This paper analyzes the fair division of common property resources when monetary compensations are feasible. A prominent example is the fair division of the atmosphere's limited absorptive capacity for greenhouse gases. I propose a solution that is Pareto efficient and satisfies the axiomatic fair division criteria of individual rationality, stand-alone upper bound, and a version of envy-freeness. The latter criterion is adapted to problems where monetary compensations can be used to facilitate the fair division of the common resource. Applied to climate change, the solution implies that developing countries should participate in emission reduction efforts, but should be fully compensated for their incremental abatement costs.

The environmental Kuznets curve (EKC) hypothesis holds that economic growth leads to increases in pollution in early stages of development, but is a significant driver of environmental improvements as income levels increase. Most empirical applications have focused on estimating a reduced form equation in which the measure of environmental degradation is posited as a non-linear function of income. In this paper we develop a structural production model based on an output distance function to investigate the EKC hypothesis for CO2 in a panel of industrialized countries from 1971 to 2000. This structural approach allows for the decomposition of the observed emission changes into the scale, composition, and productivity effects, thus providing additional insight into the interlinked processes of economic growth and environmental change. The findings from our preferred model indicate that for most countries, the CO2-saving productivity effect is not large enough to offset the CO2-producing scale effect.

The costs of living with wildlife are assessed using Namibian subsistence farmers' willingness to pay (WTP) for deterrents to attacks on crops and livestock. A utility-theoretic approach jointly estimates household WTP for deterrent programs in two ‘currencies’: maize and cash. This has a double payoff. Use of a non-cash staple increases respondent comprehension and provides more information about preferences, improving the accuracy of results. The household shadow value of maize is also identified. Significant costs from living with elephants and other types of wildlife are demonstrated. Compensation for farmers may be warranted on equity and efficiency grounds. Uncontrolled domestic cattle generate even higher costs to farmers than wildlife, highlighting the need to clarify property rights among these farmers.

This paper examines whether the stochastic convergence hypothesis of per capita carbon dioxide (CO2) emissions is supported in countries with the same level of development – that is, are shocks to relative per capita CO2 emissions temporary in industrialized countries? We respond to this question by utilizing the recently developed Lagrange Multiplier (LM) unit root test that endogenously determines structural breaks in level and trend as proposed by Lee and Strazicich (2003, 2004). Our empirical findings provide significant evidence that relative per capita CO2 emissions for 21 OECD countries stochastically converge when we control for breaks in the period 1960–2000. Structural breaks are identified in each country, and overall we find that most breakpoints occur around the two energy crises and in the 1990s. The robust test clearly also indicates that most original per capita CO2 emissions and average series are stationary.

This paper attempts to explore how the Taiwan government can effectively use subsidies to retire aquacultural farms based on the externality ground subsidence from pumping groundwater, using the town of Budai in Chia-Yi county as an example. The research first constructs the relationship between ground subsidence and groundwater consumption after taking the externality into consideration. An economic model that minimizes the total subsidy expenditure is then used for targeting the fish farms that need to be retired first in order to meet environmental goals. The results show that when the interaction caused by pumping groundwater among neighborhood farmers is considered, the responsibility for achieving the targets of environmental control is not evenly shared by aquacultural farmers. The location, and not the farm size, plays a more important role in determining whether environmental goals can be met.