empathy conditioned conservation walking in the shoes of others as a conservation farmer conservation tillage on farms can improve downstream water quality using a dual interests theoretical framework guided by the metaeconomics approach this paper examines the role of self interest and shared other interest in the conservation tillage adoption decision the data is from a 2007 survey of farmers in the blue river tuttle creek watershed of nebraska and kansas logit models show that farmers who temper their pursuit of self interest with shared other interest reflecting empathy sympathy are more likely to adopt conservation tillage habit and control also play a role farmers pursue a joint and interdependent own interest and not only self interest as presumed in microeconomics

the ambiguous impact of inequality on local resource management abstract the impact of inequality on the ability of human groups to undertake successful collective action is investigated with special reference to overexploitation of common property resources in voluntary provision problems on the one hand inequality has an ambiguous impact on the feasibility of the efficient outcome even though better endowed agents contribute more to collective action in regulated settings on the other hand inequality tends to reduce the acceptability of available regulatory schemes and therefore to make collective action more difficult

how can market mechanisms for forest environmental services help the poor preliminary lessons from latin america summary market mechanisms for forest environmental services are a new approach for conservation but there is also an increasing interest in the derived developmental benefits of these mechanisms we first propose a conceptual framework for future research on the livelihood impacts of environmental service markets we then review eight latin american case studies on carbon sequestration and watershed protection market initiatives finding positive local income effects in most cases more land tenure security and socioinstitutional strengthening in some cases but some negative effects also we recommend pro poor policy measures such as reducing smallholders transaction costs and removing inappropriate access restrictions

oil and the macroeconomy a markov state switching approach this paper analyzes the relationship between oil price shocks and postwar u s business cycle fluctuations the authors develop a generalized markov switching model of output that includes a measure of net real oil price increases and examine the capabilities of this variable to generate shifts in the mean of gdp growth and to predict transitions between dichotomous growth phases the results indicate that while the behavior of oil prices has been a contributing factor to the mean of low growth phases of output movements in oil prices generally have not been a principal determinant in the historical evidence of these phases copyright 1997 by ohio state university press

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

payments for environmental services as an alternative to logging under weak property rights the case of indonesia decentralization reforms in indonesia have led to local communities negotiating logging agreements with timber companies for relatively low financial payoffs and at high environmental cost this paper analyzes the potential of payments for environmental services pes to provide an alternative to logging for these communities and to induce forest conservation we apply a game theoretical model of community firm interactions that explicitly considers two stylized conditions present in the indonesian context i community rights to the forest remain weak even after decentralization and ii the presence of logging companies interested in the commercial exploitation of the forest intuition may suggest that pes design should focus on those communities with the lowest expected payments from logging deals however we show that these communities may not be able to enforce a pes agreement i e they may not be able to prevent logging activities by timber companies moreover some communities would conserve the forest anyway in these cases pes would not lead to additional environmental gains most important the introduction of pes may increase a community s expected payoff from a logging agreement a failure to consider this endogeneity in expected payoffs could lead to communities opting for logging agreements despite pes simply allowing communities to negotiate better logging deals our results indicate that pes design is a complex task and that the costs of an effective pes system could potentially be much higher than expected from observing current logging fees using data collected in indonesia on actual logging fees received by communities we illustrate how the theoretical results could be used in empirical analysis to guide pes design our results are likely to be useful in other cases where local people make resource use decisions but have weak property rights over these resources and where external commercial forces are present the results highlight the importance of understanding the details of the local context in order to design pes programs appropriately

on the dynamic effects of oil price shocks a study using industry level data abstract this paper analyzes the effects of oil price shocks on demand and supply in various industries the impulse responses of identified var models indicate that for industries that have a large cost share of oil such as petroleum refinery and industrial chemicals oil price shocks mainly reduce supply in contrast for many other industries with the automobile industry being a particularly important example oil price shocks mainly reduce demand the paper suggests that oil price shocks influence economic activities beyond that explained by direct input cost effects possibly by delaying purchasing decisions of durable goods

economic growth inflation and oil shocks are the 1970s coming back this article analyses the relationship between oil price shocks and the macroeconomic evolution of the group of seven g7 countries using the qu and perron 2007 methodology we endogenously identify three breaks in the nonlinear relationship across our 1970 to 2008 sample we compute long term multipliers and find that the response of output and inflation to oil price shocks is greatest in the 1970s and progressively disappears until the late 1990s in contrast to the previous literature we observe that both effects reappear in the 2000s especially on inflation nevertheless the transmission of oil price shocks to the economy is weaker than in the 1970s which means that oil price shocks have lost some of their explanatory power precisely identifying these effects is crucial for the design of adequate economic measures to control or smoothen them

incentives for cooperation the effects of institutional controls on common pool resource extraction in cambodia cooperation among humans is highly dependent on social and institutional conditions with individual incentives playing a key role in determining the level of cooperation achieved understanding the conditions under which cooperation can emerge has important implications for the design of resource management and wildlife conservation interventions incentive based conservation approaches are being widely implemented yet very few studies test the role of incentives in promoting cooperation in relevant developing country contexts using a common pool resource game in four villages in cambodia we investigated how the level of within group cooperation varies under different institutional arrangements including opportunities for social approval external enforcement of rules and individual and collective incentive payments our results demonstrate the significance of self organisation the ability to devise monitor and enforce a set of rules among resource users treatments which promoted self organisation had the greatest effect in reducing individual extraction achieved the greatest efficiencies and had the strongest interaction with group decision making in reducing extraction the effects of these treatments carried over to reduce extraction in subsequent treatments irrespective of their institutional arrangements these results suggest that policies designed to incentivise certain behaviour in local stakeholder groups may be more successful if they create opportunities for local decision making

swimming upstream local indonesian production networks in globalized palm oil production summary when agricultural commodities in developing countries experience an economic boom they offer potential pathways out of poverty while creating environmental and social problems while recent research provides insights into the governance of international supply chains it provides less analysis of the local production networks creating critical problems indonesia is now the world s largest exporter of crude palm oil this paper analyses processes of oil palm development in three oil palm districts it considers how policy models regime interests and agribusiness strategies shape local production networks generate local outcomes and affect the possibilities of tackling issues associated with this boom

direct conservation payments in the brazilian amazon scope and equity implications abstract this article looks into the scope and equity implications of applying payments for environmental services pes as a redd implementation mechanism in the brazilian amazon we establish a set of economic and institutional preconditions for pes to become a feasible and cost effective conservation mechanism we proceed with a macro scale spatial analysis and overlay of opportunity costs deforestation patterns carbon services and land tenure in order to assess where these conditions hold we then screen how the benefits of potential pes schemes might be distributed across different socioeconomic groups of service providers in different land tenure categories our economic quantitative analysis though sensitive to documented assumptions suggests that under current carbon prices the economic preconditions are in place to pay for avoided deforestation in over half of threatened forests over the next decade unfortunately the same optimism does not apply to institutional preconditions land grabbing insecure tenure overlapping claims and lacking information on private tenure constitute real medium term impediments to pes if payments were to accrue to current landholders regardless of current tenure insecurities large landowners who account for about 80 of all deforestation would reap the highest benefits though per capita benefits other tenure categories are also high schemes that closely align payments with opportunity costs are preferable for cost effectiveness and not necessarily more inequitable in outcomes essentially pes systems cannot substitute command and control measures the former depend on the latter for basic governance systems to secure effective rights of exclusion which land stewards essentially need in order to become reliable service providers

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

conservation versus equity can payments for environmental services achieve both this paper investigates the trade off between conservation and equity considerations in the use of payments for environmental services pes that implicitly incorporate different distributive justice principles using a public good experiment with heterogeneous participants we compare the effects on additional area conserved and distribution of earnings of two pes schemes an equal payment and a payment based on rawls distributional principle which we refer to as maxi min payment scheme the main findings of the framed field experiment conducted in jambi province indonesia indicate that the introduction of a maxi min pes scheme can function as a multi purpose instrument it realigns the income distribution in favor of low endowed participants and does not necessarily need to be compromised by lower environmental additionality at the group level

what happened to the oil price macroeconomy relationship abstract strong evidence is found that oil prices no longer granger cause many u s macroeconomic indicator variables in data after 1973 a number of potential explanations are explored that sample stability issues are responsible that oil prices are now endogenous and that linear and symmetric specifications misrepresent the form of the oil price interaction none of these hypotheses are supported by the data the opec price increases do appear to have had significant impacts while the effects of the price declines of the 1980s are smaller and harder to characterize these results have potentially important implications for the large body of research which utilizes oil prices as an instrumental or explanatory variable

can payments for environmental services help reduce poverty an exploration of the issues and the evidence to date from latin america summary this paper examines the main ways in which payments for environmental services pes might affect poverty pes may reduce poverty mainly by making payments to poor natural resource managers in upper watersheds the extent of the impact depends on how many pes participants are in fact poor on the poors ability to participate and on the amounts paid although pes programs are not designed for poverty reduction there can be important synergies when program design is well thought out and local conditions are favorable possible adverse effects can occur where property rights are insecure or if pes programs encourage less labor intensive practices 2004 elsevier ltd all rights reserved

socio ecological explanations for crowding out effects from economic field experiments in southern africa abstract economic and psychological literature mentions three conditions under which the crowding out effect of pro social behaviour is likely to occur and to crowd out citizens moral obligations to behave co operatively i use a framed field experiment on joint extraction from a common pool resource cpr where the crowding out effect has already been reported before in combination with the trust game carried out in farming communities of namibia and south africa to replicate these conditions the research design and the cross cultural setting enable to explicitly control for these effects the results of the experiments support that the crowding out effect depends on the nature of the external intervention controlling vs supportive external intervention the degree of participants self determination high vs low self determination in the group a society s norms of trust and reciprocity high vs low trust within the society the results imply that outside regulations aiming to conserve natural resources risk worsening the situation when neglecting democratic legitimization as well as local community norms

this is what happened to the oil price macroeconomy relationship abstract many of the quarterly oil price increases observed since 1985 are corrections to even bigger oil price decreases the previous quarter when one looks at the net increase in oil prices over the year recent data are consistent with the historical correlation between oil shocks and recessions

how sensitive are consumer expenditures to retail energy prices abstract there is growing evidence that the primary effect of energy price shocks on the u s economy involves a reduction in consumer spending we quantify the direct effect on real consumption of unanticipated changes in discretionary income shifts in precautionary savings and changes in the operating cost of energy using durables the possibility of asymmetries in the response of real consumption to energy price shocks is also considered we demonstrate that linear models are consistent with the symmetric behavior of real consumption in 1979 when energy prices increased sharply and in 1986 when they fell sharply it is shown that historically energy price shocks have been an important factor in explaining u s real consumption growth but by no means the dominant factor

prosocial behavior and incentives evidence from field experiments in rural mexico and tanzania abstract incentive based schemes for natural resource conservation are based on the premise that offering payments to groups of land users will motivate them to organize collectively to provide environmental services in contrast research from behavioral economics shows that introducing monetary incentives can undermine collective action that is motivated by social norms in such a case payment could have perverse impacts in view of this dichotomy we conducted choice and field experiments in rural mexico and tanzania to test the response of prosocial behavior to incentives the field experiments involved voluntary participation in real communal tasks under different incentive structures findings suggest that payments help raise participation where people are otherwise uninterested but that participation in communal tasks can be high irrespective of the incentive if social norms favoring participation are present in tanzania high individual payments do not undermine participation although they appear to reduce people s satisfaction from the task relative to when there is no payment in mexico group payments made through village authorities yield lower participation where people distrust leaders challenges to conducting field experiments in our research settings limit what we can conclude from our work but the findings raise important points and suggest areas for further research

correlated default and financial intermediation financial intermediation naturally arises when knowledge about the aggregate state is valuable for managing investments and lenders cannot easily observe the aggregate state i show this using a costly enforcement model in which lenders need ex post incentives to enforce payments from defaulted loans and borrowers payoffs are correlated when projects have correlated outcomes learning the state of one project via enforcement provides information about the states of other projects a large correlated portfolio provides ex post incentives for enforcement as a result intermediation dominates direct lending intermediaries are financed with risk free deposits earn positive profits and hold systemic default risk

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

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

exploring the links between equity and efficiency in payments for environmental services a conceptual approach this paper addresses the relationship between equity and efficiency in pes schemes from a conceptual point of view emphasis is placed on the role of the institutional setting social perceptions about economic fairness or distributive justice of the payments uncertainty and interactions between agents including power relations we introduce the heuristic concept of the efficiency equity interdependency curve to illustrate potential combinations between equity and efficiency that may be theoretically possible the paper argues that different types of institutional factors determine which equity efficiency combinations may be potentially feasible influence the actual combination that will be achieved on the ground and condition possible changes in that combination due to exogenous factors by stressing the role of institutional aspects in shaping the equity efficiency relationship the paper attempts to go beyond the dominant coasean vision of pes