are impatient farmers more risk averse evidence from a lab in the field experiment in rural uganda based on data from a field experiment in rural uganda we show that impatient farmers are more risk averse than patient farmers we relied on a simplified version of the convex time budget ctb method to elicit farmers time preferences and on an independent method for eliciting their risk preferences we report two important findings first we show that our simplified ctb method applied to farmers from uganda replicates the key findings of andreoni and sprenger s lab experiments that involved student subjects second we establish the existence of a negative correlation between risk tolerance and impatience based on two independent measures

evidence on changes in aid allocation criteria have donors changed their aid allocation criteria over the past three decades toward greater selectivity a frequently stated goal of the international development community using data on how 22 donors allocated their bilateral aid among 147 countries over 1970 2004 the article finds that after the fall of the berlin wall in 1989 and especially in the late 1990s bilateral aid responded more to poverty and the quality of the policy and institutional environment in the recipient countries furthermore the sensitivity of aid allocation to the country s size and its debt burden has declined over time these results are robust to different samples and model specifications various econometric techniques and alternative measures of institutional quality while the specific factors causing these changes cannot be identified these presumably include geopolitical and economic concerns and the many changes in the international aid architecture donors still differ greatly in their selectivity this suggests that further multifaceted reforms are needed to ensure even greater selectivity of aid

institutional determinants of success among forestry based carbon sequestration projects in sub saharan africa summary this paper contributes to the debate on the economic and social implications of carbon forestry through the study of 42 programs in africa using carbon offset payments to fund tree planting activities such projects may be understood as multi layered collective action problems growing trees for carbon offsets requires not only international financial incentives to plant trees but also local institutions to monitor impose sanctions and distribute benefits consistent with economic theories large projects appear to realize economies of scale contrary to expectations community based projects on lower quality sites often successfully generate and sell offsets while private for profit initiatives appear susceptible to collapse

how to identify trust and reciprocity this paper uses a three games or triadic design to identify trusting and reciprocating behavior a large literature on single game trust and reciprocity experiments is based on the implicit assumption that subjects do not have altruistic or inequality averse other regarding preferences such experimental designs test compound hypotheses that include the hypothesis that other regarding preferences do not affect behavior in contrast experiments with the triadic design do discriminate between transfers resulting from trust or reciprocity and transfers resulting from other regarding preferences that are not conditional on the behavior of others decomposing trust from altruism and reciprocity from altruism or inequality aversion is critical to obtaining empirical information that can guide the process of constructing models that can increase the empirical validity of game theory

aid policy and growth in post conflict societies countries emerging from civil war attract both aid and policy advice this paper provides the first systematic empirical analysis of aid and policy reform in the post conflict growth process it is based on a comprehensive data set of large civil wars and covers 27 countries that were in their first decade of post conflict economic recovery during the 1990s the authors first investigate whether the absorptive capacity for aid is systematically different in post conflict countries they find that during the first three post conflict years absorptive capacity is no greater than normal but that in the rest of the first decade it is approximately double its normal level so ideally aid should phase in during the decade historically aid has not on average been higher in post conflict societies and it has tended to taper out over the course of the decade the authors then investigate whether the contribution of policy to growth is systematically different in post conflict countries and in particular whether particular components of policy are differentially important for this they use the world bank policy rating database the authors find that growth is more sensitive to policy in post conflict societies comparing the efficacy of different policies they find that social policies are differentially important relative to macroeconomic policies however historically this does not appear to have been how policy reform has been prioritized in post conflict societies

project appraisal and planning twenty years on this paper discusses the use and usefulness of social cost benefit analysis it briefly recalls the main features of the procedures put forward in the book by the authors and addresses some of the issues that have arisen in theoretical work since the early 1970s particularly the implications of uncertainty an analysis of the value of project appraisal under uncertainty is provided the rise and decline of project appraisal in the world bank and elsewhere is charted and reasons are considered particular attention is given to the difficulty of using shadow prices and to the institutional environment it is argued that evidence from analysis of the world bank s projects is consistent with placing a high value on the process of economic appraisal the costs of appraisal are noted as is the need to avoid excessive complexity the paper argues for the importance of an economic appraisal system and of attending to the incentives that operate in such a system

looking ahead optimally in allocating aid summary the collier dollar approach to aid allocation among countries has been less than fully embraced by donors even those focused on poverty reduction partly because it conflicts with the approach to aid allocation implied by the millennium development goals these two approaches are shown to be special cases of a more general model of aid allocation in which donors care about future as well as current poverty this model is illustratively applied to data for developing regions adding a poverty decline adjustment to the allocation formulae used by donors could resolve the conflict between the two approaches

on the empirics of foreign aid and growth the present paper re examines the effectiveness of foreign aid theoretically and empirically using a standard olg model we show that aid inflows will in general affect long run productivity the size and direction of the impact may depend on policies deep structural characteristics and the size of the inflow the empirical analysis investigates these possibilities overall we find that aid has been effective in spurring growth but the magnitude of the effect depends on climate related circumstances finally we argue that the collier dollar allocation rule should be seriously reconsidered by donor agencies if aid effectiveness is related to climate the usefulness of foreign aid in promoting growth in developing countries has been an area of controversy ever since rosenstein rodan in 1943 advocated for aid to eastern and south eastern europe browsing through successive editions of a leading textbook in development economics provides a telling illustration of how the confidence in aid effectiveness dwindled over the years in the first edition of leading issues in economic development meier 1964 dedicated a full 18 page section to the issue of foreign aid he started out asking how much aid by the time of the sixth edition meier 1995 the treatment of foreign aid had been cut into half and the questions in focus were why official assistance and does aid work in the 2000 edition meier and rauch 2000 foreign aid is not even listed in the index

does aid availability affect effectiveness in reducing poverty a review article this paper addresses the impact of aid supply on aid effectiveness first we review theoretical literature that deals with the problem of governance in donor recipient relationships and are susceptible of highlighting effects of aggregate aid availability second we provide a conceptual framework that explicitly incorporates a trade off between considerations of needs and governance we examine the impact of aid supply on the manner in which a donor agency allocates the available money between countries differing in terms of both needs and domestic governance the central conclusion is that a donor s utility function that embodies the need governance trade off and the associated optimization mechanism yield a meaningful rule to guide inter country allocation of aid resources

behavioral economics for environmental policy abstract the predictions of widely prescribed global and country level environmental policies at present are based mainly on mainstream economic models which treat individual actors to be unboundedly rational in their decision making in recent years however behavioral and experimental economists have found that the individual actors in many circumstances act within a bounded rationality framework suggesting that predictions based on the unbounded rationality models would be less valid while some of mainstream economists have already started adopting the bounded rationality based models in their academic discourse many environmental economists seem to be reluctant to use these alternative models of rationality in their research and policy prescriptions this paper highlights the implications of using bounded rationality models in environmental research in general and policymaking in particular

stakeholder pressures as determinants of csr strategic choice why do firms choose symbolic versus substantive self regulatory codes of conduct to encourage corporations to contribute positively to the environment in which they operate voluntary self regulatory codes src have been enacted and refined over the past 15 years two of the most prominent are the united nations global compact and the global reporting initiative in this paper we explore the impact of different stakeholders pressures on the selection of strategic choices to join srcs our results show that corporations react differently to different sets of stakeholder pressures and that the src selection depends on the type and intensiveness of the stakeholder pressures as well as the resources at hand to respond to those pressures our contribution offers a more specific and finely variegated analysis of firm stakeholder interactions

disclosure strategies for pollution control disclosure strategies which involve public and or private attempts to increase the availability of information on pollution form the basis for what some have called the third wave in pollution control policy after legal regulation the first wave and market based instruments the second wave while these strategies have become common in natural resource settings forest certification and organic farming for example they are less familiar in a pollution control context yet the number of applications in that context is now growing in both oecd and developing countries this survey will review what we know and don t know about the use of disclosure strategies to control pollution and conclude with the author s sense of where further research would be particularly helpful

fairness in the international allocation of development aid this paper assesses the allocative performance of foreign aid donors it does so by identifying the consistency of the share of donor aid allocated to each developing country with these their shares of global poverty a given donor s allocative performance is maximised if the share of its aid to each developing country exactly equals its share of global poverty this is equated with fairness in the international allocation of aid the allocative performance of all donors all bilateral donors all multilateral agencies all non dac donor countries the eu france germany japan the united kingdom and the united states for the years 2010 15 is assessed the best performance is exhibited by all bilateral donors while that for an individual donor is exhibited by the united kingdom non dac donors exhibit the worst performance the paper also identifies which developing countries receive the most and least aid relative to their shares of global poverty

designing payments for environmental services in theory and practice an overview of the issues abstract payments for environmental services pes have attracted increasing interest as a mechanism to translate external non market values of the environment into real financial incentives for local actors to provide environmental services es in this introductory paper we set the stage for the rest of this special issue of ecological economics by reviewing the main issues arising in pes design and implementation and discussing these in the light of environmental economics we start with a discussion of pes definition and scope we proceed to review some of the principal dimensions and design characteristics of pes programs and then analyze how pes compares to alternative policy instruments finally we examine in detail two important aspects of pes programs their effectiveness and their distributional implications pes is not a silver bullet that can be used to address any environmental problem but a tool tailored to address a specific set of problems those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers pes is based on the beneficiary pays rather than the polluter pays principle and as such is attractive in settings where es providers are poor marginalized landholders or powerful groups of actors an important distinction within pes is between user financed pes in which the buyers are the users of the es and government financed pes in which the buyers are others typically the government acting on behalf of es users in practice pes programs differ in the type and scale of es demand the payment source the type of activity paid for the performance measure used as well as the payment mode and amount the effectiveness and efficiency of pes depends crucially on program design

aid allocation rules abstract this paper studies an aid allocation rule used by major development agencies and investigates optimal allocations when recipients are neoclassical economies undergoing transition dynamics when recipients face aid absorption constraints allocations that favor poorer recipients are not always optimal contrary to what is assumed in assessments of donor performance the most quantitatively significant factors that determine the optimal sensitivity to recipient characteristics are the generosity of the aid budget and the extent of absorption constraints in neoclassical recipients aid can only accelerate growth where there is already growth so the optimal rule places little weight on growth and optimality is largely a matter of balancing recipient need against absorption constraints

the dynamics of alignment insights from a punctuated equilibrium model several prior articles have emphasized the importance of alignment between business and information system is strategies and between business and is structures seeking to advance our understanding of alignment we examine the dynamics of changes in alignment through strategy structure interactions in the business and is domains more specifically we address the following question in what ways does alignment evolve over time changes in the strategic is management profile which includes business strategy is strategy business structure and is structure over time are examined using a punctuated equilibrium model involving long periods of relative stability or evolutionary change interrupted by short periods of quick and extensive or revolutionary change case studies of changes in business and is strategies and structure over long time periods in three organizations suggest that the punctuated equilibrium model provides a valuable perspective for viewing these dynamics the cases suggest that a pattern of alignment may continue over a long period because either the level of alignment is high or the managers do not recognize the low alignment as a problem revolutions involving changes in most or all dimensions of the strategic is management profile interrupt the evolutionary changes however organizations hesitate to make such revolutionary changes in strategic is management profiles complete revolutions apparently require a combination of strong triggers finally post revolution adjustments to one dimension of the strategic is management profile seem to follow revolutionary changes

a three stage theory of international expansion the link between multinationality and performance in the service sector it is generally assumed that the performance of a firm improves with greater multinationality yet recent empirical studies have shown both a u shaped relationship which suggests an initially negative effect of international expansion on performance before the positive returns of international expansion are realized and an inverted u shaped relationship which suggests that international expansion beyond an optimal level is again detrimental to performance and results in a negative slope this paper proposes a new unified three stage theory of international expansion that incorporates both concepts in a sigmoid hypothesis it then tests this on data from 11 service industries highlighting the difference between knowledge based and capital intensive service sectors

institutionalizing sustainability an empirical study of corporate registration and commitment to the united nations global compact guidelines abstract drawing upon institutional and stakeholder theories we explore the causal mechanisms of institutionalization and their influence on sustainable development initiatives to test our arguments we study the registration patterns of 394 large corporations from 12 western european and latin american countries into the united nations global compact results indicate that the normative and mimetic mechanisms of institutionalization i e academe and peer influence are better indicators of sustainable development initiatives than the coercive one i e government regulation the implications of these findings are consequential if sd practices continue as an ethical choice and not a mandated obligation for corporate decision makers

selling two environmental services in kind payments for bird habitat and watershed protection in los negros bolivia abstract marketing several environmental services from a single area can help access diverse sources of funding and make conservation a more competitive land use in bolivia s los negros valley department of santa cruz bordering the amboro national park 46 farmers are currently paid to protect 2774 ha of a watershed containing the threatened cloud forest habitat of 11 species of migratory birds in this payment for environmental services pes scheme annual contracts prohibit tree cutting hunting and forest clearing on enrolled lands farmer landowners as service providers submit to independent yearly monitoring and are sanctioned for non compliance facilitated by a local ngo fundacion natura bolivia one service buyer is an international conservation donor the us fish and wildlife service interested in biodiversity conservation the second service users are downstream irrigators who likely benefit from stabilized dry season water flows if upstream cloud forests are successfully protected individual irrigators have been reluctant to pay but the los negros municipal government has on their behalf contributed us 4500 to the scheme the negotiated payment mode is annual quid pro quo in kind compensations in return for forest protection predominantly payments are made as contingent project implementation transferring beehives supplemented by apicultural training with regard to service provision environment committees and education programs have increased awareness in downstream communities of the probable water supply reduction effect of continued upstream deforestation external donors have funded subsequent studies providing basic economic hydrological and biodiversity data and covered pes start up us 40 000 and running transaction costs us 3000 per year over the last three years the greatest challenges in the development of the pes mechanism have been the slow process of building trust between service buyers and providers and in achieving clear service provision additionality

can the world cut poverty in half how policy reform and effective aid can meet international development goals abstract poverty in the developing world will decline by about one half by 2015 if the trends of the 1990s persist most of this poverty reduction will occur in asia however while poverty will decline only slightly in africa effective aid could make a contribution to greater poverty reduction in lagging regions even more potent would be significant policy reform in these countries we develop a model of efficient aid in which flows respond to policy improvements that create a better environment for poverty reduction and effective aid we investigate scenarios of policy reform and efficient aid that point the way to how the world can cut poverty in half in every major region

environmental audits as a policy of state 10 years of experience in mexico abstract the procuraduria federal de proteccion al ambiente or profepa was created to assist in the enforcement of mexico s environmental legislation the agency uses two strategies to enforce legislation command control which includes inspections and penalties and voluntary environmental audits this paper analyses data generated during the first decade of administration of the voluntary program the national program of environmental audits pnaa in 2764 audits mexican companies invested us 2 155 billon generating important investments to control pollution independent of macroeconomic parameters and a market related to the economic transition of mexico at the same time it produced positive consequences for the environment the pnaa lost popularity among large companies until it was restructured in 2001 providing less industrial risk but a stronger environmental orientation with these changes the pnaa attracted new industries permitted better administration and provided opportunities for companies and the government to measure the consequences of their activities on the environment risks and opportunities for the pnaa are discussed preliminary improvements concerning environment and workers safety are given

paying for environmental services an analysis of participation in costa rica s psa program summary costa rica has long been a leader among developing countries in the design of and experimentation with innovative environmental programs since 1997 costa rica s pagos de servicios ambientales payments for environmental services program has provided payments to more than 4 400 farmers and forest owners for reforestation forest conservation and sustainable forest management activities econometric analysis of a survey of farmers and forest owners including both psa participants and nonparticipants shows that farm size human capital and household economic factors and information variables significantly influence participation in psa program alternatives large farmers and forest owners are disproportionately represented among program participants

an institutional analysis of payments for environmental services abstract in this paper the characteristics and functioning of pes is analyzed from an institutional perspective while in theory pes is seen as a market solution to environmental problems as an alternative to state hierarchical and community governance a review of a large amount of case studies shows that pes in practice depends rather fundamentally on state and or community engagement hence pes are foremost a reconfiguration of the roles of public bodies and communities becoming core intermediaries or buyers first to establish pes rights to the land that delivers the environmental service must be clarified this demands public action second transacting over environmental amenities is very costly creating markets for environmental services depends therefore crucially on state and community facilitation hence buyers are often public agencies high transaction costs also influence price setting payments do not follow the market format as intermediaries frequently are setting the price with users often being unaware even of the fact that they pay finally the distinction between payments as incentives and as fair compensations is emphasized while payments may strengthen community relations and simplify action for environmental care they may also introduce a purely instrumental logic and in some cases worsen the environmental status by crowding out environmental virtues for the future greater awareness of these dynamics is warranted

do developing country wto members receive more aid for trade aft since the world trade organization wto doha development agenda dda negotiations started in 2001 the importance of aid for trade aft has been well recognised as a useful tool for facilitating trade economic growth and social development in developing countries at the wto hong kong ministerial conference in december 2005 the aft initiative was launched and many high income member countries pledged to increase their aft contributions particularly for the least developed member countries ldc this paper aims to assess whether and to what extent the wto s developing member countries have received more aft for this purpose a system generalised method of moments is applied to a sample of 118 recipient countries for the period 2001 10 we find evidence that while ldc wto members on average receive relatively more aft than other developing countries the difference has not increased since launch of the aft initiative among the three categories of aft the positive wto membership effect for ldc members increased for building productive capacity and for trade policy and regulation but declined for infrastructure

poor household participation in payments for environmental services lessons from the silvopastoral project in quindio colombia as the use of payments for environmental services pes approaches in developing countries has grown concern has arisen over the ability of poorer households to participate this paper uses data from a pes project implemented in quindio colombia to examine the extent to which poorer households that are eligible to participate are in fact able to do so the project provides a strong test of the ability of poorer households to participate in a pes program as it required participants to make substantial and complex land use changes the results show that poorer households are in fact able to participate at levels that are broadly similar to those of better off households moreover their participation was not limited to the simpler least expensive options transaction costs may be greater obstacles to the participation of poorer households than household specific constraints

aid and performance a reassessment two visions of aid effectiveness and allocation are compared the first corresponding to the new aid paradigm argues that aid is only effective if domestic policies are appropriate the second in contrast argues that aid effectiveness depends on the external and climatic environment the worse this environment or the more vulnerable the recipient countries the greater the effectiveness of aid cross sectional econometric tests related to gdp growth on two 12 year pooled periods clearly favour the second view the two views can be reconciled through the principle of performance based aid allocation where performance is defined as outcomes adjusted for the impact of environmental factors performance can then be measured in several manners which are subject to comparison one approach would lead one to allocate more aid the worse the external environment is for a given policy and the better the policy is for a given environment

the construct validity of the kinder lydenberg domini social performance ratings data carroll 1991 encouraged researchers in social issues management sim to continue to measure corporate social performance csp from a variety of different perspectives utilizing a variety of different measures in addition wolfe and aupperle 1991 and others have asserted that there is no single best way to measure csp and that multiple measures and perspectives help develop the field however pfeffer 1993 suggest that a lack of consistent measurement has constrained organization studies and by implication the field of social issues management in its development as a field it may be in the best interest of social issues management researchers to try to development a common body of measures and data recently kinder lydenberg and domini co kld a social choice investment advisory firm has made available their social performance database the kld data have potential to become a widely accepted set of csp measures the purpose of this paper is to present a construct validity study comparing the kld data to other measures of csp

testing participation constraints in contract design for sustainable soil conservation in ethiopia abstract this paper focuses on contract design to improve the incentive structure of current coordination mechanisms related to sustainable land use management in the ethiopian highlands the main objective is to assess whether and if so under which terms and conditions rural households are willing to enter into contractual agreements to invest in soil conservation measures on their land participation constraints are tested under different soil erosion and institutional economic conditions in a choice experiment targeting 750 rural households we show that contracts provided by local government peasant associations offering additional credit land use security and extension services could be an effective means to increase the share of farmers implementing soil conservation measures however trust in contract terms and conditions appears to play an important role farmers living in the most erosion prone areas are most likely to participate while farmers taking soil conservation measures already are less likely to enter into a contractual agreement with the local government farmers not taking soil conservation measures will only do so if the contract price is lower than or equal to the income losses suffered from soil erosion

trust and social collateral this paper builds a theory of trust based on informal contract enforcement in social networks in our model network connections between individuals can be used as social collateral to secure informal borrowing we define network based trust as the largest amount one agent can borrow from another agent and derive a reduced form expression for this quantity which we then use in three applications 1 we predict that dense networks generate bonding social capital that allows transacting valuable assets whereas loose networks create bridging social capital that improves access to cheap favors such as information 2 for job recommendation networks we show that strong ties between employers and trusted recommenders reduce asymmetric information about the quality of job candidates 3 using data from peru we show empirically that network based trust predicts informal borrowing and we structurally estimate and test our model

where do the poor live this paper argues that the distribution of global poverty has changed and that most of the world s poor no longer live in countries officially classified as low income countries lics it is estimated that the majority of the world s poor or up to a billion people live in middle income countries mics this pattern is largely as a result of the recent graduation into the mic category of a number of populous countries the paper discusses the trends in the distribution of global poverty and opens a wider discussion on the potential implications for aid and development cooperation

darlings and orphans interactions across donors in international aid we examine how bilateral aid flows of an individual donor to a recipient depend on aid flows from all other bilateral and multilateral donors to that recipient we thereby assess to what extent issues including donor coordination free riding selectivity specialization and common donor interests drive bilateral aid allocations we find that others bilateral flows lead to a significant increase in aid flows from a particular donor but primarily within a given year the effects are particularly pronounced for large donors and so called darling recipients overall the results suggest that herding is a dominant feature of aid inter relationships this article is protected by copyright all rights reserved

a paradox of redistribution in international aid the determinants of poverty oriented development assistance summary donors differ in the amount of official development assistance dedicated to poverty reduction we investigate the causes of variation over time and donors by employing both a regression approach with aggregate data on bilateral aid and two short country studies on germany and the united kingdom we find that there is a trade off between the total amount of money given and the amount of money given to poor countries the trade off is similar to the paradox of redistribution of targeting vs redistribution in rich welfare states case study evidence illustrates how countries have managed this tradeoff

nafta and the environment what can the data tell us abstract critics of trade liberalization agreements such as the north american free trade agreement nafta have expressed concerns that polluting industries will locate in developing countries to evade more stringent regulation with adverse environmental consequences a study of nafta s effects on u s mexico trade finds that despite differences in the stringency of u s and mexican environmental policies nafta did not cause mexico to specialize in dirtier industries between 1989 and 1999 regarding the location of manufacturing production during the nafta transition although growth was fastest in the congested mexican border region growth declined in the congested central region and increased in the less congested interior region with all regions shifting toward less polluting industries most of the observed measures of air quality in the border region which can serve as an indicator of nafta s short term scale effects do not exhibit significant breaks in their trend of improvement

tying odysseus to the mast evidence from a commitment savings product in the philippines we designed a commitment savings product for a philippine bank and implemented it using a randomized control methodology the savings product was intended for individuals who want to commit now to restrict access to their savings and who were sophisticated enough to engage in such a mechanism we conducted a baseline survey on 1777 existing or former clients of a bank one month later we offered the commitment product to a randomly chosen subset of 710 clients 202 28 4 percent accepted the offer and opened the account in the baseline survey we asked hypothetical time discounting questions women who exhibited a lower discount rate for future relative to current trade offs and hence potentially have a preference for commitment were indeed significantly more likely to open the commitment savings account after twelve months average savings balances increased by 81 percentage points for those clients assigned to the treatment group relative to those assigned to the control group we conclude that the savings response represents a lasting change in savings and not merely a short term response to a new product

present bias predicts participation in payments for environmental services evidence from a behavioral experiment in uganda farmers are necessary agents in global efforts to conserve the environment now that croplands and pastures together constitute the largest terrestrial system on earth covering some 48 of ice free land surface whereas standard economic models predict that farmers will participate in conservation programs so long as they are profitable empirical findings from behavioral economics point to a number of normally unobservable preferences that may influence the decision making process this study tests for the first time whether heterogeneity in behavioral preferences correlates with decisions to participate in payments for environmental services pes programs we elicit individual trust and time preferences using economic experiments and link resulting measures to household survey data and participation decisions in a ugandan pes program we find that farmers who exhibit a preference for proximate gains present biased preferences are 47 7 more likely to participate in the program than those who show time consistent or future biased preferences this result has implications for ongoing and planned pes programs involving farmers particularly in africa by highlighting a potential relationship between payment timing and participation and further validates the use of behavioral experiments in explaining real world decisions

aid allocation and poverty reduction the authors derive a poverty efficient allocation of aid and compare it with actual aid allocations they build the poverty efficient allocation in two stages first they use new world bank ratings of 20 different aspects of national policy to establish the current relationship between aid policies and growth onto that they add a mapping from growth to poverty reduction which reflects the level and distribution of income they compare the effects of using headcount and poverty gap measures of poverty they find the actual allocation of aid to be radically different from the poverty efficient allocation in the efficient allocation for a given of poverty aid tapers in with policy reform in the actual allocation aid tapers out with reform in the efficient allocation aid is targeted disproportionately to countries with severe poverty and adequate polices the type of country where 74 percent of the world s poor live in the actual allocation such countries receive a much smaller share of aid 56 percent than their share of the world s poor with the present allocation aid is effective in sustainably lifting about 30 million people a year out of absolute poverty with a poverty efficient allocation this would increase to about 80 million people even with political constraints introduced to keep allocations for india and china constant poverty reduction would increase to about 60 million reallocating aid is politically difficult but it may be considerably less difficult than quadrupling aid budgets which is what the authors estimate would be necessary to achieve the same impact on poverty reduction with existing aid allocations

estimating time preferences from convex budgets experimentally elicited discount rates are frequently higher than what seems reasonable for economic decision making such high rates are often attributed to present biased discounting a well known bias of standard measurements is the assumption of linear consumption utility attempting to correct this bias using measures of risk aversion to identify concavity researchers find reasonable discounting but at the cost of exceptionally high utility function curvature we present a new methodology for identifying time preferences both discounting and curvature from simple allocation decisions we find reasonable levels of both discounting and curvature and surprisingly dynamically consistent time preferences jel c91 d12 d81 understanding and estimating time preferences is obviously of great importance to economists marketers and policy makers consumers decide how much to invest in savings education real estate and life insurance how much to diet exercise and smoke whether to marry when to have children and what to leave in their wills while there has been substantial research estimating time preferences using aggregate consumption data 1 the bulk of the effort has occurred in laboratory environments 2 among the many laboratory techniques employed recent studies have favored multiple price lists mpl with monetary payments 3 with mpls individuals are asked multiple times to choose between smaller payment amounts closer to the present and larger amounts further into the future the interest rate increases monotonically in a price list such that the point where an individual switches from preferring sooner payments to later payments carries interval

participation in the world s first clean development mechanism forest project the role of property rights social capital and contractual rules abstract clean development mechanism cdm forest projects are perceived as an attractive way to both help mitigate climate change and transfer income to rural poor however to engender participation of small scale producers a cdm forest project must offer sufficient incentives while minimizing their costs of participation all the while respecting the need for additionality property rights social capital and contractual rules are critical in the success of cdm forest projects in this paper we ask what factors affect participation in the world s first cdm project established in guangxi province china using village level surveys we find that although the project facilitates participation through carbon pooling and a share holding system much of the project land remains unforested we find that the primary reasons for the unforested regions are constrained contractual rules property rights allocation disputes and low levels of social capital in some villages

reconciling theory and practice an alternative conceptual framework for understanding payments for environmental services article i nfo this article provides an alternative and novel theoretical approach to the conceptualization and analysis of payments for environmental services pes we devote special emphasis to institutional and political economy issues which have been somewhat neglected in the literature on pes we argue that the coasean and pure market approach dominating the conceptualization of pes in the literature cannot be easily generalized and implemented in practice by contrast taking into account complexities related to uncertainty distributional issues social embeddedness and power relations permits acknowledging the variety of contexts and institutional settings in which pes operate the alternative approach presented in this introductory article to the special section may be more appealing to pes practitioners since while avoiding restrictive and prescriptive standpoints it allows some key sources of complexities they usually deal with on the ground to be more easily understood

risk preferences are not time preferences risk and time are intertwined the present is known while the future is inherently risky this is problematic when studying time prefer ences since uncontrolled risk can generate apparently present biased behavior we systematically manipulate risk in an intertemporal choice experiment discounted expected utility performs well with risk but when certainty is added common ratio predictions fail sharply the data cannot be explained by prospect theory hyperbolic discounting or preferences for resolution of uncertainty but seem consistent with a direct preference for certainty the data suggest strongly a difference between risk and time preferences jel c91 d81 d91 understanding individual decision making under risk and over time are two foundations of economic analysis 1 in both areas there has been research to suggest that standard models of expected utility eu and exponential discounting are flawed or incomplete regarding time experimental research has uncovered evidence of a present bias or hyperbolic discounting frederick loewenstein and o donoghue 2002 regarding risk there are number of well documented departures from eu such as the allais 1953 common consequence and common ratio paradoxes an organizing principle behind expected utility violations is that they seem to arise as so called boundary effects where certainty and uncertainty are combined camerer 1992 harless and camerer 1994 and starmer 2000 indicate that violations of expected utility are notably less prevalent when all choices are uncertain this observation is especially interesting when considering decisions about risk taking over time in particular certainty and uncertainty are combined in intertemporal decisions the present is known and certain while the future is inherently risky this observation is problematic if one intends to study time preference in isolation from

risk preferences are not time preferences reply can the well known experimental phenomenon of present bias in intertemporal choice be confounded with the risks associated with receiving payment can measurements of risk preferences be used to represent desires for smoothness in intertemporal payments in our two 2012 papers in this journal we explored these two questions and found the answer to the first to be yes and the second to be no we feel the three papers inspired by our work and published here underscore these arguments and point to interesting new possibilities for modeling and measuring risk over time jel c91 d81 d91

payments for environmental services in watersheds insights from a comparative study of three cases in central america we have compared three cases of payments for water related environmental services pes in central america in terms of socioeconomic background opportunity costs of forest conservation and stakeholders perceptions of the conditions of water resources and other issues we found that in general the opportunity costs are larger than the amounts paid which apparently contradicts the economic foundation of pes schemes and suggests that the role of intangibles is important in inducing participation the results also show that trade offs between different environmental and social goals are likely to emerge in pes schemes posing some doubts as to their ability to be multipurpose instruments for environmental improvement and rural development we also found that pes schemes may work as a conflict resolution instrument facilitating downstream upstream problem solving though at the same time they might introduce changes in social perceptions of property rights