Especially in developing countries, natural resources and the environment are not optimally managed. Even so, it is possible for green accounts based on current prices to measure the realized contributions of the environment to net product. The prices for use in the green accounts, however, are not necessarily shadow prices as would be recommended by cost–benefit analysis: in practice, green or comprehensive NNP is an approximation of an index of welfare. The fact that a linearization of generalized national income is used implies that disaggregated, partial-equilibrium models of resources are useful.

This article uses the welfare foundations for the usual net domestic product (NDP) income measure of the traditional National Accounts System (NAS) provided by Weitzman (1976, 2000), and the propositions of Hartwick (1993) and Hamilton (1994a) to correct this measure in order to obtain a green (sustainable) measure of economic income. It estimates green measures of the economic income of Chile's mining sector for the period 1977–1996. Different methodologies regarding the valuation of mining resources are employed, and exploration expenditures in the mining sector are included to empirically estimate the green measures of income. The results clearly show that the usual income measures of the traditional NAS overestimated the economic income generated by the Chilean mining sector during the period by 20–40 per cent, and its rate of growth by 3–20 per cent. Moreover, this overestimation has increased in recent years. These empirical results are remarkably similar when different methodologies are used to calculate green measures of the mining sector's economic income. The empirical evidence produced in this work, together with the one provided by other studies, leads to the conclusion that Chile's outstanding recent economic growth has not delivered the amount of economic income recorded by its NAS, since a significant part of it corresponded to depreciation of the country's natural capital.

We use an empirical simulation model to examine links between trade integration, pollution, and public health in Chile. We synthesize economic, engineering, and health data to elucidate this complex relationship and support more coherent policy. Trade integration scenarios examined include Chile's accession to the NAFTA, MERCOSUR, and unilateral opening to world markets. The latter scenario induces substantial worsening of pollution, partly because it facilitates access to cheaper and dirty energy, and has a significant negative effect on urban morbidity and mortality. Damages caused by rising morbidity and mortality are of similar magnitude and substantial. Emissions of small particulates, SO2, and NO2, have the strongest impact on local mortality and morbidity. These three pollutants appear to be complementary in economic activity. Unilateral trade integration combined with a tax on small particulates brings welfare gains, which are 16 per cent higher than those obtained under unilateral trade reform alone.

We analyse the effects of technological change in agriculture on forest clearing by households in developing countries. The possible effects are found to be many and diverse, depending on the type of change and the institutional context. We conclude that agricultural intensification is certainly not the panacea that some believe it to be.

This paper examines the dynamic effects of forest conservation measures. Both short-term and long-term impacts on timber markets are studied using a Finnish example. Forest conservation is interpreted as an exogenous negative shock in the standing timber growth owned by private forest owners, and its effects are retrieved through an impulse response analysis based on a dynamic demand–supply and timber stock model. The results show that timber markets are influenced by forest conservation. The conservation of forest assets reduces traded quantities and increases timber prices. These effects are of the same relative magnitude, thus leaving the annual timber-selling income of private forest owners unchanged. The results suggest that some of the negative short-run impacts of conservation on commercial timber stock will be compensated in the long run by intensified use of the remaining stock. This may to some extent reduce the ecological usefulness of the conservation policies. While the timber markets converge in the long run towards a new post-conservation state the short-term interruptions suggest that caution should be used in establishing set-asides in privately owned forestland.

This paper examines the effects of the Brazilian governments' title granting policies on the efficiency of agricultural and timber production in the Brazilian Amazon. A two-stage procedure is used that combines Data Envelopment Analysis (DEA) and a Tobit regression. Provision of private land titles before 1995 is found to positively affect the technical efficiency of agricultural and joint agriculture–timber production in 1995. Governmental expenditures, including expenditures to secure property rights, also are found to increase technical efficiency in the agricultural industry. The analysis indicates that revenue efficiency can be improved by producing more roundwood and less agricultural product. Land-granting policies may favorably affect environmental conservation by intensifying land use in agriculture, but they also may harm development by discouraging timber production.

The article describes and quantifies the financial benefits of small-scale community forestry, conducted on an ecologically sustainable basis—‘eco-forestry’, by customary landowners in Papua New Guinea. Through economic modelling the article also attempts to quantify the global benefits generated. Eco-forestry is subsidized by donors directly and through NGOs in its setting up and certification. Financial modelling suggests that, with a subsidy, eco-forestry is capable of generating a return to landowners that is comparable to industrial logging. While the return to logging followed by conversion to agriculture is much more attractive than eco-forestry, agriculture is an option available only in some locations. Economic modelling finds that the external economic benefits emanating from tropical forest conservation that replaces logging in Papua New Guinea are far greater in scale than the financial benefits to landowners. However, the lack of reliable data on the environmental benefits of forest conservation means that economic analysis is somewhat inconclusive. The need for further research to quantify environmental benefits is thus highlighted. The subsidization of forest conservation directly, instead of indirectly through small-scale forestry, is investigated and found to generate a similar level of economic benefits to eco-forestry. However, the cost of direct subsidization is greater. Moreover, mechanisms for direct subsidy are undeveloped in Papua New Guinea. Donors may prefer to continue to subsidize small-scale forestry where it replaces logging because of its apparent conservation and side benefits and because it is operational, while at the same time exploring and extending cost-effective models of direct conservation that have the advantage over eco-forestry of being applicable in more remote areas. Compared with industrial logging, eco-forestry contributes little to consolidated revenue. Therefore it is to be expected that eco-forestry will meet government resistance if it makes significant inroads into the allocation of logging concessions.

This paper examines ways in which development policies interact and influence incentives for agricultural expansion in frontier areas. We develop a model of household response to economic and technical stimuli, conditional on agronomic and household characteristics. We evaluate the model empirically using survey data gathered from low-income corn and vegetable farms near a national park in the southern Philippines. We find that within farms, land allocation is responsive to relative crop prices and yields. However, different crops elicit different responses. In particular, some crop expansion takes place primarily through land substitution and intensified input use, while changes in prices or yields of other crops induce an expansion of total farm area. Land and family labor constraint bind at different points for different crops. These results suggest that because multiple policies interact, environmental policies must have multiple strands in order to replace incentives to further land expansion.

JEL codes: Q12, Q24, O13.

Analysis of a new Mexican database reveals that air-borne, suspended particulate emissions per employee by plants with 20 or less employees are significantly greater than by larger plants within the same manufacturing sector. From a second, new data set on manufacturing plants in Brazil, it is shown that industry in lower-income areas displays a higher concentration of the dirtiest industrial sectors and of smaller plants (which are dirtier). However, harm to humans from industrial air pollution in Brazil is found to be greater in higher-income areas and most of this harm derives from larger plants. This is not simply a reflection of the greater prevalence of manufacturing in urban areas, for the rising projections of human mortality among higher wage municipalities hold, even controlling for population density. Resolution of this apparent paradox hinges on the distinction between emission intensities and total emissions, the latter determining the level of harm, a distinction that has not always been made clear in the course of debate.