities from wave surges and winds, but are rapidly being converted for the production of market goods, and anthropogenic climate change driven by the energy use of our economy may exacerbate coastal disasters in several ways. The goal of economics should be to improve the sustainable well-being of humans. Our well-being is generated in part by the production of market goods and services, but also by the goods and services provided by nature, by social networks and norms, by knowledge and health–in short: built, natural, social and human capital, respectively. In seeking to increase human well-being solely by maximizing the monetary value of market goods (built capital), our current economic system may be doing more to undermine our sustainable well-being than to improve it, a point made clear by the growing negative impacts of coastal disasters. An economic system should allocate available resources in a way that equitably and efficiently provides for the sustainable well-being of people by protecting and investing in all four types of capital. This is what ecological economics seeks to do. This article introduces ten papers that apply the four capital framework to the analysis of coastal disasters, seeking to understand their impacts and how to mitigate them, how to predict and plan for them, and how to use this information to redesign coastal areas in a more sustainable and desirable way.

Carbon dioxide (CO 2 ) is the most important of the greenhouse gases that are causing global warming. The transport sector currently accounts for more than one-quarter of CO 2 emissions and more importantly its share in total emissions is increasing in most countries. This paper investigates the key factors in the change in CO 2 emissions from car travel in Great Britain over the last 30 years. It attempts to disentangle determinants of growth in CO 2 emissions from car travel, which has the largest share of emissions in road transport. The study is based on various decomposition analyses, starting from the IPAT identity. As summarised in the IPAT identity, the degree of the I mpact of human activity on the environment is determined by changes in P opulation, A ffluence (per-capita consumption) and T echnology (environmental impact per quantity of consumption). In the case of CO 2 emissions from car travel in Great Britain, the affluence ( A ) factor (car driving distance per person) was a dominant force for the growth of emissions over the last 30 years. Not only do people travel longer distances by cars than 30 years ago, but car occupancy rates have also decreased, contributing to the growth of car driving distance per person. Although technology ( T ) factors such as fuel efficiency and fuel substitution to diesel fuel partly cancelled out these growth effects of affluence factors, this contribution was relatively small. However, in the 1990s there emerged a different pattern in the trend. Of the affluence ( A ) factors, the growth rate of car trip distance per person weakened considerably. As for the technology ( T ) effect, the carbon intensity of car driving kept decreasing over this period. Therefore, although CO 2 emissions from car travel ( I ) continued to increase, the growth rate became substantially lower than in the earlier periods. More detailed investigation into the determinants of both affluence ( A ) factors and technology ( T ) factors is needed to confirm whether the trend in the 1990s indicates that carbon dioxide emission from car travel in Great Britain reached the turning point of the Environmental Kuznets Curve.

This paper applies a contingent visitation analysis to estimate the effects of changes in climate and resource variables on nature-based recreation demand. A visitor survey at Rocky Mountain National Park included descriptions of hypothetical climate scenarios (depicting both weather- and resource-related variables), and questions about how respondents' visitation behavior would change contingent upon the scenarios. Survey responses are used to estimate the impact of climate change on park visitation and to test for the relative significance among climate scenarios and resource variables. A relatively small proportion of respondents indicated that their visitation behavior would change under the hypothetical climate scenarios, and the net effect on visitation is slightly positive. Both direct (weather-related) and indirect (resource-related) climate scenario variables are found to be statistically significant determinants of contingent expected changes in visitation. The results of the contingent visitation analysis are compared with the results of a regression analysis of historic visitation and climate variation for methodological assessment, and we find that they are in close agreement.

This paper provides an overview of the treatment of technological change in economic models of environmental policy. Numerous economic modeling studies have confirmed the sensitivity of mid- and long-run climate change mitigation cost and benefit projections to assumptions about technology costs. In general, technical progress is considered to be a non-economic, exogenous variable in global climate change modeling. However, there is overwhelming evidence that technological change is not an exogenous variable but to an important degree endogenous, induced by needs and pressures. Hence, some environment-economy models treat technological change as endogenous, responding to socio-economic variables. Three main elements in models of technological innovation are: (i) corporate investment in research and development, (ii) spillovers from R&D, and (iii) technology learning, especially learning-by-doing. The incorporation of induced technological change in different types of environmental-economic models tends to reduce the costs of environmental policy, accelerates abatement and may lead to positive spillover and negative leakage.

Recent empirical research has examined the relationship between certain indicators of environmental degradation and income, concluding that in some cases an inverted U-shaped relationship, which has been called an environmental Kuznets curve (EKC), exists between these variables. Unfortunately, this inverted U-shaped relationship does not hold for greenhouse gas emissions. One explanation of the absence of EKC-like behavior in greenhouse gas emissions is that greenhouse gases are special pollutants that create global, not local, disutility. But the international nature of global warming is not the only reason that prevents de-linking greenhouse gas emissions from economic growth. The intergenerational nature of the negative impact of greenhouse gas emissions may have also been an important factor preventing the implementation of greenhouse gas abatement measures in the past. In this paper we explore the effect that the presence of intergenerational spillovers has on the emissions–income relationship. We use a numerically calibrated overlapping generations model of climate–economy interactions. We conclude that: (1) the intertemporal responsibility of the regulatory agency, (2) the institutional capacity to make intergenerational transfers and (3) the presence of intergenerationally lagged impact of emissions constitute important determinants of the relationship between economic growth and greenhouse gas emissions.

Protecting tropical forests under the Clean Development Mechanism (CDM) could reduce the cost of emissions limitations set in Kyoto. However, while society must soon decide whether or not to use tropical forest-based offsets, evidence regarding tropical carbon sinks is sparse. This paper presents a general method for constructing an integrated model (based on detailed historical, remote sensing and field data) that can produce land-use and carbon baselines, predict carbon sequestration supply to a carbon-offsets market and also help to evaluate optimal market rules. Creating such integrated models requires close collaboration between social and natural scientists. Our project combines varied disciplinary expertise (in economics, ecology and geography) with local knowledge in order to create high-quality, empirically grounded, integrated models for Costa Rica.

A positive relationship between carbon dioxide emissions, the most important greenhouse gas (GHG) implicated in global warming, and GDP is shown in this paper, examining per capita income and CO2 emissions of 137 countries across 21 years. It also appears that as per capita incomes accelerate across countries emissions increases, for the most part, tend to decelerate. It could be that higher income levels lead to increased demand for environmental protection. Only emissions reduction proposals that assure incomes will not be adversely affected, particularly those of less developed countries (LDCs), will have any possibility of successful implementation.