The presence of monitoring institutions affects quality and effort of leaders. We investigate the effect of intensified monitoring on the ability and effort of leaders for a sample of forest user groups in Ethiopia, and find experimental and non-experimental evidence of an important trade-off: monitoring increases leaders' effort but lowers their quality in terms of education and experience. This effort–ability trade-off only occurs in the presence of alternative income opportunities (affecting the opportunity cost of time) and only among a subsample of leaders with low prosocial motivation. For our context, we document that the net effect of monitoring on economic outcomes is positive.

This paper examines a causal relationship between foreign direct investment (FDI) and firms' pollution intensity by exploiting the policy of China's FDI access relaxation in 2002. The result shows that FDI leads to a significant reduction in firms' pollution intensity. The mechanism tests find that FDI reduces pollution intensity by increasing firms' productivity, pollution management abilities, and the output of lightly polluting firms. The effect primarily acts on firms in lightly polluting industries and firms in the eastern region. The findings support the pollution halo hypothesis and provide implications for developing countries like China by evaluating the effectiveness of policies to attract FDI.

The additionality of forest conservation interventions is frequently questioned. In particular, they are often considered to be located in places where forests are not threatened, which points to the existence of location biases. Revisiting this location bias concept, we conceptually distinguish potential and effective additionality and theoretically consider how the objectives of the implementer affect the siting choice of the forest conservation interventions and their additionality. Our theoretical intuition is that the choices of the implementers are influenced by the quality of institutions. Our results show that (1) the implementer's objective and local institutions may lead the implementer to select a site with low development potential and low forest threat, and (2) the selection of a site with low development potential, which is frequently presented as a location bias, does not necessarily preclude additionality.

It is well known that a consumer price-neutral reform of consumption taxes and import tariffs is welfare-improving. This paper shows that such price controls are inferior to quantity controls in terms of welfare improvement. The paper next turns to a comparison of different abatement strategies. Whether or not policy changes should fix private abatement or public abatement relates to the level of earmarking, and depends on the relationship between private production and public abatement. There are cases in which increased public abatement only improves welfare by more than both increased private and public abatement together. The paper recommends that environmental earmarking in the form of public abatement should be delivered to cushion price hikes and sustain private energy consumption.