Abstract: Tourism associated with beaches, protected areas, and other natural resources often has serious environmental impacts. The problem is especially acute in developing countries, where nature-based tourism is increasingly important and environmental regulation is typically weak. Eco-certification programs—voluntary initiatives certifying that tourism operators meet defined environmental standards—promise to help address this problem by creating a private-sector system of inducements, monitoring, and enforcement. But to do that, they must provide incentives for tourism operators to participate, such as price premiums and more customers. Rigorous evidence on such benefits is virtually nonexistent. To help fill this gap, we use detailed panel data to analyze the effects of the Blue Flag Program, a leading international eco-certification program, in Costa Rica, where nature-based tourism has caused significant environmental damage. We use new hotel investment to proxy for private benefits, and fixed effects and propensity score matching to control for self-selection bias. We find that past Blue Flag certification has a statistically and economically significant effect on new hotel investment, particularly in luxury hotels. Our results suggest that certification has spurred the construction of 12 to 19 additional hotels per year in our regression samples. These findings provide some of the first evidence that eco-certification can generate private benefits for tourism operators in developing countries and therefore has the potential to improve their environmental performance.

Abstract: Tourism associated with beaches, protected areas, and other natural resources often has serious environmental impacts. The problem is especially acute in developing countries, where nature-based tourism is increasingly important and environmental regulation is typically weak. Eco-certification programs—voluntary initiatives certifying that tourism operators meet defined environmental standards—promise to help address this problem by creating a private-sector system of inducements, monitoring, and enforcement. But to do that, they must provide incentives for tourism operators to participate, such as price premiums and more customers. Rigorous evidence on such benefits is virtually nonexistent. To help fill this gap, we use detailed panel data to analyze the effects of the Blue Flag Program, a leading international eco-certification program, in Costa Rica, where nature-based tourism has caused significant environmental damage. We use new hotel investment to proxy for private benefits, and fixed effects and propensity score matching to control for self-selection bias. We find that past Blue Flag certification has a statistically and economically significant effect on new hotel investment, particularly in luxury hotels. Our results suggest that certification has spurred the construction of 12 to 19 additional hotels per year in our regression samples. These findings provide some of the first evidence that eco-certification can generate private benefits for tourism operators in developing countries and therefore has the potential to improve their environmental performance.

Abstract: Rigorous, objective evaluation of forest conservation policies in developing countries is needed to ensure that the limited financial, human, and political resources devoted to these policies are put to good use. Yet such evaluations remain uncommon. Recent advances in conservation best practices, the widening availability of high-resolution remotely sensed land-cover data, and the dissemination of geographic information system capacity have created significant opportunities to reverse this trend. This paper provides a nontechnical introduction and practical guide to a relatively low cost method that relies on remote sensing data to support ex post analysis of forest conservation policies. It describes the defining features of this approach, catalogues and briefly reviews the studies that have used it, discusses the requisite data, explains the principal challenges to its use and the empirical strategies to overcome them, provides some practical guidance on modeling choices, and describes in detail two recent case studies.

Abstract: Rigorous, objective evaluation of forest conservation policies in developing countries is needed to ensure that the limited financial, human, and political resources devoted to these policies are put to good use. Yet such evaluations remain uncommon. Recent advances in conservation best practices, the widening availability of high-resolution remotely sensed land-cover data, and the dissemination of geographic information system capacity have created significant opportunities to reverse this trend. This paper provides a nontechnical introduction and practical guide to a relatively low cost method that relies on remote sensing data to support ex post analysis of forest conservation policies. It describes the defining features of this approach, catalogues and briefly reviews the studies that have used it, discusses the requisite data, explains the principal challenges to its use and the empirical strategies to overcome them, provides some practical guidance on modeling choices, and describes in detail two recent case studies.

Abstract: According to proponents, voluntary agreements (VAs) negotiated with polluters sidestep weak institutions and other barriers to conventional environmental regulation in developing countries. Yet little is known about their effectiveness. We examine VAs in Colombia, a global leader in the use of these policies. We find that the main motive for using VAs has been to build capacity needed for broader environmental regulatory reform. Their additional effect on environmental performance has been questionable. These findings suggest that in developing countries, VAs may be best suited to capacity building, not environmental management per se.

Abstract: According to proponents, voluntary agreements (VAs) negotiated with polluters sidestep weak institutions and other barriers to conventional environmental regulation in developing countries. Yet little is known about their effectiveness. We examine VAs in Colombia, a global leader in the use of these policies. We find that the main motive for using VAs has been to build capacity needed for broader environmental regulatory reform. Their additional effect on environmental performance has been questionable. These findings suggest that in developing

Abstract: In the past two decades, rapid population and economic growth on the U.S.–Mexico border has spurred a dramatic increase in electricity demand. In response, American energy multinationals have built power plants just south of the border that export most of their electricity to the United States. This development has stirred considerable controversy because these plants effectively skirt U.S. environmental air pollution regulations in a severely degraded international airshed. Yet to our knowledge, this concern has not been subjected to rigorous scrutiny. This paper uses a suite of air dispersion, health impacts, and valuation models to assess the human health damages in the United States and Mexico caused by air emissions from two power-exporting plants in Mexicali, Baja California. We find that these emissions have limited but nontrivial health impacts, mostly by exacerbating particulate pollution in the United States, and we value these damages at more than half a million dollars per year. These findings demonstrate that power-exporting plants can have cross-border health effects and bolster the case for systematically evaluating their environmental impacts.

Abstract: In the past two decades, rapid population and economic growth on the U.S.–Mexico border has spurred a dramatic increase in electricity demand. In response, American energy multinationals have built power plants just south of the border that export most of their electricity to the United States. This development has stirred considerable controversy because these plants effectively skirt U.S. environmental air pollution regulations in a severely degraded international airshed. Yet to our knowledge, this concern has not been subjected to rigorous scrutiny. This paper uses a suite of air dispersion, health impacts, and valuation models to assess the human health damages in the United States and Mexico caused by air emissions from two power-exporting plants in Mexicali, Baja California. We find that these emissions have limited but nontrivial health impacts, mostly by exacerbating particulate pollution in the United States, and we value these damages at more than half a million dollars per year. These findings demonstrate that power-exporting plants can have cross-border health effects and bolster the case for systematically evaluating their environmental impacts.

Abstract: Private sector initiatives certifying that producers of goods and services adhere to defined environmental process standards are increasingly popular worldwide. According to proponents, they can circumvent chronic barriers to effective public sector environmental regulation in developing countries. But eco-certification programs will have limited effects on producers’ environmental performance if, as one would expect, they select for those already meeting certification standards. Rigorous evaluations of the environmental effects of eco-certification in developing countries that control for selection bias are rare. The author used plant-level data on more than 80,000 Mexican facilities to determine whether ISO 14001 series certification of environmental management systems boosts regulatory compliance.

Abstract: Private sector initiatives certifying that producers of goods and services adhere to defined environmental process standards are increasingly popular worldwide. According to proponents, they can circumvent chronic barriers to effective public sector environmental regulation in developing countries. But eco-certification programs will have limited effects on producers’ environmental performance if, as one would expect, they select for those already meeting certification standards. Rigorous evaluations of the environmental effects of eco-certification in developing countries that control for selection bias are rare. We use plant-level data on more than 80,000 Mexican facilities to determine whether ISO 14001 series certification of environmental management systems boosts regulatory compliance. We use propensity score matching to control for nonrandom selection into the program. We find that plants recently fined by environmental regulators were more likely to be certified, all other things equal, but that certified plants were subsequently fined just as often as similar uncertified plants. These results suggest that in Mexico, the ISO 14001 program attracts dirty plants under pressure from regulators—not just relatively clean ones—but does not have a large, lasting impact on their regulatory compliance.

Abstract: In the past two decades, rapid population and economic growth on the U.S.–Mexico border has spurred a dramatic increase in electricity demand. In response, American energy multinationals have built power plants just south of the border that sell most of their electricity to the United States. This development has heightened concern about border area’s already-poor air quality because these plants effectively skirt U.S. environmental regulations. Yet to our knowledge, this concern has not been subjected to rigorous scrutiny. This paper uses a suite of air dispersion, health impacts, and valuation models to assess the benefits of offsetting polluting emissions from two power-exporting plants inMexicali, Baja California. We find that these plants have extensive health impacts, including more than 1.9 short-term mortalities and hundreds of respiratory hospital admissions per year, which we value atalmost US$8 million. The vast majority of these health impacts are associated with ozone pollution in the United States caused by one of the two plants’ emissions. These findings bolster the case for changingU.S. law either to require power-exporting plants to reduce or offset their emissions or to provide incentives for them to do so.

Abstract: Eco-certification of coffee, timber and other high-value agricultural commodities is increasingly widespread. In principle, it can improve commodity producers’ environmental performance, even in countries where state regulation is weak. However, evidence needed to evaluate this hypothesis is virtually nonexistent. To help fill this gap, we use detailed farm-level data to analyze the environmental impacts of organic coffee certification in central Costa Rica. We use propensity score matching to control for self-selection bias. We find that organic certification improves coffee growers’ environmental performance. It significantly reduces chemical input use and increases adoption of some environmentally friendly management practices.

Abstract: Eco-certification of coffee, timber and other high-value agricultural commodities is increasingly widespread. In principle, it can improve commodity producers’ environmental performance, even in countries where state regulation is weak. However, evidence needed to evaluate this hypothesis is virtually nonexistent. To help fill this gap, we use detailed farm-level data to analyze the environmental impacts of organic coffee certification in central Costa Rica. We use propensity score matching to control for self-selection bias. We find that organic certification improves coffee growers’ environmental performance. It significantly reduces chemical input use and increases adoption of some environmentally friendly management practices.

Abstract: Because conventional command-and-control environmental regulation often performs poorly in developing countries, policymakers are increasingly experimenting with alternatives, including state-sponsored voluntary regulatory programs that provide incentives, but not mandates, for pollution control. Although the literature on this trend is quite thin, research in industrialized countries suggests that voluntary programs are sometimes ineffective because they mainly attract relatively clean participants seeking to free-ride on unrelated pollution control investments. We use plant-level data on more than 60,000 facilities to identify the drivers of participation in the Clean Industry Program, Mexico’s flagship voluntary regulatory initiative. Our results suggest that the threat of regulatory sanctions drives participation in the program. Therefore, the program does appear to attract relatively dirty firms. We also find that plants that sold their goods in overseas markets and to government suppliers, used imported inputs, were relatively large, and were in certain sectors and states were more likely to participate in the program, all other things equal.

Abstract: Nearly every state in the United States has developed one or more voluntary cleanup programs (VCPs) to support an alternative approach to cleanup of contaminated sites. Thousands of sites have entered into these programs. Yet, despite the ubiquity of VCPs and the number of enrolled properties, we know little about the factors that influence voluntary action at these sites. This paper reports results from interviews of state officials involved in VCPs in all states, and from a survey of VCP participants in several states. It has two objectives. First, at an application level, the interview and survey results can be used to help improve policy and practice in voluntary cleanup programs. Second, the paper furnishes a unique study to the general literature on environmental voluntary behavior, contributing an empirical, survey-based study of volunteers engaged in cleanup.

Abstract: Advocates claim that voluntary programs can help shore up poorly performing command-andcontrol environmental regulation in developing countries. Although literature on this issue is quite thin, research on voluntary environmental programs in industrialized countries suggests that they are often ineffective because they mainly attract relatively clean plants free-riding on prior pollution controlinvestments. We use plant-level data on some 59,000 facilities to identify the drivers of participation in the ISO 14001 certification program in Mexico. We find that regulatory fines spur certification: on average, a fine roughly doubles the likelihood of certification for three years. Hence, the program attracts dirty firms and at least has the potential to improve environmental performance. We also find that plants that sold their goods in overseas markets, used imported inputs, were relatively large, and were in certain sectors and states were more likely to be certified.

Abstract: Initiatives certifying that farms and firms adhere to predefined environmental and social welfare production standards are increasingly popular. According to proponents, they create financial incentives for farms and firms to improve their environmental and socioeconomic performance. This paper reviews the evidence on whether sustainable certification of agricultural commodities and tourism operations actually has such benefits. It identifies empirical ex post farm-level studies of certification, classifies them on the basis of whether they use methods likely to generate credible results, summarizes their findings, and considers the implications for future research. We conclude that empirical evidence that sustainable certification has significant benefits is limited. We identify just 37 relevant studies, only 14 of which use methods likely to generate credible results. Of these 14 studies, only 6 find that certification has environmental or socioeconomic benefits. This evidence can be expanded by incorporating rigorous, independent evaluation into the design and implementation of projects promoting sustainable certification.

Abstract: Initiatives certifying that farms and firms adhere to predefined environmental and social welfare production standards are increasingly popular. According to proponents, they create financial incentives for farms and firms to improve their environmental and socioeconomic performance. This paper reviews the evidence on whether sustainable certification of agricultural commodities and tourism operations actually has such benefits. It identifies empirical ex post farm-level studies of certification, classifies them on the basis of whether they use methods likely to generate credible results, summarizes their findings, and considers the implications for future research. We conclude that empirical evidence that sustainable certification has significant benefits is limited. We identify just 37 relevant studies, only 14 of which use methods likely to generate credible results. Of these 14 studies, only 6 find that certification has environmental or socioeconomic benefits. This evidence can be expanded by incorporating rigorous, independent evaluation into the design and implementation of projects promoting sustainable certification.

Abstract: Although fuel taxes are a practical means of curbing vehicular air pollution, congestion, and accidents in developing countries—all of which are typically major problems—they are often opposed on distributional grounds. Yet few studies have investigated fuel tax incidence in a developing country context. We use household survey data and income-outcome coefficients to analyze fuel tax incidence inCosta Rica. We find that the effect of a 10 percent fuel price hike through direct spending on gasoline would be progressive, its effect through spending on diesel—both directly and via bus transportation—would be regressive (mainly because poorer households rely heavily on buses), and its effect through spending on goods other than fuel and bus transportation would be relatively small, albeit regressive.Finally, we find that although the overall effect of a 10 percent fuel price hike through all types of direct and indirect spending would be slightly regressive, the magnitude of this combined effect would be modest. We conclude that distributional concerns need not rule out using fuel taxes to address pressing public health and safety problems, particularly if gasoline and diesel taxes can be differentiated.

Abstract: Although fuel taxes are a practical means of curbing vehicular air pollution, congestion, and accidents in developing countries—all of which are typically major problems—they are often opposed ondistributional grounds. Yet few studies have investigated fuel tax incidence in a developing country context. We use household survey data and income-outcome coefficients to analyze fuel tax incidence inCosta Rica. We find that the effect of a 10 percent fuel price hike through direct spending on gasoline would be progressive, its effect through spending on diesel—both directly and via bus transportation—would be regressive (mainly because poorer households rely heavily on buses), and its effect through spending on goods other than fuel and bus transportation would be relatively small, albeit regressive.Finally, we find that although the overall effect of a 10 percent fuel price hike through all types of direct and indirect spending would be slightly regressive, the magnitude of this combined effect would be modest. We conclude that distributional concerns need not rule out using fuel taxes to address pressing public health and safety problems, particularly if gasoline and diesel taxes can be differentiated.

Abstract: In developing countries, weak environmental regulatory institutions often undermine conventional command-and-control policies. As a result, these countries are increasingly experimenting with alternative approaches that aim to leverage nonregulatory “green” pressures applied by local communities, capital markets, and consumers. This article reviews three strands of the empirical literature on this trend. The first strand examines the direct impact of nonregulatory pressures on developing country firms’ environmental performance. The second and third strands analyze policy innovations reputed to leverage these pressures—public disclosure and voluntary regulation. I find that the econometric evidence that nonregulatory pressures have had a direct impact on firms’ environmental performance is thin, at least partly because disentangling such impacts is inherently difficult. Nevertheless, existing empirical research suggests that public disclosure programs have spurred emissions reductions by particularly dirty firms. The evidence on voluntary regulatory policies is far more mixed. Taken as a whole, the literature suggests that policymakers would do well to exercise caution in promoting and implementing alternative pollution control tools: they are only likely to be effective in some incarnations and situations.

Abstract: In developing countries, weak environmental regulatory institutions often undermine conventional command-and-control policies. As a result, these countries are increasingly experimenting with alternative approaches that aim to leverage nonregulatory "green" pressures applied by local communities, capital markets, and consumers. This article reviews three strands of the empirical literature on this trend. The first strand examines the direct impact of nonregulatory pressures on developing country firms' environmental performance. The second and third strands analyze policy innovations reputed to leverage these pressures—public disclosure and voluntary regulation. I find that the econometric evidence that nonregulatory pressures have had a direct impact on firms' environmental performance is thin, at least partly because disentangling such impacts is inherently difficult. Nevertheless, existing empirical research suggests that public disclosure programs have spurred emissions reductions by particularly dirty firms. The evidence on voluntary regulatory policies is far more mixed. Taken as a whole, the literature suggests that policymakers would do well to exercise caution in promoting and implementing alternative pollution control tools: they are only likely to be effective in some incarnations and situations.

Abstract: National government-funded payments for environmental services (PES) programs often lack sustainable financing and fail to target payments to providers of important environmental services. Inprinciple, these problems could be mitigated by replacing at least some government funding with direct contributions from individual environmental service users who have incentives to underwrite payments and who can ensure that they are targeted appropriately. We use original survey data and official statistics to analyze user financing in Costa Rica’s renowned national PES program, focusing on the amounts and sources of such financing, the drivers of contributions by private hydroelectricity plants (the mostimportant sources of user financing), and hydroelectric plant managers’ perceptions of the PES program. We find that user financing from all sources supports less than three percent of the program’s total payments to environmental service providers. In the private hydroelectric sector, not surprisingly, large plants tend to contribute while small ones do not. Beyond that, the weight of evidence suggests that improving relations with local communities and government regulators may be as important a motive forcontributing to the PSA program as ensuring the provision of forest environmental services. These findings raise questions about the potential of user financing to improve the efficiency and financialsustainability of national PES programs.

Abstract: National government-funded payments for environmental services (PES) programs often lack sustainable financing and fail to target payments to providers of important environmental services. Inprinciple, these problems could be mitigated by replacing at least some government funding with direct contributions from individual environmental service users who have incentives to underwrite payments and who can ensure that they are targeted appropriately. We use original survey data and official statistics to analyze user financing in Costa Rica’s renowned national PES program, focusing on the amounts and sources of such financing, the drivers of contributions by private hydroelectricity plants (the most important sources of user financing), and hydroelectric plant managers’ perceptions of the PES program. We find that user financing from all sources supports less than three percent of the program’s totalpayments to environmental service providers. In the private hydroelectric sector, not surprisingly, large plants tend to contribute while small ones do not. Beyond that, the weight of evidence suggests that improving relations with local communities and government regulators may be as important a motive forcontributing to the PSA program as ensuring the provision of forest environmental services. These findings raise questions about the potential of user financing to improve the efficiency and financialsustainability of national PES programs.

Abstract: Economic policies that boost the return to mixed agroforesty, thereby creating financial incentives for land managers to favor these systems over less environmentally friendly land uses, could,in theory, have ancillary environmental benefits. This paper analyses primary and secondary data to determine whether a voluntary price support program for Mexican coffee—mostly grown in shadedsystems that supply important ecosystem services—has had such “win-win” benefits by stemming rampant land-use change in the coffee sector. We find that although the program attracted the types ofgrowers associated with land-use change, it attracted only a relatively small number of them, did not target growing areas hardest hit by conversion to other land uses, and provided subsidies that were probably too small to affect land-use decisions. These results raise serious questions about the ability of a mixed agroforestry price support program with a modest price floor to have a significant conservation impact.

Abstract: Public disclosure programs that collect and disseminate information about firms’ environmental performance are increasingly popular in both developed and developing countries. Yet little is knownabout whether they actually improve environmental performance, particularly in the latter setting. We use detailed plant-level survey data to evaluate the impact of India’s Green Rating Project (GRP) on the environmental performance of the country’s largest pulp and paper plants. We find that the GRP drove significant reductions in pollution loadings among dirty plants but not among cleaner ones. This result comports with statistical and anecdotal evaluations of similar disclosure programs. We also find that plants located in wealthier communities were more responsive to GRP ratings, as were single-plant firms.

Abstract: Little is known about land cover change in mixed agroforestry systems, which often supply valuable ecological services. The authors use a spatial regression model to analyze clearing in El Salvador’s shade coffee–growing regions during the 1990s. Their findings buttress previous research suggesting the relationship between proximity to cities and clearing in mixed agroforestry systems is the opposite of that in natural forests. But this result, and several others, depends critically on the characteristics of the growing area, particularly the dominant cleared land use. These findings imply that policies aimed at retaining mixed agroforestry need to be carefully targeted and tailored.

Abstract: Little is known about land cover change in mixed agroforestry systems, which often supply valuable ecological services. We use a spatial regression model to analyze clearing in El Salvador’s shadecoffee–growing regions during the 1990s. Our findings buttress previous research suggesting the relationship between proximity to cities and clearing in mixed agroforestry systems is the opposite of that in natural forests. But this result, and several others, depends critically on the characteristics of the growing area, particularly the dominant cleared land use. These findings imply that policies aimed at retaining mixed agroforestry need to be carefully targeted and tailored.

Abstract: Virtually all U.S. states have now created voluntary cleanup programs (VCPs) offering liability relief and other incentives for responsible parties to remediate contaminated sites. We use a duration model to analyze participation in Oregon’s program. In contrast to previous VCP research, we find that this program attracts sites with significant contamination, not just relatively clean ones. Furthermore, we find that regulatory pressure—in particular, the public listing of contaminated sites—drives participation. These findings imply Oregon has been able to spur voluntary remediation via public disclosure, a result that comports with key themes in the literature on voluntary environmental regulation

Abstract: Managed forest ecosystems—agroforestry systems in which crops such as coffee and bananas are planted side-by-side with woody perennials—are being touted as a means of safeguarding forests along with the ecological services they provide. Yet we know little about the determinants of land cover in such systems, information needed to design effective forest conservation policies. This paper presents a spatial regression analysis of land cover in a managed forest ecosystem—a shade coffee region of coastal Mexico. Using high-resolution land cover data derived from aerial photographs along with data on the geophysical and institutional characteristics of the study area, we find that plots in close proximity to urban centers are less likely to be cleared, all other things equal. This result contrasts sharply with the literature on natural forests. In addition, we find that membership in coffee-marketing cooperatives, farm size, and certain soil types are associated with forest cover, while proximity to small town centers is associated with forest clearing.

Abstract: Shade coffee farms in Central America provide important ecological services. But because international coffee prices have fallen since 1990, many have been cleared to make way for more remunerative land uses. This problem is of particular concern in heavily deforested El Salvador, where a large share of the remaining tree cover is associated with shade coffee. We use satellite images, stakeholder interviews, and secondary data to analyze the magnitude, characteristics, and drivers of clearing in El Salvador’s shade coffee areas during the 1990s. We find that 13 percent of these areas was cleared, mostly in middle- and high-altitude regions. Falling coffee prices were not the only drivers of this phenomenon, however: a downward spiral of on-farm investment and yields, debt, poverty, urbanization, migration, and weak land use regulation also contributed. Our findings suggest that stricter enforcement of land use and land cover regulations is urgently needed to prevent further clearing.

Abstract: Hamstrung by weak institutions that undermine conventional environmental regulatory tools, policymakers in developing countries are increasingly turning to voluntary approaches. To date, however,there have been few evaluations of these policy experiments. To help fill this gap, we summarize arguments for and against the use of voluntary regulation in developing countries, review the nascentliterature on the topic, and present case studies of agreements negotiated between regulators and leather tanners in an industrial city in Mexico, a national environmental audit program in Mexico, and a national public disclosure program in India. Admittedly few in number, these three case studies nevertheless suggest that although voluntary environmental regulation in developing countries is a risky endeavor, it is by no means doomed to failure. The risks can be minimized by emphasizing the dissemination of information about pollution and pollution abatement options and by avoiding voluntary approaches in certain situations—those where regulatory and nonregulatory pressures for improved environmental performance are weak and where polluters can block quantified targets, individual sanctions for noncompliance, and other widely accepted prerequisites of effective initiatives.

Abstract: Voluntary agreements (VAs) negotiated between environmental regulators and industry are increasingly popular. However, little is known about whether they are likely to be effective in developing and transition countries, where local and federal environmental regulatory capacity is typically weak. We develop a dynamic theoretical model to examine the effect of VAs on investment in regulatory infrastructure and pollution abatement in such countries. We find that under certain conditions, VAs can improve welfare by generating more private-sector investment in pollution control and more public-sector investment in regulatory capacity than the status quo.

Abstract: Shade-grown coffee provides a livelihood to many farmers, protects biodiversity, and creates environmental services. Many shade-coffee farmers have abandoned production in recent years, however, in response to declines in international coffee prices. This paper builds a farmer decision model under price uncertainty and uses simulation analysis of that model to examine the likely impact of various policies on abandonment of shade-coffee plantations. Using information from coastal Oaxaca, Mexico, this paper examines the role of various constraints in abandonment decisions, reveals the importance of the timing of policies, and characterizes the current situation in the study region.

Abstract: This paper examines the United States’ experience with environmental decentralization, focusing on the relationship between the U.S. Environmental Protection Agency (EPA) and the states. It outlines the factors that are considered in determining the appropriate degree of decentralization, the advantages and disadvantages of decentralization, how the EPA-state relationship has evolved over the years, and the structural mechanisms used to ensure that there is a high degree of performance by EPA and the states in administering the programs. Program-specific examples of the EPA-state relationship are also provided.

Abstract: More than three-quarters of Mexico’s coffee is grown on small plots shaded by the existingforest. Because they preserve forest cover, shade coffee farms provide vital ecological services includingharboring biodiversity and preventing soil erosion. Unfortunately, tree cover in Mexico’s shade coffeeareas is increasingly being cleared to make way for subsistence agriculture, a direct result of theunprecedented decline of international coffee prices over the past decade. This paper summarizes the keyfindings of a three-year study of deforestation in Oaxaca, one of Mexico’s prime regions for growingshade coffee. First, we find that deforestation during the 1990s was significant. Second, the loss of treecover can likely be slowed by promoting coffee-marketing cooperatives and “green” certification,providing coffee price supports, and specifically targeting areas populated by small, indigenous farmersfor assistance. Finally, to be effective, such policies must be implemented quickly after price shocksoccur.

Abstract: In many developing countries, a host of financial, institutional, and political factors hamstringconventional environmental regulation. Given these constraints, a promising strategy for controllingpollution is to promote the voluntary adoption of clean technologies. Although this strategy has receivedconsiderable attention in policy circles, empirical research on the adoption of clean technologies indeveloping countries is limited. This paper presents historical background and original survey data on theadoption of five clean tanning technologies by a sample of 137 leather tanneries in León, Guanajuato,Mexico, a city where tanneries have serious environmental impacts and conventional environmentalregulation has repeatedly failed to mitigate the problem. The analysis suggest that rather than top-downpublic-sector pressure and technical assistance, the key factor driving the adoption of clean tanningtechnologies in León is the bottom-up dissemination of information about the cost and quality benefits ofthe technologies.

Abstract: Colombia’s discharge fee system for water effluents is often held up as a model of a wellfunctioning, economic-incentive pollution control program in a developing country. Yet few objective evaluations of the program have appeared. Based on a variety of primary and secondary data, this paper finds that that in its first five years, the program was beset by a number of serious problems including limited implementation in many regions, widespread noncompliance by municipal sewerage authorities, and a confused relationship between discharge fees and emissions standards. Nevertheless, in some watersheds, pollution loads dropped significantly after the program was introduced. While proponents claim the incentives that discharge fees created for polluters to cut emissions in a cost-effective mannerwere responsible, this paper argues that the incentives they created for regulatory authorities to improve permitting, monitoring, and enforcement were at least as important.

Abstract: The city of León, Guanajuato, is Mexico’s leather goods capital and a notorious environmentalhotspot. Over the past two decades, four high-profile voluntary agreements aimed at controlling pollutionfrom León’s tanneries have yielded few concrete results. To understand why, this paper reconstructs thehistory of these initiatives, along with that of local environmental regulatory capacity. Juxtaposing thesetwo timelines suggests that the voluntary pollution control agreements were both motivated by—andundermined by—gaps in the legal, institutional, physical, and civic infrastructures needed to makeregulation effective. Our analysis offers a concrete definition of environmental regulatory capacity,provides insights into how it evolves, and demonstrates its importance. Moreover, it sheds light on thequestion of whether voluntary environmental agreements—an increasingly popular regulatory tool—arelikely to be effective in developing countries.

Abstract: Managed forest ecosystems—agroforestry systems in which crops such as coffee and bananas are planted side-by-side with woody perennials—are being touted as a means of safeguarding forests along with the ecological services they provide. Yet we know little about the determinants of land cover in such systems, information needed to design effective forest conservation policies. This paper presents a spatial regression analysis of land cover in a managed forest ecosystem—a shade coffee region of coastal Mexico. Using high-resolution land cover data derived from aerial photographs along with data on the geophysical and institutional characteristics of the study area, we find that plots in close proximity to urban centers are less likely to be cleared, all other things equal. This result contrasts sharply with the literature on natural forests. In addition, we find that membership in coffee-marketing cooperatives, farm size, and certain soil types are associated with forest cover, while proximity to small town centers is associated with forest clearing.

Abstract: In many cities in developing countries, clusters of small and medium enterprises create severe pollution problems. Because conventional regulatory approaches are typically ineffective in such situations, policy responses have increasingly focused on promoting voluntary clean technological change. Yet the data and analysis needed to guide such efforts are scarce. This paper uses original firmlevel survey data on a cluster of small- and medium-scale leather tanneries in León, Guanajuato— Mexico’s leather capital—to econometrically identify the factors that drive the adoption of three clean tanning technologies. Using a multivariate probit model to estimate a system of seemingly unrelated regressions, we find—in contrast to conventional wisdom—that neither firm size nor regulatory pressure is correlated with adoption. Rather, the drivers of adoption are the firm’s human capital and stock of technical information, the same factors that explain conventional productivity-enhancing technological change. We also find that private-sector trade associations and input suppliers are important sources of technical information about clean technologies.

Abstract: Ciudad Juárez, Chihuahua, is home to the U.S.–Mexico border’s largest maquiladora labor force,and also its worst air pollution. We marshal two types of evidence to examine the link betweenmaquiladoras and air pollution in Ciudad Juárez, and in its sister city, El Paso, Texas. First, we use apublicly available sector-level emissions inventory for Ciudad Juárez to determine the importance of allindustrial facilities (including maquiladoras) as a source of air pollution. Second, we use original plantleveldata from two sample maquiladoras to better understand the impacts of maquiladora air pollution onhuman health. We use a series of computational models to estimate health damages attributable to airpollution from these plants, we compare these damages to estimates of damages from non-maquiladoraindustrial polluters, and we use regression analysis to determine whether the poor sufferdisproportionately from maquiladora air pollution. We find that air pollution from maquiladoras hasserious consequences for human health, including respiratory disease and premature mortality. However,maquiladoras are clearly not the leading cause of air pollution in Ciudad Juárez and El Paso. Moreover,most maquiladoras are probably less important sources of dangerous air pollution than at least onenotoriously polluting Mexican-owned industry. Finally, we find no evidence to suggest that maquiladoraair pollution affects the poor disproportionately.

Abstract: According to conventional wisdom, rapidly growing stocks of scrap tires on the U.S.–Mexico border pose a variety of health and environmental risks. This article assesses these risks in Paso del Norte, the border’s second-largest metropolis comprised principally of Ciudad Juárez, Chihuahua, and El Paso, Texas. We find that air pollution from tire pile fires poses the greatest threat. Scrap tires in Paso del Norte do not contribute significantly to the propagation of mosquito-borne diseases or to shortages of space in solid waste disposal sites. The burning of scrap tires at industrial facilities is minimal and might not have significant adverse environmental impacts even if it were more common.

Abstract: Most of the literature attributes credit constraints in small-farm developing-country agriculture to the variability of returns to investment in this sector. But the literature does not fully explain lenders’ reluctance to finance investments in technologies that provide both higher average and less variable returns. To fill this gap, this article develops an information-theoretic credit market model with endogenous technology choice. The model demonstrates that lenders may refuse to finance any investment in a riskless high-return technology— regardless of the interest rate they are offered—when they are imperfectly informed about loan applicants’ time preferences and, therefore, about their propensities to default intentionally in order to finance current consumption.

Abstract: Although ignored for decades, environmental issues now attract considerable attention in the literature on economic development. This paper describes research on environmental issues in seven topic areas that historically have been at the heart of development economics: the role of the state, economic growth, trade and industrialization, relations between rich and poor countries, structural adjustment and stabilization, population change, and the objectives and strategies of development.

Abstract: Increasingly, conventional wisdom dictates that agrarian policy in developing countries should foster a "doubly green revolution" that both protects the environment and boosts output. Like the first green revolution, such a transformation will entail convincing millions of farmers to adopt new practices and, as a result, will confront well-documented barriers to technological change in developing-country agriculture. It will also face a number of new obstacles, including a divergence between the interests of policymakers and farmers, a policy environment biased in favor of input-intensive agriculture, and the fact that many environmentally friendly technologies entail relatively high set-up costs. At least in the short run, institutional constraints will limit the contribution of agricultural biotechnology to overcoming these obstacles. Hence, the first green revolution may serve as an overly optimistic model for a shift to a more sustainable agriculture.

Abstract: In developing countries, urban clusters of manufacturers which are "informal"—small-scale, unlicensed and virtually unregulated—can have severe environmental impacts. Yet pollution control efforts have traditionally focused on large industrial sources, in part because the problem is not well-understood. This paper presents a benefit-cost analysis of four practical strategies for reducing emissions from traditional brick kilns in Ciudad Juárez, Mexico. To our knowledge, it is the first such analysis of informal sources. We find very significant net benefits for three of the four control strategies. These results suggest that informal polluters should be a high priority for environmental regulators.

Abstract: Although a growing body of evidence suggests that publicly disclosing information about plants’ environmental performance can motivate emissions reductions, this phenomenon remains poorly understood. To help fill this gap, this paper presents original data from a survey of plants participating in the Program for Pollution Control, Evaluation and Rating (PROPER), Indonesia’s widely-acclaimed public disclosure program. These data suggest that a key means by which PROPER spurs abatement is improving factory managers’ information about their own plants’ emissions and abatement opportunities. This finding contrasts with the prevailing view in the literature that public disclosure enhances pressures to abate placed on firms by external agents such as community groups and shareholders. But our data also suggest that PROPER’s "environmental audit" effect operates in concert with external pressures. Therefore, simply supplying new information to plant managers without making that information public may not be sufficient to motivate significant abatement

Abstract: Increasingly popular tailored regulation (TR) initiatives like EPA’s Project XL allow plants to voluntarily substitute site-specific environmental performance standards for command-and-control regulations that dictate pollution abatement strategies. TR can significantly reduce participants’ costs of complying with environmental regulations. But in doing so, it can also provide participants with a competitive advantage. We show that this can have undesirable welfare consequences when it enables relatively inefficient firms in oligopolistic markets to "steal" market share from more efficient firms. One critical determinant of whether or not TR has such adverse welfare impacts is the regulator’s policy regarding the diffusion of TR agreements among non-participating firms.

Abstract: In developing countries, urban clusters of informal firms such as brick kilns and leather tanneries can create severe pollution problems. However, these firms are quite difficult to regulate for a variety of technical and political reasons. Drawing on the literature, this paper first develops a list of feasible environmental management policies. It then examines how these policies have fared in four independent efforts to control emissions from informal brick kilns in northern Mexico. The case studies suggest that: (i) conventional command and control process standards are generally only enforceable when buttressed by peer monitoring, (ii) surprisingly, clean technologies can be successfully diffused even when they raise variable costs, in part because early adopters have an economic incentive to promote further adoption, (iii) boycotts of "dirty" goods sold in informal markets are unenforceable, (iv) well-organized informal firms can block implementation of costly abatement strategies such as relocation, and (v) private-sector-led initiatives may be best suited for informal sector pollution control.

Abstract: The flagship of the Environmental Protection Agency’s regulatory reinvention initiative, Project XL has been touted as a ‘regulatory blueprint’ for a site-specific, performance-based pollution control system. But widespread complaints about the costs of the program beg the question of whether the costs of tailoring regulations to individual facilities are manageable. To address this question, this paper presents original survey data on a sample of 11 XL projects. We find that the fixed costs of putting in place XL agreements are substantial, averaging over $450,000 per firm. While stakeholder negotiations are widely cited as the principal source for these costs, we find that they actually arise mainly from interaction between participating facilities and the EPA. Moreover, EPA management problems are perceived by our survey respondents as having inflated project development costs. Finally, we find that the key factor that explains differences in costs across XL projects is the scope and complexity of the project proposal. These findings suggest that Project XL favors large firms that can afford to pay significant project development costs, that EPA management problems must be resolved to reduce costs, and that there may be a significant economic bias against complex and innovative proposals—precisely the type of proposals that Project XL was designed to foster in order to improve the efficiency of the regulatory system.

Abstract:

Location efficient mortgages (LEM) programs are an increasingly popular approach to combating urban sprawl. LEMs allow families who want to live in densely-populated, transit-rich communities to obtain larger mortgages with smaller downpayments than traditional underwriting guidelines allow.

LEMs are premised on the proposition that homeowners in such "location efficient" areas can safely be allowed to breach underwriting guidelines designed to prevent mortgage default because they have lower than average automobile-related transportation expenses and more income available for mortgage payments. This paper employs records of over 8,000 FHA-insured mortgages matched with data on various measures of location efficiency to test this proposition. Our results suggest that it does not hold and that LEMs—like other low-downpayment mortgage programs—will raise mortgage default rates.

This cost must be weighed against any potential anti-sprawl benefits LEMs may have.

Abstract: Recent efforts to forge a consensus on the role developing countries should play in reducing global greenhouse gas emissions have focused attention on climate friendly technologies (CFTs), most notably those that enhance energy efficiency. In the medium term, the effectiveness of technology-based climate strategies will depend critically on the rates at which CFTs diffuse in developing countries. This paper reviews some of the key findings of the economics research on technology diffusion and assesses the implications for climate policy. The most obvious lessons from this research are that widespread diffusion of CFTs may take decades, and that diffusion rates in developing and industrialized countries are likely to be quite different. In addition, the literature has implications for a number of strategies for promoting technology diffusion including information dissemination, factor price rationalization, and investment in human capital.

Abstract: To what extent should developing countries eschew conventional command and control environmental regulation that is increasingly seen as inefficient and rely instead on economic incentives? This paper addresses this question as it pertains to industrial air pollution. The paper discusses the advantages and disadvantages of various economic incentive instruments, presents in-depth case studies of their application in Sweden, the United States, China, and Poland, and proposes a number of policy guidelines. The authors argue that both design deficiencies and pervasive constraints on monitoring and enforcement impede the effectiveness of economic instruments in developing countries. The latter are difficult to rectify, at least in the medium term. As a result, tradable permits are generally not practical. Suitably modified however, emissions fee policies probably are appropriate. They can provide a foundation for a transition to an effective economic incentive system, and can raise much needed revenue for environmental projects and programs. In addition, if political opposition can be overcome, environmental taxes constitute a second-best but potentially effective pollution control instrument.

Abstract: In the early 1990s, hoping to reduce chronic electricity shortages and enhance the efficiency of Chinese power plants, China opened its doors to foreign direct investment (FDI) in electricity generation. Using data from an original survey of US private investors, official Chinese statistics, and other sources, we assess the volume and characteristics of FDI in China's power sector, its impact on energy efficiency, and the factors that limit this impact. Our five principal findings are as follows. First, the volume FDI in China's power sector will likely fall short of the government's 1995 - 2000 capacity expansion target by a substantial margin, most likely because of persistent institutional barriers to FDI. Second, to avoid the lengthy central government approval process for large plants and to minimize risk, early FDI tended to be in small-scale, gas- and oil-fired plants using imported equipment and located in coastal provinces. However, more recent FDI tends to be in larger coal-fired plants that use more Chinese equipment and tends to be located in the north as well as the east. Third, and perhaps most important, FDI is likely having a significant positive impact on energy efficiency. Almost a third of the 20 FDI plants in our survey sample use advanced efficiency-enhancing generating technologies, and a fifth are cogeneration plants. Fourth, the main factor that has hampered the contribution of FDI to energy efficiency is an institutional bias in favor of small-scale plants which are generally not as energy efficient as the large-scale plants. And finally, the most important barriers to FDI generally are uncertainty associated with the approval process of FDI projects, electricity sector regulation, and the risk of default on power purchase contracts.

Abstract: Low-technology unlicensed micro-enterprises known as "informal" firms are a significant source of pollution in developing countries that are virtually impossible to regulate in the conventional manner. This paper describes an example of an innovative and promising approach to the problem: the Ciudad Juárez Brickmakers' Project, a private-sector-led initiative aimed at abating highly polluting emissions from Ciudad Juárez, Mexico's approximately 300 informal brick kilns. We draw four lessons from the Project's history. First, private-sector-led initiatives can work -- indeed they may be more effective than public sector initiatives -- but they require strong public sector support. Second, necessary conditions for effective environmental management in the informal sector include enlisting the cooperation of local organizations, relying upon peer monitoring, and offsetting compliance costs. Ineffective strategies include promoting too-advanced technologies and intervening in informal markets. Third, pollution control strategies that provide the greatest environmental benefits may be less appropriate than low-cost intermediate strategies. Finally, in volatile developing economies, market-based environmental initiatives in the informal sector are bound to be fragile.

Abstract: In many developing countries the informal sector, comprised of low-technology unlicensed micro-enterprises, is a major source of pollution. Environmental management in this sector is exceptionally challenging, even by developing country standards. Though clean technologies offer a means of mitigating the problem, to our knowledge there has been no rigorous empirical research on why informal (or even small-scale) firms do and do not adopt them. As a first step towards filling this gap, this paper presents the results of an econometric analysis of the diffusion of propane among informal 'traditional' brickmakers in Cd. Juárez, Mexico — a leading source of air pollution owing to their reliance on cheap, highly polluting fuels such as used tires and scrap wood. The three key policy implications of our analysis are that: (1) community pressure applied by private-sector trade and neighborhood organizations can generate strong incentives for informal firms to adopt clean technologies, presumably even in the absence of formal regulatory pressure, (2) it is possible to successfully promote the adoption of a clean technology by intensely competitive informal firms even when the new technology significantly raises variable costs, and (3) training and education — in particular the dissemination of information about the health risks associated with dirty technologies — can be an effective means of promoting adoption.

Abstract: The considerable difficulties associated with cross-border environmental management are compounded when polluters are unlicensed micro-enterprises such as auto repair shops and traditional brick kilns; such "informal sector" firms are virtually impossible to regulate in the conventional manner. This paper describes an example of an innovative and promising approach to the problem: the Ciudad Juárez Brickmakers' Project, a private-sector-led, binational initiative aimed at abating highly polluting emissions from Ciudad Juárez's approximately 350 informal brick kilns. We draw three lessons from the Project's history. First, private-sector-led cross-border initiatives can work — indeed they may be more effective than public sector initiatives — but they require strong public sector support. Second, necessary conditions for effective environmental management in the informal sector include enlisting the cooperation of local unions and political organizations, relying upon peer monitoring among informal firms, and providing inducements to offset compliance costs. Ineffective strategies include promoting too-advanced and therefore inappropriate technologies and intervening in informal markets. And finally, the history of the Brickmakers' Project suggests that, in volatile developing economies, even well designed voluntary market-based environmental initiatives in the informal sector are bound to be fragile.

Abstract: International differences in the timing and speed of the diffusion of technical innovations have profound economic and environmental impacts. For example, they affect the rate of 'convergence' of levels of per capita income in developing and industrialized countries and the rate of global warming. This note investigates the usefulness of macroeconomic statistics as predictors of such differences. Specifically, we test to see whether differences in the timing and speed of the diffusion of four steel and textile core-process innovations (the basic oxygen furnace, continuous casting, the open-end rotor, and the shuttle-less loom) in 48 diverse countries are explained by: GDP per capita, exports as a share of sectoral production, and money stock as a share of GDP. We find that these statistics do in fact explain some international variation in patterns of diffusion; the two steel innovations diffused faster in countries where a relatively high proportion of steel output was exported and that the two textile innovations diffused either earlier or faster in countries with relatively high GDP.