An Economic Analysis of the UK Landfill Permits Scheme

The UK will introduce in 2004 a system of tradable permits for the landfill of municipal waste, in response to an EU directive setting limits on such activity. Tradable permits are becoming an increasingly popular method of dealing with some environmental issues — for example, sulphur dioxide (SO2) emissions in the USA. This paper describes the background to the landfill proposals and provides an analysis of how the permit system might work. Estimates are made of the possible savings in compliance costs of a permit system compared with a conventional ‘command–and–control’ approach. These estimates are subject to a considerable degree of uncertainty, related to factors discussed in the paper.     

Markets and pro-poor agricultural growth: insights from livelihood and informal rural economy models in Malawi

This article presents the development of a set of programming models describing the major features of different rural livelihoods and of the informal rural economy they together make up in Malawi. The models allow for differentiated responses by different household types to change and for the partial equilibrium effects of consequent supply, demand, and price adjustments in labor and grain markets. The models provide insights into the relations between own‐farm and nonown‐farm activities in different households' livelihoods and in the informal rural economy as a whole, and are used to investigate possible impacts of increasing cash crop prices and of a more open rural economy. Impacts of these changes on the poor are found to be critically dependent upon supply and demand elasticities in labor and grain markets, but the poor could potentially suffer significant losses from increased openness of the local economy leading to increased expenditure by less poor households on imported goods and services.     

Intertemporal Equity and Hartwick's Rule in an Exhaustible Resource Model*

In a standard exhaustible resource model, it is known that if, along a competitive path, investment in the augmentable capital good equals the rents on the exhaustible resource (known as Hartwick's rule), then the path is equitable in the sense that the consumption level is constant over time. In this paper, we show the converse of this result: if a competitive path is equitable, then it must satisfy Hartwick's rule.     

Policy reform and productivity change in Chinese agriculture: A distance function approach

Agricultural policy reform has been an important source of change in the Chinese agricultural sector. The reforms led to productivity growth and helped China to pursue its self-sufficiency goal especially in the grain sector. In order to analyze whether observable productivity growth stems from technologically induced components or from the market induced parts, a multi-input–multi-output model is derived by using an econometric distance function framework. A decomposition allows to distinguish allocative effects, scale effects, technological change, and technical efficiency change. Data on farms in Zhejiang from 1986 to 2000 are used to analyze the impact of policy reform.     

Comparative Advantage in Demand: Experimental Evidence of Preferences for Genetically Modified Food in the United States and European Union

The United States (US) exports more than US$6 billion in agricultural commodities to the European Union(EU) each year, but one issue carries the potential to diminish this trade: use of biotechnology in food production. The EU has adopted more stringent policies towards biotechnology than the US. Understanding differences in European and American policies towards genetically modified (GM) foods requires a greater understanding of consumers’ attitudes and preferences. This paper reports results from the first large‐scale, cross‐Atlantic study to analyse consumer demand for genetically modified food in a non‐hypothetical market environment. We strongly reject the frequent if convenient assumption in trade theory that consumer preferences are identical across countries: the median level of compensation demanded by English and French consumers to consume a GM food is found to be more than twice that in any of the US locations. Results have important implications for trade theory, which typically focuses on differences in specialization, comparative advantage and factor endowments across countries, and for on‐going trade disputes at the World Trade Organization.     

China's regional income disparityAn alternative way to think of the sources and causes1

Using data on China's provincial economies for the period 1978–2005, we decomposed the causes and factors that have contributed to inter‐regional per capita income disparity. Variance in capital per employee and variance in capital elasticity are found to be the two main sources of income disparity while the employment–labour force ratio is shown to be an important factor in containing the rise of income disparity. An analysis on inter‐regional factor reallocation effects reveals their relatively small and insignificant contributions to overall growth performance. It is also discovered that capital has in most years flowed in the right direction to pursue higher marginal productivity across provincial economies. Inter‐provincial labour movement, on the other hand, had not displayed significant equilibrating effects until institutional reforms started to allow freer inter‐regional labour mobility in later years. Generally, we conclude that market‐oriented factor mobility has played a crucial role in equalizing factor returns as well as enhancing growth efficiency across regions.     

Does individualization help productivity of transition agriculture?

There are large differences across transition countries with respect to agricultural‐sector performance and corresponding scope of farm restructuring and shift to individual farming. In this article we analyze the impact of individualization on productivity growth within an augmented neoclassical growth model framework. This approach allows us to circumvent criticisms on the grounds of lack of theoretical and objective criteria for inclusion of explanatory variables. Furthermore, in the empirical analysis using a panel data covering 15 transition countries over the period 1990–2001 and applying a generalized method of moments with instrumental variable estimator we are able to control for the impact of various factors and the potential endogeneity of variables. Our estimation results are robust and support the view that the shift to individual farming, as well as the overall economic reforms, has positively contributed to the productivity growth in agriculture during the first decade of transition.     

Indonesian Local Government Spending,Taxing and Saving: An Explanation of Pre‐ and Post‐decentralization Fiscal Outcomes*

As a result of Indonesia's decentralization program, local governments have gained significantly more responsibility for service delivery, considerably larger fiscal resources, and much greater authority over the use of those resources than before. The present paper develops a simple budget model to describe and explain the substantial differences in pre‐ and post‐decentralization local government fiscal behavior related to spending, taxing and saving. During the post‐decentralization period special attention is paid to the fiscal behavior of natural resource rich regions. Among other things, the evidence suggests that: post‐decentralization local government spending is partly responsive to increasing needs and partly the subject of elite capture; local government taxation has become more aggressive under decentralization and appears to be mostly driven by local bureaucratic expectations related to routine overhead budgets; and the increased savings of local governments during the post‐decentralization period is determined to a large degree by delayed central government transfer payments.