Ariaster B. Chimeli and John B. Braden.

Journal of Environmental Economics and Management, Vol. 49, No. 2, March 2005 2005, pp. 366-380.

Empirical studies support the environmental Kuznets curve hypothesis (EKC) for some pollutants--as income increases pollution increases, reaches a peak and eventually decreases. While relying mostly on cross-sectional data, the interpretations assert that the EKC is a by-product of economic growth over time. In doing so, and in neglecting the role of important country-specific characteristics, these studies overlook potential econometric problems and introduce policy misconceptions. Differences in total factor productivity (TFPs) account for much of the variation in income across countries, with important implications for environmental quality. We develop a theoretical model where different TFPs produce a cross-sectional EKC, even if the dynamic path of environmental quality to its steady-state in individual countries suggest otherwise. The cross-sectional EKC depends on diminishing returns to scale in environmental protection, on the curvatures of the utility function with respect to consumption and of the environmental protection function, and the elasticities of steady-state consumption and environmental expenditures with respect to variation in TFPs.

Deborah Doane.

Futures, vol. 37, no. 2-3, pp. 215-229, March/April 2005.

Corporate Social Responsibility (CSR) has become the mainstream prescription by business and governments for dealing with social and environmental ills. It is a voluntary form of self-regulation that aims to tackle everything from human rights and labour standards to limiting carbon dioxide emissions that lead to climate change. But because CSR ultimately lies within the framework of markets, and requires market-based incentives for companies to invest in such programmes, it ultimately falls prey to the vagaries of the market. The myths of CSR include that voluntary reporting improves performance; that codes and management systems change corporate behaviour; the consumer will drive change and that the investment community will provide the best incentive for business to perform in a more sustainable manner. Re-envisioning ethical business requires us to look at opportunities below the radar screen: not at minimising the impacts of big business. Understanding and providing the institutions to support the ethical minnows: those businesses that operate on a sustainable platform and provide a social return on investment, beyond mere financial profit. Ultimately, we need to transform markets in such a way as to see an end to the larger corporate winner-takes-all approach if we are to see a sustainable future.

Samuel Fankhauser and Richard S. J. Tol.

Resource and Energy Economics, Vol. 27, No. 1, January 2005 2005, pp. 1-17.

The economic impact of climate change is usually measured as the extent to which the climate of a given period affects social welfare in that period. This static approach ignores the dynamic effects through which climate change may affect economic growth and hence future welfare. In this paper we take a closer look at these dynamic effects, in particular saving and capital accumulation. With a constant savings rate, a lower output due to climate change will lead to a proportionate reduction in investment which in turn will depress future production (capital accumulation effect) and, in almost all cases, future consumption per capita. If the savings rate is endogenous, forward looking agents would change their savings behavior to accommodate the impact of future climate change. This suppresses growth prospects in absolute and per capita terms (savings effect). In an endogenous growth context, these two effects may be exacerbated through changes in labour productivity and the rate of technical progress. Simulations using a simple climate-economy model suggest that the capital accumulation effect is important, especially if technological change is endogenous, and may be larger than the direct impact of climate change. The savings effect is less pronounced. The dynamic effects are more important, relative to the direct effects, if climate change impacts are moderate overall. This suggests that they are more of a concern in developed countries, which are believed to be less vulnerable to climate change. The magnitude of dynamic effects is not sensitive to the choice of discount rate.

Stefan Gelcich, Gareth Edwards-Jones, Michel J. Kaiser and Elizabeth Watson.

Society and Natural Resources, vol. 18, no. 4, pp. 377-391, April 2005

In an attempt to combine marine conservation and economic development, the Chilean government introduced a policy that gives formal property rights over defined areas of seabed to artisanal fishers. This study used discourse analysis to understand the impacts and consequences of this policy. Story lines based on sustainability, livelihood maintenance, and historical right claims are mechanisms by which three different groups of fishers adopted postures toward the policy and each other. These act as a means of legitimizing claims when adapting to conditions generated by the policy and also vindicate poaching between syndicates, thereby jeopardizing the whole system. Results show the fishing groups studied adopt the policy for different reasons than those espoused by government during its development. Discourse analysis assists the understanding of actors policy responses and provides an insightful tool to investigate incentives and dominance of particular sets of ideas in a comanagement framework.

Donna Ramirez Harrington, Madhu Khanna and David Zilberman.

Oxford Economic Papers, Vol. 57, No. 2, April 2005 2005, pp. 336-359.

An endogenous growth model, which links pollution to ineffective input-use, is developed to examine the potential for achieving balanced growth while preserving the environment through investment in conservation capital. We derive conditions under which individual preferences for environmental quality and private incentives for investment in conservation capital can lead to non-decreasing environmental quality with balanced growth even in the absence of environmental regulations. Additionally, conditions under which investment in conservation capital can enable an environmentally regulated economy to achieve a higher rate of sustainable balanced growth than otherwise are analysed.

Donna Ramirez Harrington, Madhu Khanna and David Zilberman.

Oxford economic papers, Vol. 57, No. 2, Apr 2005, pp. 336-359.

An endogenous growth model, which links pollution to ineffective input-use, is developed to examine the potential for achieving balanced growth while preserving the environment through investment in conservation capital. We derive conditions under which individual preferences for environmental quality and private incentives for investment in conservation capital can lead to non-decreasing environmental quality with balanced growth even in the absence of environmental regulations. Additionally, conditions under which investment in conservation capital can enable an environmentally regulated economy to achieve a higher rate of sustainable balanced growth than otherwise are analysed.; Reprinted by permission of Oxford University Press

Neha Khanna and Florenz Plassmann.

Ecological Economics, Vol. 51, No. 3-4, December 2004 2004, pp. 225-236.

Household demand for better environmental quality is the key factor in the long-term global applicability of the Environmental Kuznets Curve (EKC) hypothesis. We argue that, for given consumer preferences, the threshold income level at which the EKC turns downwards or the equilibrium income elasticity changes sign from positive to negative depends on the ability to spatially separate production and consumption. We test our hypothesis by estimating the equilibrium income elasticities of five pollutants, using 1990 data for the United States. We find that the change in sign occurs at lower income levels for pollutants for which spatial separation is relatively easy as compared to pollutants for which spatial separation is difficult. Our results suggest that even high-income households in the United States have not yet reached the income level at which their demand for better environmental quality is high enough to cause the income-pollution relationship to turn downwards for all the pollutants that we analyzed.

Robin M. Leichenko and William D. Solecki.

Regional Studies, vol. 39, no. 2, pp. 241-253, April 2005 .

This paper examines how cultural, economic and political aspects of globalization interact with processes of urbanization in less developed country (LDC) cities to create new landscapes of housing consumption. Drawing evidence from the current literature, the paper demonstrates that globalization processes influence the housing preferences and housing consumption decisions of a small yet growing, middle-income segment of LDC urban residents. These changes lead to patterns of urban resource use akin to those associated with suburbanization and suburban sprawl in more developed countries (MDC), particularly the USA. In effect, these changes amount to the manifest export of the American Dream-the ideal of homeownership of a single-family house in a suburban area-to LDC cities. A critical element of this process explored in the paper is how this suburban ideal is set down within each city context. This placement is presented as the result of global-, national- and local-level drivers. The emergence of consumption landscapes raises critical questions about the environmental and social sustainability of globalization, as LDC residents increasingly emulate the highly resource-consumptive, energy-intensive and exclusionary lifestyles currently practiced by MDC suburbanites.

Sushanta Mallick and Brigette Granville.

International review of applied economics, Vol. 19, No. 1, Jan 2005, pp. 67-85.

This paper attempts to provide an economic model in the context of developing countries to address the policy strategies related to poverty reduction. With a view to deal with the shortcomings of the existing approaches as regards poverty reduction, this paper develops a model on the basis of the policy framework of the IMF and the World Bank to show how demand growth can be a crucial mechanism in determining the potential rate of growth, and then to suggest ways in which poverty-conceptualised officially in absolute terms with a subjective cut-off point (e.g. US $1/$2 a day), and a new objective measure in terms of consumption deprivation - can be linked with the key policy variables contained in the adjustment programmes. A strategy of investment in infrastructure and in human development, and improving access to credit markets, particularly in rural areas to encourage or 'crowd in' private investment is a precondition for growth and poverty alleviation. Debt relief can only provide a temporary, not a sustainable, solution to the problem of reducing poverty.; Reprinted by permission of Carfax Publishing, Taylor & Francis Ltd.

Sushanta Mallick and Brigitte Granville.

International Review of Applied Economics, Vol. 19, No. 1, January 2005 2005, pp. 67-85.

This paper attempts to provide an economic model in the context of developing countries to address the policy strategies related to poverty reduction. With a view to deal with the shortcomings of the existing approaches as regards poverty reduction, this paper develops a model on the basis of the policy framework of the IMF and the World Bank to show how demand growth can be a crucial mechanism in determining the potential rate of growth, and then to suggest ways in which poverty--conceptualised officially in absolute terms with a subjective cut-off point (e.g. US $l/$2 a day), and a new objective measure in terms of consumption deprivation--can be linked with the key policy variables contained in the adjustment programmes. A strategy of investment in infrastructure and in human development, and improving access to credit markets, particularly in rural areas to encourage or "crowd in" private investment is a precondition for growth and poverty alleviation. Debt relief can only provide a temporary, not a sustainable, solution to the problem of reducing poverty.

Paul Mosley and Lucy Steel.

Social Policy and Administration, Vol. 38, No. 7, Dec 2004, pp. pp.721-743.

Great hopes have been held out for microfinance and other community development finance institutions (CDFIs) in industrialized countries as an instrument of "financially sustainable welfare provision", following on from their success in many developing countries. Using interview data drawn from an exploratory sample of 45 clients, this paper examines the social and economic impact of three microfinance institutions in Glasgow, Sheffield and Belfast. The tentative conclusion is that most loans we examined do hit the target of the "financially excluded but bankable", and exert an impact on poverty and social exclusion through the labour market and through helping to build social networks which reduce interpersonal risk. Our initial estimate is that each ban studied here was responsible for about 0.67 exits from unemployment over the two years 2000-2. If this ratio holds good outside the sample (and we emphasize the limitations of small sample size), this could mean that in the absence of microfinance services, the national unemployment total would be higher by some 2.4 per cent (or 22,000 individuals). The loans we have examined also save about ?0.4 million on what would otherwise have been social security payments; grossed up again to all microfinance organizations, this implies an annual saving of about ?250 million (1.4 per cent) on the total social security budget. However, to achieve this optimal impact microfinance institutions need to diversify their product: for example by switching from business bans into consumption bans, micro-insurance, and equity, particularly in the rehabilitation of run-down council estates. (Original abstract)

Wankeun Oh and Kihoon Lee.

Journal of Policy Modeling, Vol. 26, No. 8-9, December 2004 2004, pp. 973-981.

The causal relationship between energy consumption and economic growth is investigated applying two multivariate time series models: a demand side model of energy, GDP and real energy price and a production side model of GDP, energy, capital, and labor. To test for Granger causality in the presence of cointegration among the variables, we employ a VECM rather than a VAR model. Empirical results from the two models for Korea over the period 1981:1-2000:4 suggest no causality between energy and GDP in the short run and a unidirectional causal relationship running from GDP to energy in the long run. It implies an energy conservation policy may be feasible without compromising economic growth in the long run. It also implies that a sustainable development strategy may be feasible with lower level of CO emissions from fossil fuel combustion.

R. Quentin Grafton, Frank Jotzo and Merrilyn Wasson.

Ecological Economics, Vol. 51, No. 1-2, November 2004 2004, pp. 65-78.

We propose a global mechanism to finance sustainable development (SD) that offers a number of advantages over the current Global Environmental Facility (GEF). The mechanism would be multinational, provide incentives for rich and poor countries to promote SD, incorporate the principle of common, but differentiated, responsibilities and link incentives and funding for SD to structural benchmarks and performance targets. It would operate as a large fund into which rich countries would pay based on their level of population, per capita income and change in a measure of environmental sustainability. Receipts from the funds, called Country Undertakings and Rights for Environmental Sustainability (CURES), would be made to poor countries based on their population, per capita income and absolute level of environmental sustainability. This approach differentiates payments and receipts on the basis of income, while rewarding improvements in environmental performance in rich countries, and making greater payments to countries with greater environmental problems. To promote flexibility, recipient countries would be able to trade, bank or borrow their assigned CURES, provided that the trade resulted in a verifiable improvement in environmental sustainability in the purchasing country. A reformed GEF that adopted the desirable features of CURES, if widely adopted and funded at a sufficiently high level, would offer a significant boost to global SD and would greatly assist poor countries to address the twin challenges of poverty and environmental degradation.

M. del Mar Rubio.

Journal of Environmental Economics and Management, Vol. 48, No. 3, November 2004 2004, pp. 1175-1191.

In principle, a country cannot endure negative genuine savings for long periods of time without experiencing declining consumption. Nevertheless, theoreticians envisage two alternatives to explain how an exporter of non-renewable natural resources could experience permanent negative genuine savings and still ensure sustainability. The first one alleges that the capital gains arising from the expected improvement in the terms of trade would suffice to compensate for the negative savings of the resource exporter. The second alternative points at technological change as a way to avoid economic collapse. This paper uses the data of Venezuela and Mexico to empirically test the first of these two hypotheses. The results presented here prove that the terms of trade do not suffice to compensate the depletion of oil reserves in these two open economies.

Simone Valente.

Environmental & Resource Economics, Vol. 30, No. 1, Jan 2005, pp. 115-125.

Conflicts between optimality and sustainability are typical in the literature on sustainable development. Using the 'capital-resource' growth model, Pezzey and Withagen (1998, Scandinavian Journal of Economics 100 (2), 513-527) have proved that if natural resources are exhaustible, the time-path of consumption is single-peaked, declining from some point in time onwards. This paper extends the model to include technical progress, resource renewability, extraction costs and population growth. The main result is that, for any constant returns to scale technology, optimal paths can be sustainable only if the social discount rate does not exceed the sum of the rates of resource regeneration and augmentation. The development of resource-saving techniques is crucial for sustaining consumption per capita in the long run, whereas capital depreciation and extraction costs are neutral with respect to this sustainability condition.; Reprinted by permission of Springer

Ralph Winkler.

Structural Change and Economic Dynamics, Vol. 16, No. 1, March 2005 2005, pp. 111-135.

This paper examines whether and to what extent the well known necessary and sufficient conditions for the innovation of a new production technique remain valid if the new production technique jointly produces an unwanted and at least potentially harmful output. The formal framework employed here is an extension of the neo-Austrian three-process model as introduced in [Struct. Change Econ. Dyn. 2 (1991) 143]. Three possible ways of comparing the desired consumption output and the negative environmental side-effects in the innovation decision are introduced: a technical, an ecological and an economic solution. Although adjusted necessary and sufficient conditions can be derived, full replacement of the old production technique cannot be achieved in general.