A comparative study of environmental amenity valuations

The paper reports on a comparative study of direct and indirect approaches to valuing environmental amenities (i.e., public goods), specifically, air quality in terms of its human health effects. The application of three indirect valuation methods (via market goods) is reported here: the health production method, a consumer preferences (for nonmarket goods) model, and the cost of illness method. The first and second methods are (economic) behavior-based approaches where willingness to pay for an environmental good is derived by exploiting relationships in consumption between the public good and market good(s). The third method is based on a physical relationship—a dose-response function—between the environmental good and health. The direct valuation approach encompassed three contingent valuation elicitation formats: open-ended, modified iterative bidding game, and referenda-style binary choice. The application of all four methods was based on data from a survey of a large, stratified sample of households from the Haifa metropolitan area in northern Israel. The estimates of welfare change derived by the various methods are discussed and compared.     

Current expenditure upswings in good times and public investment downswings in bad times? New evidence from developing countries

Anecdotal evidence suggests that policymakers usually cannot resist the temptation of spending more on current expenditure (e.g., wages, transfers) in good times and mostly pick public investment to adjust during bad times. In this paper, we answer the following questions: do current expenditures and public investment react differently to the business cycle? If so, why? In a sample of more than 100 developing countries and 30 developed countries observed between 1980 and 2014, a new empirical regularity specific to developing countries is identified: upswings are associated with increases in current primary expenditures only, while public investment falls and current spending remains acyclical during downturns. Evidence is also presented that this asymmetrical response is more pronounced in countries where incumbent politicians face shorter time horizons and weak institutions. Other types of determinants traditionally discussed in the literature have limited explanatory power.     

Is the fourth industrial revolution relevant to sub-Sahara Africa?

While the 4IR has the potential to impact on all industries and all nations, regardless of their location or state of development, many of the discussions of the 4IR and its impact are focused on advanced economies. What are the prospects and constraints of the 4IR to emerging economies in sub-Sahara Africa? To what extent is the 4IR relevant to sub-Sahara Africa where there is a large informal economy, limited public infrastructure, where technical skills levels are low, and advanced technology can be found in only a few sectors that are dominated by foreign multinational companies and staffed by expatriate workers? What is the relevance of policy development towards the 4IR in the region given its young population profile, and emerging skill shortages in key sectors? The paper draws on secondary literature to highlight the challenges and to identify the policy developments that have been developed in the region.     

Using job changes to evaluate the bias of value of a statistical life estimates

This paper presents a new approach to obtaining unbiased estimates of the value of a statistical life (VSL) with labor market data. Investigating job changes, we combine the advantages of recent panel studies, allowing us to control for unobserved heterogeneity of workers, and conventional cross-sectional estimations, which are less affected by measurement error. We find a VSL of 6.1 million euros from pooled cross-sectional estimation, 1.5 million euros from the first-differences panel model and 2.0 million euros from the job-changer specification. Thus, ignoring individual heterogeneity causes overestimates of the VSL, whereas the attenuation bias in panel data models leads to underestimates of the VSL. Our results are less biased than former results and can be used to perform cost–benefit analyses of public projects aimed at reducing fatality risks, e.g., in the domains of environmental, health, or traffic policy.     

Environmental policy in the European Union: Fostering the development of pollution havens?

A pollution haven occurs when dirty industries from developed nations relocate to developing nations in order to avoid strict environmental standards or developed nations imports of dirty industries expand replacing domestic production. The purpose of this study is to determine whether the European Union (EU) has increased its imports of “dirty” goods from poorer, less democratic countries during a period of more stringent environmental standards. Previous empirical studies such as those by Levinson and Taylor [Levinson, A., and Taylor, M.S., in press. Unmasking the Pollution Haven Effect. International Economic Review.], Ederington, Levinson and Minier [Ederington, J., Levinson, A., and Minier, J., 2005. Footloose and Pollution-Free. Review of Economics and Statistics., 87: 92-99.], Kahn and Yoshino (2004), and Ederington and Minier [Ederington, J., and Minier. J., 2003. Is Environmental Policy a Secondary Trade Barrier? An Empirical Analysis. Canadian Journal of Economics., 36: 137-54.] find evidence that United States imports are responsive to changes in environmental stringency, but the effects of EU policy have not been examined as thoroughly. Our study follows Kahn [Kahn, M.E., 2003. The Geography of Us Pollution Intensive Trade: Evidence from 1958 to 1994. Regional Science and Urban Economics., 33: 383-400.] and examines the impact of industry energy intensity and toxicity, measured by an energy index and a Toxic Release Inventory (TRI) index, on imports into the EU, at the 2-digit industry level from 1970 to 1999. We use the signing of the Maastricht Treaty to signify a period of more uniform and stringent community wide environmental standards (1993-1999), and identify the level of per capita GDP within an EU trading partner. We find an increased amount of EU energy intensive trade with poorer countries during the period with more stringent EU environmental standards. This result is not robust, however, when poorer countries are defined by OECD membership and geographic region. We do not find an increased amount of EU toxic intensive trade with poorer countries although there is some evidence of increased EU imports of toxic goods from poorer OECD and non-EU European countries. For our full sample of trading partners in all regions, the evidence supports the PHH for EU energy intensive trade, but not for toxic intensive trade. Results for regional trade analysis are less clear.     

Effects of permitted effluent limits on environmental compliance levels

This paper empirically analyzes the effects of permitted effluent limits on compliance levels - discharges relative to limits - at individual polluting facilities. In particular, it constructs and employs effluent limit-related regressors that measure the differences between the actual effluent limit level imposed on a particular facility for a given month and three benchmarks: federally-mandated standard for effluent limit level, a particular facility's average effluent limit level over a specified period (e.g., entire sample period), and preceding monthly limit at a particular facility (i.e., transition to new limit). By examining the effects of effluent limit levels as measured relative to these three benchmarks, this paper explores whether limit stringency affects compliance level choices (e.g., more stringent limits undermine compliance), whether adjustments to treatment are non-smooth (“lumpy”), and whether quick adjustments are difficult. Evidence of these possibilities would have meaningful implications for environmental protection policies.     

Public Pension Programs in Southeast Asia: An Assessment

This paper assesses public pension programs in select Southeast Asian economies (Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam – henceforth referred to as the SEA6) and the key issues facing them. The criteria used in assessing pension systems are the philosophy of pension design, the extent of coverage, investment policies and performance, and administrative and compliance costs. The paper argues that three broad reform directions to strengthen public pensions merit consideration. The first direction is to enhance the professionalism of the existing provident and pension fund organizations, including their governance practices. The second direction is to strengthen the role of noncontributory budget‐financed pensions (e.g. social pensions). The third is to adopt a systemic perspective to pension reform that includes reforms in complementary areas (labor markets, public financial management practices, and the civil service); developing a financing‐mix of pensions; and lastly, improving effective coverage by exploring complementarities between health care and pension programs.     

CONDITIONING AID ON SOCIAL EXPENDITURES

Aid conditionality forces countries to adopt policies that they would not otherwise choose. We examine how government discretion should be so constrained when the donor cannot fully control public expenditures, but instead can influence a less disaggregated indicator of public policy, namely the allocation of public spending between the social sectors (e.g. education, health, etc.) on the one hand and more traditional public goods (e.g. infrastructure) on the other. We first show how budget allocations will be altered when recipient government preferences are known – i.e. we characterize what policies the donor should "buy"– and how a given aid budget should be allocated between different types of countries. When recipient government preferences are not known by the donor, the permitted policies are distorted due to incentive constraints, and the extent to which aid flows are optimally differentiated between different countries is reduced.     

The Role of the Health System in Health Biotechnology in Developing Countries

This paper examines the role of local health systems in developing countries in health biotechnology innovation. The heath systems encompass the final users of health biotechnology products and services. In innovation studies in general, users have been identified as playing vital roles as sources for innovation and in shaping the innovation process. It is therefore of interest to cast light upon the role of users in the health biotechnology innovation in developing countries. This paper briefly reviews literature on science and technology based health innovation in both industrialised and developing countries. It then examines to what extent the focus of developing countries is on their local health problems and explores the linkages between the organisations involved in research and development of health biotechnology products and services with the local health system, and thereby identifies the main roles of their own health systems in the innovation process. The paper bases this analysis on research on publication patterns and case studies on leading developing countries in health biotechnology and focuses particularly on health biotechnology development in Brazil, Cuba and India.     

Shadow prices of environmental outputs and production efficiency of household-level paper recycling units in Vietnam

The production efficiency and shadow prices of three environmental outputs (BOD, COD, and SS) of 63 household-level paper-recycling units, from a recycling craft village in Vietnam, are assessed A two-stage procedure, linear programming and stochastic estimation, is used to estimate output distance function. Social capital as a production factor and environmental outputs are included in the output distance function. Results indicate that production efficiencies could potentially be improved by 28%. There is a substantial variation in the shadow prices of environmental outputs among the production units of different types of paper products. Furthermore, the average shadow prices of the three environmental outputs are all positive. This indicates a potential for improving environmental quality though introducing pollution-prevention methods to paper-recycling production processes in Vietnam (e.g., recirculation of wastewater), and suggests that it may be inappropriate to restrict the shadow prices of environmental outputs to be non-positive for the analysis of some production processes.     

ASSESSING THE PERFORMANCE OF THE PUBLIC SECTOR

ABSTRACT ** :  One is used to hearing harsh statements about inefficient public services. It is not surprising to see public sector performance questioned. What is surprising is that what is meant by performance, and how it is measured, does not seem to matter much to either the critics or the advocates of the public sector.
The purpose of this paper is to suggest a definition, and a way to measure the performance of the public sector or rather of its main components. Our approach is explicitly rooted in the principles of welfare and production economics. We will proceed in four stages. First of all we present what we call the 'performance approach' to the public sector. This concept rests on the principal-agent relation that links a principal, i.e., the State, and an agent, i.e., the person in charge of the public sector unit, and on the definition of performance as the extent to which the agent fulfils the objectives assigned by the principal. The performance is then measured by using the notion of productive efficiency and the 'best practice' frontier technique.
In the second stage we move to the issue of measuring the performance of some canonical components of the public sector (education, health care and railways transport), assuming that there is no constraint as to data availability. The idea is to disentangle the usual confusion between conceptual and data problems. In the third stage, we move to real world data problems. The question is then given the available data, whether it makes sense to assess and measure the performance of such public sector activities. The final stage is devoted to explaining performance or rather lack thereof. This exercise has clear implications for public policy.
Finally we argue that when the scope is not components but the entirety of the public sector, one should restrict the performance analysis to outcomes and not relate them to inputs.     

Environmental Degradation,Longevity, and the Dynamics of Economic Development

I construct a two-period overlapping generations model in which longevity is positively affected by public spending on health services and negatively affected by pollution. It is shown that the parameters which determine the extent of environmental degradation (i.e., emission rate and pollution abatement) may also represent additional factors affecting the dynamics of the economy, the likelihood of multiple (non-trivial) steady-state equilibria and the emergence of poverty traps. The distribution of public spending between public health care and pollution abatement that maximizes equilibrium income is also derived. This distribution of spending minimizes the threshold which the economy needs to surpass in order to avoid a poverty trap while, under certain circumstances, it can maximize equilibrium welfare as well.     

Valuations of Life and Injury Risks

A research on valuing risks to life and health in thecontext of a developing country is practicallynon-existent. This study provides the first estimatedvalues of life and health, using data from India.These values can aid policy makers, internationalagencies and researchers in evaluating health projectsin developing nations. They can also be used to carryout comparisons with values obtained for developedcountries.     

The design of a consumption tax under capital risk

This paper focuses on the design of a consumption tax in a world of capital risk. The certainty literature discusses two standard options, namely the cash flow method and the pre-payment method (i.e., the wage tax), and finds the two approaches to be equivalent. Models that consider capital risk (via asset choice) reach different conclusions. This discrepancy arises in part due to a different choice of the social discount rate. In light of the failure of the discount-rate argument to resolve the issue at hand, we explore the market certainty equivalence of risky government revenue. We let revenue risks stay in the private sector, and examine the market value of the feasible transfer (e.g., in the form of a public good) back to households. We reach three broad conclusions. First, we find that if the state returns to each household its own tax-revenue risks, equivalence will be re-established as in certainty models. Next, we show that if the state engages in intergenerational risk sharing (e.g., through a system of stochastic tax transfers), the wage tax cannot be construed to be a valid pre-payment alternative to the cash flow or a modified wage-tax-ation system. Efficient risk allocation across generations under a cash flow tax (or, one that includes future capital gains as well as wages in the tax base) leads to a Pareto improvement over the simple wage tax. Finally, a major policy implication follows; in order to be practicable, a consumption tax would have to be implemented via registered savings accounts much in the fashion of the Canadian registered retirement savings plans program rather than through the pre-payment route.     

Trends affecting the next generation of U.S. agricultural biotechnology: Politics, policy, and plant-made pharmaceuticals

This paper analyzes the structure and history of regulatory policies in the United States, focusing on recent regulatory changes due to the promise and threat posed by plant-made pharmaceuticals (PMPs). PMPs are the latest advance in the genetic engineering of plants and promise to produce medicines inexpensively and abundantly by using a range of different plants as factories to express active medicinal ingredients; however, PMPs may pose a risk to the public's health if they enter the food supply. How the benefits and risks of PMPs are addressed by the respective government's regulation and how this will affect what, if any, products make it to the marketplace and their ultimate success are of great concern to many different parties, ranging from consumers and farmers to health and food production industries. As a result, this paper addresses the history of agricultural biotechnology regulatory policy since 1972, arguing that three distinct periods may be identified: (1) from 1972 to 1986 when the new biotechnology was focused on scientific self-regulation in the laboratory; (2) from 1987 to 2002, as the technology was being developed and widespread release of certain technologies became more common and was not perceived as an environmental threat, regulations became increasingly laxer; and finally, (3) we argue that we are entering a third phase with a series of controversies over regulatory infractions involving genetically engineered (GE) plants and the potential threats posed by PMPs.     

Female political representation and substantive effects on policies: A literature review

The share of women in political offices has increased considerably over the past few decades in almost every country in the world. Does this matter for policy outcomes? This is the first paper to provide a literature review on the substantive effects of female representation on policies. In developing countries, the increase in female political representation has caused a better provision of public goods, especially with regard to education and health. In developed countries, higher female representation has not affected public policies as measured by spending patterns. However, more recent evidence shows that female representation has induced changes in parliamentary deliberations and specific policy choices (e.g. more public child care) that may not be reflected in the observable composition of public spending. Finally, higher female representation has improved institutional quality by reducing corruption and rent-extraction by those in power.     

Endogenous lifetime and economic growth

Endogenous mortality is introduced in a two-period overlapping generations model: probability of surviving from the first period to the next depends upon health capital that is augmented through public investment. High mortality societies do not grow fast since shorter lifespans discourage savings; development traps are possible. Productivity differences across nations result in persistent differences in capital-output ratios and relatively larger gaps in income and mortality. High mortality also reduces returns on education, where risks are undiversifiable. When human capital drives economic growth, countries differing in health capital do not converge to similar living standards, ‘threshold effects’ may also result.     

Energy in America's future

Energy in America's Future, the book reported on in this article, assembled facts and performed analyses required for making informed energy choices. It reached broad conclusions on supply and demand prospects and on the environmental and other social aspects of policy choices. Although near-term constraints are severely binding, the nation's natural resource position is favorable for long-run supply expansion. Future technologies are also promising in cost terms. Although costs are bound to rise, a ceiling on long-run supply costs looks to be possible at real levels surprisingly close to current prices. Energy consumption in relationship to overall national output (GNP) will be growing at a slower rate than in recent decades. Consumers will use relatively less energy as a result of higher energy prices, conservation incentives, and new energy-using technology. Even so, overall energy use will grow. Major energy demand policy issues concern not just the likely rate of growth of consumption, but also the possible problems connected with optimizing energy efficiency at the expense of economic efficiency (i.e., output in relation to all inputs, particularly those of labor and capital). Environmental impacts and concerns about questions of human health and safety will continue to affect public acceptance of particular energy technologies. The public will need to be adequately informed on the comparative risks of energy supply technologies, and the technical and institutional means available for reducing these risks. The price system must be permitted to function to the maximum feasible extent. In addition, the task for political leadership is to forge a public consensus in support of achievable energy goals. This has been difficult because of conflicting public perceptions of the facts and clashes in social values among different groups. The future prospects for achieving a national energy consensus should be enhanced by the outlook for slower energy demand growth and favorable supply prospects along with potential improvements in the environmental side effects associated with new and improved supply technologies. As knowledge of these changing circumstances becomes more broadly disseminated, the ability to achieve broad public support of energy goals should grow stronger.     

Does ecologically unequal exchange occur?

The hypothesis of ecologically unequal exchange posits that low and middle income developing nations maintain an ecological deficit with wealthy developed nations, exporting natural resources and high impact commodities thereby allowing wealthy economies to avoid operating ecologically impactful industries at home. In this survey we assess the footprint of consumption of 187 countries using eight indicators of environmental pressure in order to determine whether or not this phenomenon occurs. We use input–output analysis with a new high resolution global Multi-Region Input–Output table to calculate each trading pair's balance of trade in biophysical terms of: GHG emissions, embodied water, and scarcity-weighted water content, air pollution, threatened species, Human Appropriated Net Primary Productivity, total material flow, and ecological footprint. We test three hypotheses that should be true if ecologically unequal exchange occurs. One: The inter-regional balance of trade in biophysical terms is disproportional to the balance of trade in financial terms. We find this is true, though not strongly so. Two: Exports from developing nations are more ecologically intensive than those from developed nations. We find this is true. Three: High-income nations disproportionately exert ecological impacts in lower income nations. We find this is false: high income nations are mostly exporters, not importers, of biophysical resources.     

The influence of facility characteristics and permit conditions on the effectiveness of environmental regulatory deterrence

This paper analyzes the influence of facility characteristics and permit conditions on the effectiveness of regulatory pressure—stemming from inspections and sanctions—at inducing better environmental performance from individual polluting facilities. The study considers the influence of various facility characteristics, especially those relating to size and operation (e.g., capacity utilization), and permit conditions that vary across facilities (e.g., effluent limit level). To capture this influence, the paper analyzes the interactions between regulatory pressure and facility characteristics/permit conditions when estimating the level of environmental performance. The empirical analysis examines wastewater discharges by U.S. chemical manufacturing facilities for the years 1995–2001.