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This study estimates the technical efficiency measures of maize producing farm households in Ethiopia using stochastic frontier (SF) panel models that take different approaches to model firm heterogeneity. The efficiency measures are found to vary depending on how the estimation model treats both unobserved and observed firm heterogeneity. Estimates from the ‘true’ random effects (TRE) models that treat firm effects as heterogeneity are found to be identical to those from pooled SF models. Those results differ from the ones generated from the basic random effects (RE) models that treat firm effects as part of overall technical inefficiency. The more flexible generalised ‘true’ random effects (GTRE) model that splits the error term into firm effects, persistent inefficiency, transient inefficiency, and a random noise component indicates the presence of higher levels of persistent inefficiency than transient inefficiency. The basic truncated-normal RE model and heteroscedastic RE model yields similar efficiency estimates. The GTRE model predict persistent efficiency measures similar to those from the basic RE and flexible RE model with environmental variables incorporated in the variance function as well as in the deterministic production frontier. These results imply that the RE and GTRE panel models provide reliable efficiency estimates for our data compared to the TRE models. All the estimated SF models generate comparable production function parameters in terms of magnitude and sign. Overall, the results underscore the importance of scrutinising stochastic frontier models for their reliability of analytical results before drawing policy inferences.

Many researchers have pointed to coastal environments and their use for energy production, aquaculture, and conservation as key to solving profound challenges facing humanity. Navigating this transition in ocean space necessitates tools to quantify impacts on displaced marine users, including recreational fishers. In this study, we present a novel method combining spatial ecological models of recreational catch with fine-scale random utility models of site choice to predict the impacts of site closures on recreational fishing experiences (fisher welfare). We demonstrate our approach by modelling data from over 10 000 fishing trips to fine-scale sites across 1500 km of coastline in the south-west of Australia and simulating the effects of no-take marine reserves recently implemented in the Australian Marine Parks. The results show how the combination of random utility modelling with spatial ecological methods provides a powerful tool for investigating recreational fisheries as joint social-ecological systems and incorporating recreational fishing into marine spatial planning.

Sustainable agricultural intensification (SAI) practices have been promoted in developing countries to improve farm productivity and environmental services. However, it is still unclear whether use of a combination of SAI practices has a significant influence on the cost efficiency of smallholder farms. This study investigates whether the cost efficiency of smallholder maize producers in Ethiopia depends on use of input‐augmenting and agronomic SAI practices. Stochastic cost frontier models that account for heterogeneity across farms are used for estimation. We find that the use of individual SAI practices increases cost while the combined use of the practices reduces it. The marginal effect on cost reduction is substantial when SAI practices are set at their sample maximum levels. Overall, the results demonstrate the benefit of using a combination of SAI practices in minimizing production cost while addressing the adverse effects of soil degradation and climate variability. To enhance food security, smallholder farm incomes and the sustainability of production in developing countries, policy programs should focus on promoting packages of input‐augmenting and agronomic SAI practices.

Mendoza is the main wine-producing province of Argentina, and the government is currently implementing a range of policies that seek to improve grape grower profitability, including a vineyard replanting program. This study uses a dataset of all grape sales recorded in Mendoza from 2007 to 2018, totaling 90,910 observations, to investigate the determinants of grape prices. Key findings include: smaller volume transactions receive lower-average prices per kilogram sold; the discount for cash payments is higher in less-profitable regions; and the effect of wine stock levels on prices is substantial for all varieties. Long-run predicted prices are also estimated for each variety, and region; and these results suggest that policymakers should review some of the varieties currently used in the vineyard replanting program. (JEL Classifications: Q12, Q13, Q18)

Ecotourism can be an important tool for protecting biodiversity in developing countries. Tourists have preferences for viewing charismatic species and for their conservation, but our understanding of these preferences remains limited. Using choice experiment surveys, we investigate tourists’ preferences and willingness to pay (WTP) for the protection of the Ethiopian wolf ( Canis simensis) in Ethiopia’s Bale Mountains National Park. Results from a random parameter logit model show that tourists were willing to pay up to US$5.82/day/trip for increasing the wolf population from 200 to a more viable number of 250 but very little for a more substantial increase. Tourists also valued increases in the size of the protected area (PA) and access to the wolf habitat. The WTP is found to be dependent on tourists’ prior experience to Ethiopian PAs and whether they had viewed other unique species in the park. The findings suggest opportunities for ecotourism to support the Ethiopian wolf, which is in a critical state, and that the primary motivation for tourists’ support might be due to the wolf’s existence value.

Marine recreational fisheries (MRFs) are often highly spatially heterogenous, with effort concentrated into small areas, and fisheries spanning large environmental gradients. However, spatially resolved catch data is rarely collected in MRFs, preventing the study of spatial heterogeneity in catch. This study uses recreational catch reported in 10 × 10 nm blocks across eight degrees of latitude in Western Australia to map spatial predictions of the probability of a recreational catch on an average trip for two key species: West Australian dhufish (Glaucosoma hebraicum) and snapper (Chrysophrys auratus). Two spatial modelling techniques are compared for the analysis, generalized additive mixed models (GAMMs) and boosted regression trees (BRTs). We find that BRTs outperform GAMMs, but performance gains are small. We also find marked spatial variations in recreational catch probabilities: high catches of dhufish are found in the north of the study area, and low catches in the Perth Metropolitan area and in the south; snapper catches are highest in the north and low in the south. These patterns are used to identify important spatial processes in the fishery. The analysis also suggests that modelling approach (GAMMs or BRTs) has only a minor effect on outcomes of spatial catch analysis in MRFs.

Achieving sustainable food security and increased farm income will depend on how efficient production systems are in converting available inputs to produce outputs. Using data from Malawi, we estimate a Bayesian directional technology distance function to examine the relationship between farm size and technical efficiency. Our results support the existence of an inverse relationship between farm size and productive efficiency, where small farms are more efficient than large farms. On average, farms exhibit inefficiency levels of 60%, suggesting that productivity could be improved substantially. Improving productive efficiency and food security will require farms to operate in ways where the size of cultivated area is matched by nonland production inputs such as labor, fertilizer, and improved seeds. The results highlight the need for policies that could incentivize farmers to adopt productivity‐enhancing technologies and, where possible, to allocate excess land to lease markets.

Industrialization and urbanization, as a result of rapid economic development, have led to the deterioration of water quality in many rivers in developing countries. The Kelani River in Sri Lanka provides drinking water to Colombo and a range of market and non-market ecosystem services; but these services are threatened by deteriorating water quality. We apply a hydro-economic model that accounts for spatial patterns of water quality and abatement cost variability between firms in the catchment. The hydro-economic model combines a hydrological model of water quality with an economic optimization model to determine a cost-effective policy under alternate policy regimes. These include: the existing policy based on effluent concentration standards, effluent trading and effluent trading with multiple zones and an effluent tax. Tradeable permits with multiple zones are the least cost policy option that accounts for both spatial externalities and abatement costs. However, given current institutional capabilities, an effluent tax would be a more realistic second best policy as a transition from the current policy of effluent concentration standards to a policy based on the quantity of effluents.

No-take marine reserves are essential for scientific monitoring, likely to contribute to the sustainability of targeted species, help to buffer biodiversity loss due to climate change impacts, and provide public education, tourism and diverse economic benefits to local communities. However, the establishment of no-take marine reserves has been a contentious policy in several countries because of a perception that recreational fishers are opposed to reserves. Nevertheless, it is unclear whether negative perceptions about reserves are widespread amongst recreational fishers, and whether perceptions change after the reserve has been created. In this study, recreational fishers were surveyed in ten Australian marine parks to determine levels of support and beliefs about the benefits and costs of no-take marine reserves. A ‘space-for-time’ approach was used to explore whether support is higher in older reserves. The results suggest that most recreational fishers who fish in established marine parks are supportive of the no-take marine reserves within them. On average, 63.3% of fishers support no-take marine reserves in their marine park, and 17.8% are opposed. Further, recreational fishers’ support for no-take marine reserves increases markedly with reserve age. This research indicates that most recreational fishers are supportive of no-take marine reserves within marine parks and that support increases over time.

The problem of excess capacity has persisted in many fisheries worldwide, threatening the sustainability of fisheries, even in cases where there are regulatory restrictions on fishing inputs. Getting fishers involved in monitoring illegal fishing has been one of the solutions proposed to tackle excessive investment in fishing capacity. However, the real effects of participation in monitoring have not yet been investigated in a rigorous and quantitative way. Using survey data for small-scale fisheries under a Territorial Use Rights for Fisheries (TURFs) system in Vietnam, this study measures the extent of excess capacity at individual fisher level using a bootstrapped Data Envelopment Analysis and investigates the effects of fisher participation in monitoring on level of excess capacity by employing an Endogenous Switching Regression model. We find evidence of substantial excess capacity even under TURFs, with fishers on average operating at 59% capacity. However, the results also show that participation in monitoring contributes to a significant reduction in excess capacity. Non-monitors are likely to have short-sighted investment behavior while monitors are likely to be driven by perception about the management of TURFs, and long-term incentives in their investment behavior. Age, education, and alternative livelihood also help explain the variation in the level of excess capacity among fishers. Knowledge of the drivers of fisher investment are of critical importance to policy-makers to establish effective capacity management interventions. Engaging fishers in monitoring should be considered as one of the key strategies for reducing excess capacity. To promote fisher participation in monitoring, effort should be directed towards enhancing awareness of the consequences of illegal fishing and building fisher trust in peers and local government officials.

Sustainable fisheries management largely depends on how effectively fishing regulations are enforced, which often relies on active monitoring by fishers. If fishers perceive that monitoring schemes do not fulfill their needs, they will resist participating in monitoring. However, fisheries managers worldwide have been making blanket assumptions about the way fishers respond to a monitoring scheme. Although this has been proven to be a common mistake, the literature has remained almost silent about heterogeneity of fisher preferences for monitoring scheme, and how it affects their participation. This study contributes to this knowledge gap by carrying out a choice experiment with artisanal fishers in Vietnam to elicit preferences and value key design elements of monitoring schemes. This is the first study to investigate fishers' preference heterogeneity using an advanced technique - the Scale-adjusted Latent Class model - that accounts for variance in both preferences and scale. We identified five distinct preference classes. Remarkably for a poor community, monetary compensation was found not to be the prime driver of fishers' choices. A one-size-fits-all monitoring scheme is ill-suited to all fishers. The design of flexible schemes can be an effective way to enhance the likelihood of fisher participation and the effectiveness of regulation enforcement.

Understanding factors that influence the adoption of agricultural innovations is imperative to stakeholders promoting such technologies as well as farmers who are the potential users of the same. Using a discrete-time duration model, this study identifies factors that determine the timing of adoption of conservation agriculture (CA) in Malawi. We establish that social learning through a network of peers, and access to extension advisors facilitates quick adoption of conservation agriculture technologies. Further, our results show that farmers who became aware of the existence of conservation agriculture during years of drought-hazards were highly likely to adopt these practices. The results highlight the need for strengthening and targeting social networks as conduits for information about new technologies. (JEL C41, O33, Q12, Q24).

We develop and use an empirically based model, which integrates fishing behaviour and a coral reef system, to evaluate outcomes from site closure strategies to manage the effects of recreational fishing. The model is designed to estimate management effects in complex settings with two-way feedback effects (between fishing and ecosystem dynamics) as well as spillover effects where the closure of a site (or sites) leads to the redistribution of fishing effort. An iconic coral reef system is used as a case study. The results demonstrate that some site closure strategies provide little incremental benefits over less stringent approaches. They also show that some strategies targeting more sites are actually inferior to more limited strategies, demonstrating that, in the analysis of complex problems involving feedback effects and substitutions, there is little substitute for the use of empirically based and sound modelling as the basis for informed conservation decision making and stakeholder consultation. These findings have direct relevance not only for policies aimed at improving recreational fishing management but also for securing the supply of marine ecosystem services.

Many countries have introduced incentives to encourage farmers' adoption of practices that can reduce greenhouse gas (GHG) emissions. In this study, we deliver a whole-farm bio-economic analysis to assess the changes in land-use patterns, farm practices and on-farm GHG emissions under varying levels of agricultural abatement incentives in the form of a carbon tax for a broadacre farming system in Western Australia's Great Southern Region. Our results consistently indicate that an increase in agricultural carbon tax rate reduces both farm profits and on-farm GHG emissions. Since livestock are the dominant emissions source, the optimised enterprises mix would shift further towards cropping to produce less emissions. Under a carbon tax, farmers also tend to include less canola-based rotations and more field-pea-based rotations in their optimal enterprise mix. The estimates show that broadacre farmers in Western Australia may abate their on-farm emissions to help meet the national goal (13% reduction), with marginal abatement costs not higher than $20/ton CO2 equivalent in 2015 Australian dollars. In general, the analysis implies that abating broadacre agricultural GHG emissions through changing land-use patterns and farm management practices is relatively a low-cost choice.

The model of a coral reef ecosystem, proposed by D.B. Kramer and published in Ecology and Society in 2008, explored the implications of changes in biological parameters and changes in economic and social interaction variables governing the fishing behaviour of anglers targeting the two fish species included in the model, herbivore and piscivore fish. This model is parametrized based on evidence provided in the literature. The recognition of multiple species in the model as well as the inclusion of adaptive harvesting behaviour may supposedly allow to explore policy or management options. This paper reviews, extends and sharpens the analysis undertaken in original article, and reveals both mathematical and interpretational mistakes in it. We use analytical and numerical methods to show that, contrary to the assertion in discussed article, some of the equilibrium outcomes are independent of the parameter values that were identified as important in this paper. At the same time the model is highly sensitive to the setting of some parameter values as well as to the structures representing interactions in the model. We suggest ways in which the model can be modified so that it would become interpretable

The establishment of Marine Protected Areas (MPAs) is seen as a chosen strategy in managing marine resources in Southeast Asia (SEA). The region has some of the most extensive coastline and diverse coral reef ecosystems that remain highly threatened. The need to protect these areas is definite, but establishment of a MPA often involves conflicts with its stakeholders that highly depend on the ecosystem. This paper reviews 32 studies that evaluated the MPA strategy implemented in various SEA countries since the 1980's to the present. The objective of this paper is to determine the effectiveness of the MPA strategy within the context of SEA. Biological, socioeconomic and governance indicators provided by The World Conservation Union (IUCN) were used in this paper as measures of MPA effectiveness. It was found that the MPA strategy may be ideally suited for some areas but may also be inappropriate for others. The three indicators are highly related to each other in determining a MPA success. An integrated study of these three aspects is believed to provide greater knowledge for future implementation of MPAs.

Determining the value of legumes as soil fertility amendments can be challenging, yet this information is required to guide public policy and to incentivise prescribed land-management practices such as conservation agriculture. We use a directional input distance function (DIDF) to estimate shadow prices for symbiotic nitrogen and the technical efficiency for mixed maize-legume production systems in Malawi. The shadow prices reflect the trade-off between fertiliser nitrogen and symbiotic nitrogen required to achieve a given quantity of output. Our results reveal considerable technical inefficiency in the production system. The estimated shadow prices vary across farms and are, on average, higher than the reference price for commercial nitrogen. The results suggest that it would be beneficial to redesign the current price-support programs that subsidise chemical fertilisers and indirectly crowd-out organic soil amendments such as legumes.

This paper estimates the cost of effluent discharge regulations for firms located in the lower Kelani River catchment in Sri Lanka. The river provides water for many economic purposes including drinking water to the capital city, Colombo and a variety of ecosystem services. Employing multi-input and multi-output translog production technology, we estimate shadow prices of effluents and technical efficiency of firms belonging to eight industries. With the given level of compliance, we extend our analysis to compute total abatement cost for firms under different policy scenarios, related to simultaneous reduction in concentration of three water pollutants including current regulatory standards. The evidence of poor compliance and wide variations in firm and industry specific shadow prices (marginal abatement costs) provide a strong case for a comprehensive redesign of environmental policy to control water pollution by industries in the heavily industrialized river catchment.

Emerging as an innovation for improving the management of overexploited fisheries around the world, rights-based fisheries management systems are being implemented in the form of either species- or area-based management. While there are numerous reviews on species-based management, there have been none on area-based management. To fill this gap, we undertake a critical review of the literature on area-based management systems known as “Territorial Use Rights for Fisheries” (or TURFs). Following an exhaustive search, seventy-nine peer-reviewed journal papers discussing the evolution, effectiveness, enforcement, and management context of TURFs were identified and selected. Review of these papers reveals that there is a growing interest in investigating the real-world effects of TURFs, both positive and negative. The variability in TURF performance appears to be due to design features, enforcement behavior of fishers, and specific contextual conditions, namely, biological fishery characteristics, socio-economic aspects of fishers, and institutional arrangements. The bulk of the published research has focused on theoretical analysis and empirical evidence based on fishers’ perception and experience. And there has been little research on enforcement issues or how design features and management contexts influence performance. This review emphasizes the need for rigorous empirical analyses of TURF effects, including assessment of the cost-effectiveness of different enforcement schemes and the effects of contextual conditions on TURF performance. Addressing current shortcomings in the literature could improve the design, implementation and performance of TURFs worldwide.

This study tracks the emissions of 250 rainfed broadacre farms in south-western Australia from 2002 to 2011. Relationships between their emissions, farming systems, their productive efficiency and profit efficiency are examined. Emissions varied greatly among the farms, ranging from 0.02 to 2.49 CO 2 -e tonnes per hectare, and averaged 0.43 CO 2 -e tonnes per hectare. The distribution of emissions was rightwards skewed due to a small proportion of the sample being livestock dominant farms that generated high levels of emissions per hectare. The mix of enterprises on farms and the regional location of farms led to large differences being observed regarding farm aggregate and per hectare emissions. The trajectory of the farm emissions over the ten years was quadratic, with the diminution of emissions being attributable to the increased crop dominance of farming systems over the study period, an associated reduction in sheep numbers and the impacts of drought. The lessening in emissions towards the end of the decade occurred despite there being no policy incentive to lessen farm emissions. If these farms had to pay for their emissions then livestock farms in particular would have little capacity to pay. Across the decade, improvements in profit efficiency were significantly associated with only small increases in emissions per hectare. A 1% improvement in profit efficiency resulted in only a 0.10% increase in emissions per hectare. The implication is that improvements to the productive and profit efficiency of farms, although important for the commercial success of farming, are unlikely to cause large increases in farm emissions. Choice of the farm's enterprise mix and farm location are the more important decisions affecting farm emissions.

Calculation of wind power capacity values for risk assessment of power system adequacy has attracted great attention in the literature. And the most popular approach has been the Effective Load Carrying Capability (ELCC) method which allows for the consideration of key factors such as wind capacity factor, forced outage rates (F.O.R) of conventional power stations, system reliability targets, and the correlation between wind availability and system load. However, comparatively little attention has been paid to analysing the effects of other factors such as the number of wind farms and wind installed capacity, the length of historic time series data on demand and wind resources. This paper provides an in-depth analysis of how these factors influence the calculation of capacity value for the Australian National Electricity Market (NEM) power system using metered half-hourly wind and load data for 2006 to 2013. The analysis incorporates the periods with extreme risk events. Our results show that capacity values depend greatly on the design of the simulation model used, and highlight the importance of capturing wind and load data points relating to extremely high demand periods. We compare our NEM-wide estimates to recent estimates for the State of South Australia.

supplementary_material for What are tourists willing to pay for securing the survival of a flagship species? The case of protection of the Ethiopian wolf by Tafesse Estifanos, Maksym Polyakov, Ram Pandit, Atakelty Hailu and Michael Burton in Tourism Economics

Conflict over land use is one of the challenges faced by large carnivore conservation programs in human-disturbed landscapes. Designing effective conservation strategies requires an understanding of the socioecological context and people’s preferences towards conservation programs. This study investigates preferences of rural residents for management options defined by conservation program attributes to protect the endangered Ethiopian wolf, Canis simensis , in the Bale Mountains National Park of Ethiopia. The conservation program attributes examined include population targets for the Ethiopian wolf, increases in the size of the protected habitat area, monitoring outposts, local participation in monitoring, and provision of financial incentives to the local residents. Using a scale extended latent class model, we analyse choice experiment data collected from households living inside, adjacent to and outside the park. We find that preferences for the conservation programs are heterogeneous. Proximity to the park and park associated livelihoods influence residents’ preference for the conservation programs. A significant proportion of residents, predominantly agro-pastoralists, prefer increases in the population of the Ethiopian wolf and receiving financial incentives from wolf-related tourism. Addressing local livelihood interests, and promoting alternative livestock management strategies among rural residents, would help ensure tolerance to and the recovery of the wolf population.

By employing Ostrom’s set of eight design principles (DPs) as an analytical framework, this study evaluates the robustness of the institutions introduced by Territorial Use Rights for Fisheries (TURFs) and investigates how the DPs are interrelated. Data were collected from unstructured and semi-structured interviews with government officials and fishers in fishing communities in Vietnam. Although TURF institutions were found to be in better conformity with the DPs (and therefore more robust) than non-TURF ones, none of the TURFs satisfy all the DPs. Principles relating to collective choice arrangements, monitoring, and nested enterprise structures appear to be the missing elements in the current TURF design, despite the influence they have on the likelihood of adherence to other DPs. Results suggest management policies should better empower fishers, promote fisher participation in monitoring activities and establish horizontal linkages between fishing communities. Lessons learnt from this study will be useful for developing more robust TURF institutions and more sustainable fisheries.

For many developing countries like China, agricultural production has been causing severe environmental issues, such as massive chemical oxygen demand (COD) emissions. However, limited studies have estimated regional total factor efficiency (TFE) and marginal abatement cost (MAC) of agricultural pollutants in developing countries. Multiple directional vectors have not been considered when using directional distance function approach to analyse agriculture production. In this study, we estimate TFE and MAC of COD emissions for the agricultural sector in China between 2006 and 2015. Three alternative scenarios, represented by three direction vectors, have been considered in a parametric directional approach. We find that there is no substantial efficiency improvement in China’s agricultural production when all resource use and output production are considered. Averagely, eastern coastal provinces perform much better than western inland provinces. The average MAC estimate across all three scenarios is 11,640 yuan/tonne. In addition, the MAC curves under three scenarios are generally characterised by increasing trends during 2006–2015. Abatement cost profiles are also characterised by substantial regional heterogeneity in MAC. Provinces in the East region have lower abatement costs than provinces in the West region. In general, our analysis suggests that there is space for China to achieve simultaneous improvements in agricultural production, pollution reduction, and resource saving, and agriculture is a potentially more cost-effective sector to reduce COD emissions compared to other sectors.

Broadacre agriculture is a major emitter of greenhouse gases (GHG). To improve efficiency of climate change policies, we need to know the marginal abatement costs of agricultural GHG. This article combines calculations of on-farm GHG emissions with an input-based distance function approach to estimate the marginal abatement costs for a broadacre farming system in the Great Southern Region of Western Australia. The results show that, in the study region, the average marginal abatement cost for the 1998–2005 periods was $29.3 per tonne CO2-e. Farms with higher crop output shares were found to have higher marginal abatement costs. Overall, our results indicate that broadacre agriculture is among the lowest cost sources of GHG mitigation.

In energy markets, regulators are often tempted to use price schedules to improve economic efficiency and promote a reasonable resource allocation. Time-of-use pricing is very popular with economists, and many researchers have been written estimating and exploring the optimal time-of-use pricing for electricity markets. Yet, such pricing has rarely been used in the natural gas sector. In this paper, we propose an optimal time-of-use pricing in urban gas market based on an evolutionary game-theoretic perspective. As the urban gas market is a nonlinear complex economic system with several interacting agents, we use a multi-agent system comprising a government agent, a local gas distribution operator agent, and different types of end-user agents. A power structure demand response program is employed to simulate the user demand response. A mixed-integer linear programming is formulated to determine the time-of-use price-signal delivering maximum gas operator profit and the optimal load pattern for end-users. In an illustrative example, we simulate and compare the time-of-use block prices and time-of-use hourly prices with traditional fixed pricing using real-world data of Wuhan in China. The numerical results indicate that time-of-use pricing schedules have significant potential for peak-shaving and load-shifting for urban gas pipeline network systems and would thus lower operating costs. Furthermore, different gas users exhibit different demand responsiveness intensity. Finally, we evaluate the impact on total social welfare of regulation scenarios and find that welfare decreases with deregulation, implying that the urban gas market is immature and reasonable regulation is still necessary.

Water quality of the Kelani River has become a critical issue in Sri Lanka due to the high cost of maintaining drinking water standards and the market and non-market costs of deteriorating river ecosystem services. By integrating a catchment model with a river model of water quality, we developed a method to estimate the effect of pollution sources on ambient water quality. Using integrated model simulations, we estimate (1) the relative contribution from point (industrial and domestic) and non-point sources (river catchment) to river water quality and (2) pollutant transfer coefficients for zones along the lower section of the river. Transfer coefficients provide the basis for policy analyses in relation to the location of new industries and the setting of priorities for industrial pollution control. They also offer valuable information to design socially optimal economic policy to manage industrialized river catchments.

China is now the leading source of carbon emissions, and has become the subject of a growing number of studies attempting to estimate marginal carbon abatement costs using distance functions. Provincial-level data for China are used to estimate the functions using mathematical programming (deterministic frontier) and Bayesian methods (stochastic frontiers). Carbon abatement cost estimates are compared to values reported in the literature and to market prices for carbon. The Bayesian results are found to be lower and closer to observed market prices.

Protected areas are cornerstones for biodiversity conservation, yet they can be controversial because of their potential impact on the livelihoods of local people due to restrictions on agricultural land use and the extractive use of natural resources. This study evaluates the impact of PAs on households’ livelihoods, as measured by total household income (THI) and livestock income (LI). We use a survey and a quasi-experimental design to gather socioeconomic and biophysical data from households living within, adjacent to and outside three national parks (NPs) in Ethiopia and employ matching methods to isolate the impact of NPs. Our findings suggest that there is no evidence that the establishment of NPs adversely affects local livelihoods. Instead, we find that households within and in adjacent areas to NPs have higher incomes compared to those living outside. Understanding the heterogeneity of the effect of NPs on local livelihoods can help in designing well-targeted policy interventions that improve conservation goals while also addressing livelihood concerns of resource-dependent local communities.

The impacts of climate change on agriculture in developing countries will depend on the extent to which agricultural production in those regions adapts to climate change’s influences. This study uses a whole-farm land use optimisation approach to explore climate change impacts, when including adaptation, on farm profitability, production and associated greenhouse gas (GHG) emissions in the Loess Plateau of northern China. The results show that with adaptation activities, the losses in smallholder farm profitability caused by the climate change could be moderate. Declining rainfall results in land use changes that generate higher on-farm GHG emissions with the most economically beneficial adaptations. With 5 % or 10 % decline in annual rainfall, the introduction of agricultural carbon tax would generate substantial reduction in on-farm GHG emissions. With 30 % rainfall reduction, agricultural carbon tax is not likely to bring about considerable emission reduction. The economically optimised land uses are generally sensitive to potential changes. When rainfall reductions appear, there is a clear trend toward reducing cropping area and transiting to pasture. With 5–10% rainfall reductions, increasing agricultural carbon tax with same rainfall reduction leads to the expansion in cropping enterprises. However, with 30 % rainfall reduction, land allocations are not sensitive to agricultural carbon tax. When with declining annual rainfall, in the optimal enterprises more oats-pasture rotations are employed to reduce wheat dominated rotations. Besides land use patterns, adaptations through altering farm management practices are also necessary. The economically optimised sheep flock would be increased considerably with declining rainfall. Overall, policymakers are suggested to initial more educational schemes to tell smallholder farmers how to make the best use of available adaptation strategies and consider changes in climate when design and implement agricultural policy.

Summary Northern China has been facing severe water scarcity as a result of vigorous economic growth, population expansion and changing lifestyles. A typical case is Shandong province whose water resources per capita is approximately only a sixth of the national average and a twentieth of the global average. It is useful to assess the implications of the province’s growth and trade patterns for water use and water conservation strategies. This study quantitatively analyses relationships between regional economic sectors and water use in Shandong using an input–output model for virtual water resources. The changes in key indicators for 1997–2007 are tracked and the effects of water-saving policies on these changes are examined. The results highlight the benefits of applying a virtual water trade analysis on a water-scarce region where water resources exhibit highly heterogeneous temporal and geographical distributions. The net export of virtual water in Shandong was initially large, but this declined over the years and the province has recently become a net importer. Between 1997 and 2002, water use in most sectors increased due to rapid urbanisation and industrialisation. Since then, water use in all Shandong economic sectors exhibit a downward trend despite continued increases in goods and services net exports, a trend which can be attributed to the vigorous implementation of water-saving policies and measures, especially water use quotas. Economic sectors consume water directly and indirectly and understanding the pattern of virtual water trade implied by sectoral relationships is important for managing water scarcity problems. This study fills the knowledge gap in the existing literature created by the lack of case studies that dynamically assess virtual water trade and analyse the effects of water-saving policies and measures. The study draws policy recommendations that are relevant for future water planning in Shandong and other regions in northern China.

The last few years have witnessed a rapidly emerging literature estimating the marginal abatement cost, or the shadow price of carbon dioxide (CO2) emissions in China using parametric or non-parametric distance function approaches. This is largely driven by the fact that China has become the world’s largest carbon emitter and thus faced mounting domestic and international pressure to mitigate emissions. There is an urgent policy need to model and predict the cost burdens of various mitigation scenarios. Consistent information about the marginal abatement cost of CO2 emissions plays a crucial role in addressing this need. However, the existing literature has suffered from various issues that have severely weakened the scientific support that these studies could potentially provide for sound policy making. This paper provides a thorough and critical review of this rapidly emerging literature and identifies important research directions that need the most attention from scholars.

Conservation auctions allow landholders to propose conservation projects and associated payments (bids) for consideration by a conservation agency. Recently, the application of iterative combinatorial auction designs has been proposed to improve outcomes of conservation auctions. In combinatorial auctions, landholders are allowed to offer projects each of which involves activities aimed at providing one or multiple services. An iterative format allows bidders the opportunity to gradually explore the type of projects they want to offer, with this process being facilitated through price feedback provided based on intermediate auction round results. Auction designs vary with the type of feedback and respond differently to market conditions. At present there is a lack of information about their performance in markets with varying degrees of competition (in terms of number of bidders and level of target). Therefore, using an agent-based simulation model, we evaluate a number of iterative auction designs. We observe that a higher degree of competition leads to a higher auction efficiency. In a high competition environment, efficiency outcomes tend to be less sensitive to auction design choices. Therefore, an auctioneer could enjoy freedom in design choice if adequate competition could be ensured. In weak competition environments, however, some auction designs perform better than others. Les encheres de conservation permettent a des proprietaires fonciers de proposer des projets de conservation et des paiements connexes (offres) qui sont soumis a l'examen d'un organisme de conservation. Dernierement, il a ete propose d'utiliser des mecanismes d'encheres combinatoires iteratifs afin d'ameliorer les resultats des encheres de conservation. Les encheres combinatoires permettent aux proprietaires fonciers de proposer des projets qui comprennent des activites destinees a fournir un ou plusieurs services. Le mecanisme iteratif permet aux encherisseurs d'examiner graduellement le type de projets qu'ils souhaitent offrir; dans ce cas, les encherisseurs obtiennent de la retroaction sur les prix fondee sur les resultats de tours d'encheres intermediaires. Les mecanismes d'encheres varient en fonction de la retroaction sur les prix et reagissent differemment aux conditions du marche. A l'heure actuelle, nous manquons d'information quant a leur performance sur les marches lorsque les niveaux de concurrence varient (nombre d'encherisseurs et niveau cible). A l'aide d'un modele multi-agent, nous avons evalue certains mecanismes d'encheres iteratifs. Les resultats de notre etude indiquent qu'un degre de concurrence eleve accroit l'efficacite des encheres. Dans un contexte ou la concurrence est elevee, les resultats quant a l'efficacite sont moins sensibles au choix des mecanismes d'encheres. Ainsi, un commissaire-priseur (encanteur) pourrait jouir d'une certaine liberte quant au choix du mecanisme d'encheres s'il etait possible de garantir un niveau de concurrence adequat. Par contre, dans les contextes ou la concurrence est faible, certains mecanismes d'encheres donnent de meilleurs resultats.

Allocation of fish resources is a controversial subject. This is partly because of our limited understanding of the values of fishing opportunities. This study investigates fishing site choices in Western Australia using national survey data covering eight major fishing regions and forty-eight fishing sites. We estimate a random utility model (RUM) of site choice with a supporting negative binomial model of angler-specific expected catch rates. Value estimates for fish types, fishing site attribute changes and access values are presented and discussed.

This study undertakes an economic analysis of flood mitigation options for a high flood risk catchment in Adelaide, South Australia: the Brown Hill and Keswick creeks catchment. Several proposals for flood mitigation investments have been presented, including creek capacity upgrades, high flow bypass culverts and detention dams. For flood managers to know which option or options provide the best value for money, it is necessary to compare the costs and the benefits of all available options. To date, economic analyses have focused primarily on estimating the tangible (market) costs and benefits of mitigation strategies, but have largely ignored the intangible (non-market) costs and benefits. This analysis improves upon previous studies by conducting a cost benefit analysis that incorporates the intangible costs and benefits of mitigation. We used the benefit transfer method to include eight different intangible values that can be affected by floods or by the implementation of the proposed mitigation options. We found that for this particular case study in the Brown Hill and Keswick creeks catchment, the inclusion of intangible values does not change the results of the analysis significantly; the results with and without intangibles are relatively similar. This is because intangible values are relatively small compared to the potential tangible flood damages as intangible value losses represent only between 6 and 21% of total damages. In order to better understand people's preferences and the trade-offs they make, a survey based nonmarket valuation research would need to be conducted amongst the residents at risk of flooding. Such a study would provide values that are specific to the catchment and could be compared with the intangible values from the literature that have been assembled for this study.

In the management of recreational fishing, multiple biophysical and socio-economic objectives need to be considered. The identification of best management options is technically challenging because of the lack of scientific tools to inform resource managers of future responses/impacts of these different options. This paper proposes a decision support system which aims at greatly improving stakeholder dialogue and decision making. The system consists of two main components: an integrated agent-based model for simulating recreational fishing behavior and reef ecosystem dynamics; and an evaluation model based on the analytic hierarchy process (AHP) together with a technique for order preference by similarity to ideal solution (TOPSIS). The evaluation component is responsible for assessing alternative strategies based on the simulation outputs generated by the former. We apply the proposed system to the assessment of management strategies for recreational fishing in the Ningaloo Marine Park, an iconic coral reef system in Western Australia. A set of management strategies, including a “business-as-usual” strategy and six alternative site closure strategies are assessed using the proposed solution. The site closure strategies evaluated vary in length and number of popular sites closed. The evaluation results illustrate the usefulness of the proposed system in tackling complex management choices. We also perform a sensitivity analysis on the stakeholder or decision maker outcome preference weights and provide measures for assessing the sensitivity of strategy ranking outcomes to changes in these weights.

Recently, interest in combinatorial auctions has extended to include trade in multiple units of heterogeneous items. Combinatorial bidding is complex and iterative auctions are used to allow bidders to sequentially express their preferences with the aid of auction market information provided in the form of price feedbacks. There are different competing designs for the provision of item price feedbacks; however, most of these have not been thoroughly studied for multiple unit combinatorial auctions. This paper focuses on addressing this gap by evaluating several feedback schemes or algorithms in the context of multiple unit auctions. We numerically evaluate these algorithms under different scenarios that vary in bidder package selection strategies and in the degree of competition. We observe that auction outcomes are best when bidders use a naive bidding strategy and competition is strong. Performance deteriorates significantly when bidders strategically select packages to maximize their profit. Finally, the performances of some algorithms are more sensitive to strategic bidding than others.

A conservation auction is a tender mechanism for allocating project contracts among landholders for undertaking environmental conservation activities. Typically, environmental indices (EIs) are used to combine multiple project benefits into an overall score for selecting successful projects. However, higher flexibility and efficiency can be achieved by allowing bidders to offer different combinations of conservation benefits where projects are evaluated directly in terms of their multiple outcomes. Combinatorial auctions that allow bidders to express their preferences for a combination of projects can be attractive. In this article, we discuss three major features of combinatorial auction designs that would be useful in conservation: submission of multiple projects by individual bidders, consideration of cost complementarities by individual bidders, and flexibility in project evaluation by the auctioneer. Using a stylized simulation experiment, we quantify and demonstrate the benefits of these features fo...

Auctions where landholders submit conservation projects for consideration in return for payment have recently gained popularity. Flexible versions of these, combinatorial auctions, which allow for the simultaneous submission of bids on different combinations of projects, have recently been tested for conservation purposes. Combinatorial auctions allow bidders to exploit synergies in the execution of multiple conservation activities while the auction mechanism stimulates competition among potential participants, enabling the auctioneer (or government) to secure a cost-effective set of conservation projects. Combinatorial auctions have the potential to improve outcomes beyond what is possible with the simple auctions explored in trials over the last decade in many parts of Australia. This article reviews the state of the art in the design of combinatorial auctions with a particular focus on conservation auctions. Key design issues identified are the problem of determining the winning bid, pricing f...