We describe the main insights from the papers included in this special issue, Challenges for the Development of Latin America in the Anthropocene: Current Research in Environmental Economics. The contributions are organized around three themes: the economic and welfare impacts of temperature variability, the role of institutions and user rights in shaping environmental governance and the effectiveness of regulatory instruments for managing ambient and atmospheric pollution. Together, these papers show that environmental outcomes in Latin America are deeply shaped by institutional capacity, governance quality and social inequality. By combining rigorous empirical analysis with attention to local contexts, they demonstrate how environmental economics can inform policy responses to the triple planetary crisis of climate change, biodiversity loss and pollution.

While a growing body of literature studies the effects of weather shocks on economic activity in low-income countries, relatively little is known about their impact on cross-border capital flows. This study investigates whether weather shocks, specifically deviations in precipitation and temperature from their long-term averages, trigger capital flight from Africa. Exploiting the variation in within-country exposure to weather shocks, we find that temperature shocks lead to increased capital outflows and trade misinvoicing. The long-run relationship between temperature and capital flight is conditional upon country-specific factors, such as reliance on oil exports, institutional frameworks and financial infrastructures. Our findings reveal a moderate role of state capacity in the relationship between weather shocks and capital flight, highlighting the need for further investigation into other potential mechanisms.

Changes like the shift of tropical forests into savannah in the Amazon highlight the potential for deforestation to drive ecosystems past potentially irreversible tipping points. Reforestation may avert or delay tipping points, but its success depends on the degree to which secondary and primary forests are substitutes in the production of ecosystem services. This article explores how deforestation, reforestation and substitutability between forest types affect the likelihood that a forest system will cross a tipping point. Efforts to ensure that secondary forests better mimic primary forests only yield a small improvement in terms of delaying ecosystem collapse. The most significant effects on tipping points arise from an increase in the relative costs of clearing primary forests or a decrease in the costs of protecting land tenure in secondary forests. Our results highlight the importance of the latter, which are often ignored as a policy target, to reduce the risk of ecosystem collapse.

It is widely recognized that local management of common pool resources can be more efficient and more effective than private markets or top-down government management, especially in remote rural communities in which the institutions may be weak or prone to elite capture. In this paper, we explore the propensity for cooperation in the management of local common resources by introducing a variant of a public goods game among remote rural communities in the state of Odisha, in eastern India. We explore various patterns of cooperation, including free riding behaviour, unconditional cooperation and conditional cooperation, in which individuals’ propensity toward cooperation is tied to their beliefs about the level of cooperation among their peers. We find that a significant portion of our sample fall into this latter category, but also that their expectations about the level of contributions among their peers are somewhat malleable.

Using a dynamic computable general equilibrium model that differentiates cropping activities and labour by sex and includes household home production, this study examines the effects of rainfall variability in Burkina Faso from both a macroeconomic perspective and a gender lens. The simulation of the annual rainfall pattern observed in the country over the past decade highlights its broad economic effects and confirms the greater sensitivity of female-led cropping activities. It also underscores the differential impacts on female and male workers in the labour market and within households, revealing the interactions between the non-market and market spheres of the economy when a rainfall shock occurs. Nevertheless, additional simulations suggest that promoting water management systems or more water-stress-resistant crop varieties could help mitigate the effects of rainfall variability and that targeted measures to support female farmers could effectively reduce their specific vulnerability.

The economic valuation of recreational ecosystem services is challenging due to difficulties in obtaining geo-tagged information of users. The objective of this study is to validate crowdsourced and user-generated content in order to predict visitation patterns to 16 national parks in Spain. The results may serve to encourage its utilization in the study of recreational demand in other countries, particularly developing countries, where on-site visitor information may be limited or expensive to gather. The present article employs a negative binomial regression model to evaluate the validity of two sources of data: Flickr and mobile phones. The accuracy of predictions exhibited variation across the 16 parks, indicating that site-specific characteristics, such as the seasonality of visitation patterns, may be of significance. The utilization of mobile phone data for modelling visitors yielded enhanced predictive capacity, as shown by the goodness of fit of the estimated models.

Climate change increasingly threatens human development, economic resilience and labour market stability. Using panel data from Chinese A-share listed firms (2007–2021), this study quantifies the employment impacts of extreme temperatures. A one-standard-deviation increase in exposure reduces employment by 0.07 per cent, equivalent to an average loss of 0.0054 workers per firm and 4.36 jobs across the sample. Extreme heat has a stronger effect than cold, with temperature bin analysis showing an average loss of 0.191 workers per firm and 15.565 jobs overall. Mechanism analyses indicate that extreme temperatures heighten operational risks and financial constraints, reducing labour demand. Internal and external buffers are identified: higher wages mitigate employment losses, government subsidies provide external support, while robot adoption and supply chain concentration show limited moderating effects. Heterogeneity analyses reveal greater vulnerabilities in underdeveloped, resource-dependent and climate-sensitive regions. Results emphasize the need for climate-adaptive policies to protect employment amid rising environmental risks.

We estimate the effect of temperature on the economic activity of Mexico utilizing 42 years of quarterly panel data of economic growth at the state level. Our findings elicit a concave relationship between economic growth and temperature that is maximized at around 20°C. Temperatures below or above this level are associated with lower growth rates. Temperature affects aggregate economic activity mainly through the effect it has on the growth of the primary and secondary sectors. In addition, the estimated sensitivity of economic growth to temperature has not decreased within our sample period which indicates that adaptation to climate change has been limited. When combining our panel estimates with temperature projections by the year 2100, our results suggest that quarterly economic growth might be reduced by 0.4 percentage points, on average, under an intermediate scenario of climate change with reductions as large as 1.0 percentage point during the spring and summer quarters.

While previous scientific literature has found evidence that warming winters result in a loss of crop yields, recent studies suggest that temperature alone may not be the sole factor in determining yields. In this study, we investigate multiple climatic factors (freezing degree days (FDD) and snow cover fraction) to evaluate the heterogeneous impact of snowpack insulation on winter wheat yields in China. We find that a unit increase in FDD causes a loss of 2.37 kg/hectare in winter wheat yields. Furthermore, our results show that snowpack insulation has a statistically significant negative effect on winter wheat yields at lower and middle quantiles, but a statistically significant positive effect at higher quantiles of the winter wheat yields distribution, suggesting that snowpack insulation is important in maintaining higher winter wheat yields.

Will rising temperatures from climate change affect labour markets? This paper examines the impact of temperature on hours worked, using panel data from Peru covering the period from 2007 to 2015. We combine information on hours worked from household surveys with weather reanalysis data. Our findings show that high temperatures reduce hours worked, with the effect concentrated in informal jobs rather than in weather-exposed industries. These results suggest that labour market segmentation may shape how climate change affects labour outcomes in developing countries.

This study examines the impact of environmentally oriented investments on firms’ integration into global value chains (GVCs). We use firm-level data in 41 countries from the Business Environment and Enterprise Performance Survey dataset and control for selection and endogeneity bias. Our findings reveal that the adoption of environmental protection actions boosts firms’ participation in GVCs. Measures reducing air pollution, followed by waste minimization techniques and energy management tools, yield the highest impact at both margins. Larger firms are more likely to experience a rise in their chances of participating in GVCs compared to their smaller counterparts. At the sectoral level, dirty sectors (such as plastics, construction and chemicals) are less likely to witness the positive impact of environment-friendly measures on GVC integration, given their production techniques that are CO2 and energy intensive. Finally, at the regional level, the effect of such environmental measures is more pronounced for firms located in European Union countries.

Policy making in areas of scientific uncertainty may be shaped by the public’s stated preferences (SP). SP surveys provide respondents with information about the scenario, typically from expert sources. Here, we tested whether respondents’ pre-existing confidence in the ability of experts in general to provide reliable information was associated with (a) status quo bias, (b) response certainty and (c) willingness to pay (WTP) estimates. Using 670 responses to a 2020 choice experiment on microplastic restrictions in the UK, we show that being ex ante more confident was significantly related to less frequent status quo choices and higher response certainty. However, we only observed differences in mean WTP for our ‘microplastics released’ attribute. Our findings suggest that confidence in expert-provided information shapes how respondents engage with SP surveys, particularly in contexts of scientific uncertainty. Future work to further understand determinants and consequences of perceived expert trustworthiness would be insightful.

Environmental outcomes can be shaped by underlying politics. This study investigates whether pre-determined election timings affect these outcomes by combining electoral data with remote sensing data on crop burning, forest fires, slash-and-burn activity, and tree cover for 28 major states (covering approximately 3800 assembly constituencies) in India from 2008 to 2019. Analysing 71 elections during this period reveals evidence of the presence of electoral cycles in environmental outcomes, with non-election years experiencing higher levels of environmentally harmful activities compared to election years. These cycles are more pronounced when the incumbent’s party wins without a supermajority in state elections. The study further shows that specific factors, such as high-yield crop varieties, poverty levels, and Scheduled Tribe population proportions, also shape these environmental outcomes across the electoral cycle.

This paper presents a theoretical framework to explain how firms strategically choose between truthful disclosure, greenwash (overstating environmental performance) or greenhush (deliberately under-communicating positive environmental actions). The analysis reveals that greenhush arises as an equilibrium when signalling costs exceed benefits from investor support, particularly when firms can secure sales without environmental claims. Greenwash emerges when penalties for false claims are insufficient relative to market premiums. Notably, increasing investor support for environmental initiatives reduces greenhush but may unintentionally promote greenwash rather than truthful disclosure without complementary regulatory mechanisms. The results suggest several policy strategies to promote truthful labeling: strengthening certification credibility by increasing the cost differential between legitimate and fraudulent certification, calibrating penalties to ensure separating equilibria and developing coordinated approaches that simultaneously target investor preferences andverification mechanisms.

This study examines the impact of temperature on human well-being using approximately 80 million geo-tagged tweets from Argentina spanning 2017–2022. Employing text mining techniques, we derive two quantitative estimators: sentiments and a social media aggression index. The Hedonometer Index measures overall sentiment, distinguishing positive and negative ones, while social media aggressive behavior is assessed through profanity frequency. Non-linear fixed effects panel regressions reveal a notable negative causal association between extreme heat and the overall sentiment index, with a weaker relationship found for extreme cold. Our results highlight that, while heat strongly influences negative sentiments, it has no significant effect on positive ones. Consequently, the overall impact of extremely high temperatures on sentiment is predominantly driven by heightened negative feelings in hot conditions. Moreover, our profanity index exhibits a similar pattern to that observed for negative sentiments.

We derive optimal road fuel taxes for gasoline, diesel and ethanol for Brazil. Fuel-related externalities, including carbon emissions and air pollution, and distance-related externalities, such as accidents, congestion and road damages, are added as Brazil has today no other way to effectively tax these components. A value-added tax (VAT) of 26.5 per cent is added to the tax for gasoline and ethanol, but not for diesel which is mostly an input and not final consumption. On this basis, we find that the optimal gasoline, diesel and ethanol taxes are US$1.03, 0.85 and 0.58 per litre, of which the respective carbon taxes, excluding VAT, are about US$0.14, 0.16 and 0.04 per litre given a carbon price of US$60 per ton of CO2. The largest externality component for gasoline and ethanol is accidents followed by congestion and carbon emissions. For diesel, air pollution is most significant, followed by accidents and congestion.

Public authorities often enforce pollution abatement through monitoring and penalties. However, monitoring is costly and only a small percentage of firms are monitored. Inspectors may be corrupt and permit evasion for a bribe. For firms in developing countries, it is expensive to enter formally and install costly abatement technologies, which are accessible only to formal firms. This paper studies a framework where firms, depending on abatement cost, the probability of inspection, the likelihood of a corrupt inspector and the bribe, choose whether to organize formally or informally and whether to abate before inspection. Firms that do not abate beforehand are liable to either pay a penalty and abate or close down post-inspection. Greater monitoring and lower abatement costs encourage firms to move towards formal organization, while excessively high penalties may discourage entry.

Different farmers require different compensation payments to be incentivized to participate in water quality improvement-related agri-environmental schemes (AESs) and payment for ecosystem services (PESs). This is because they differ in their farm management practices, cost structures and attitudinal characteristics. However, these differences are rarely characterized in the design and implementation of AESs and PESs in the Global South. Using a discrete choice experiment, we investigate farmers’ willingness to accept compensation to control agricultural nonpoint source pollution in the Limpopo River Basin of South Africa to observe whether these differences matter. Conditional, random parameter and latent class logit models are estimated. Our latent class logit model identified one random choice class (farmers making random responses) and three preference classes of farmers (low-, moderate- and high-resistance) with dissimilar compensation requirements to alter their status quo farm management practices to improve water quality. Gender, age, education, farming experience and secure tenure rights are key drivers of preference heterogeneity.

Governments offer resource user rights, such as individual and collective agricultural land rights, fishing quotas, and territorial user rights in marine activities, to induce economic development and efficient resource use. Yet, user rights and improved incomes do not always lead to project uptake, as in rural-rural migration. Marine user rights may differ from land tenure rights, especially when rights are individual or collective. We explore household survey data from Chile about participation in projects linking marine resource activities with user rights across payoff levels and commute/relocation ‘disruption’ costs. Households are more likely to participate in projects with low disruption costs and high incomes, yet many households reject lucrative projects. The household's existing user rights and the project's activity–rights pairs affect project participation levels, with differences across collective and individually-held rights. These results inform policy aimed at increasing incomes and resource use efficiency through marine resource projects with user rights.

We study monitoring and enforcement for environmental compliance in the context of a transitional economy. We estimate the factors correlated with inspections carried out by the Chilean Superintendence of Environment, the imposition of fines to detected violators and the compliance behaviour of regulated facilities. The analysis considers 6,670 facilities from different economic sectors between 2013 and 2019. We find evidence of targeted monitoring and enforcement actions based on past facilities’ behaviour and individual specific characteristics. The size of the implemented fines on detected violators correlates positively with the severity and recurrence of the violation and larger fines are imposed on facilities in the energy and mining sector. We also find that the imposition of fines is transmitted as a spillover effect on the compliance behaviour of facilities sharing the same firm owner. We discuss the policy implications for improving monitoring and enforcement strategies under budget constraints.