In this paper, we provide a general framework for dynamic macroeconomic models that incorporate history and context dependencies. Such features arise in several strands in the economic literature including habit formation based on consumption or other economic variables, decision theory, health economics, sports economics, environmental economics, and law and economics. Our approach introduces a memory function to account for how history is formed. This allows us to encompass a wide range of standard economic models while adapting to emerging modelings such as circular economy models. We establish the corresponding optimization results and develop dynamic programming tools so that the standard machinery can still be applied directly despite the specific difficulties induced by history-dependence.

This paper studies whether environmental enforcement powers should be assigned to central or regional authorities. We develop a two-stage model in which authorities choose inspection intensities under imperfect monitoring, then firms determine emissions and compliance behaviour. We show that centralized enforcement is generally more stringent unless there is a high level of heterogeneity across regions or authorities. Although decentralized enforcement may yield higher welfare when regional heterogeneity in inspection effectiveness is sufficiently large, moving from centralization to decentralization is not a Pareto improvement. We further show that when regional governments place relatively low weight on environmental quality, central and local authorities disagree over the preferred enforcement structure, generating potential intergovernmental conflict within environmental federalism.

Amid ecological civilization construction, coordinating environmental protection and economic development across administrative jurisdictions is increasingly urgent. As an important institutional arrangement for balancing inter-regional ecological interests, the effectiveness of the horizontal river basin ecological compensation policy is crucial for future watershed protection policy design. Based on a theoretical model, this study uses the multi-period difference-in-differences method to examine the policy's environmental and economic impacts on 529 county-level units in the Yellow River Basin. Results show that first, the policy significantly reduces pollutant emission intensity and promotes green economic growth in compensated regions. Second, it achieves environmental–economic synergy through industrial upgrading, technological innovation and energy conservation. Third, the synergy effect is stronger in areas with severe water pollution, gentle terrain and non-poverty status. Finally, fiscal transfer payments and human capital accumulation positively moderate this synergy. This study provides new implications for watershed governance and ecological compensation policy.

This study examines the intricate relationship between financial development, institutional quality and environmental efficiency. While financial development has the potential to support environmental sustainability, concerns remain regarding its unintended negative effects through unchecked economic expansion. The objective of this research is to investigate how financial development affects environmental efficiency and to assess the moderating role of institutional quality, particularly when financial development proxies reflect financial market accessibility and efficiency. Using a directional distance function within a stochastic frontier framework and incorporating multiple financial development indicators alongside measures of institutional quality, we find that financial development significantly reduces environmental inefficiency, with institutional quality strengthening this effect. These results highlight the importance of policy approaches that simultaneously enhance financial development and institutional quality. Furthermore, our findings support targeted initiatives such as promoting green finance, building institutional capacity and investing in research and data infrastructure to inform evidence-based policymaking for sustainable development.

Although forests play a vital role in US climate strategies, US forest area is expected to decline in the coming decades. Policymakers can help arrest or reverse that decline by strengthening incentives for forest carbon sequestration. Increased funding for afforestation, restoration, and bioenergy and wood products market development will likely benefit the forest sector unevenly across geographic, commercial, and demographic dimensions. This review explores the effects of policies – particularly incentives for afforestation and reforestation, carbon credit market participation, and wood products utilization – on US forest communities. We describe this policy landscape and use various data to investigate effects on diverse stakeholders, with special emphasis on the implications for disadvantaged and forest-dependent communities.

Afforestation policies in the South-Central region could significantly enhance carbon dioxide removal while reshaping rural dynamics. Forest carbon credit markets, though crucial for climate goals, may disadvantage small forest owners and communities, instead favoring large corporate entities. Policies promoting wood products in the South-Central region could benefit forest-dependent, high-poverty communities. We also note how policy implementation might ensure an equitable distribution of climate-related benefits among stakeholders in the forest sector.

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.

Over the last four decades, a broad stream of experimental literature has been published using the Common Pool Resource (CPR) game to study how people react to congestible resources, and how to keep such resources from socially harmful overexploitation. With the goal of providing guidance to future work on this still-important paradigm, we provide a narrative review of the literature, summarizing the results for several key aspects of the experimental operationalization. We classify these aspects into two broad categories. The first describes ‘environmental’ assumptions on the modeled resource problem itself. This refers to aspects of the experimental environment reflecting factors such as group size, resource size and asymmetry of access, which generally constitute the nature of the dilemma. The second category involves ‘institutional’ issues related to how people might solve the problem, such as user communication between subjects, information about previous subjects’ choices, and regulatory measures.

This paper investigates the factors that drive farmers’ simultaneous adoption of six water conservation practices (WCPs) and the intensity of their adoption. We estimate farmers’ adoption of these WCPs with a multivariate probit model, and for the intensity of their adoption, an ordered probit model is estimated. Our results show that gender, age, education, and farm size (among other factors) influence the probability and extent of adoption of WCPs. Furthermore, combinations like drip and/or sprinkler irrigations and cover cropping, drip and/or sprinkler irrigations and intercropping (among others) are complements, suggesting the bundling of these WCPs.

As its practitioners know well, benefit-cost analysis (BCA) walks a fine line between the positive and normative, between the science of economics and the art of political economy. Missteps threaten to undermine its credibility as a value-free science, while overcaution risks irrelevance to the pressing questions of the day. As BCA adapts to give more weight to distributional concerns, while operating in a more highly charged political environment than ever before, these tensions will only grow. For perspective, I reexamine three prominent episodes in the history of economics where these issues were vigorously debated: (i) The founding of the NBER by Wesley Clair Mitchell, who insisted that the organization eschew all policy recommendations; (ii) the introduction of the modern definition of economics as the study of tradeoffs by Lionel Robbins, who insisted welfare effects could never be aggregated; and (iii) the origins of BCA as a measure of income, which to first-generation practitioners seemed to foreclose the possibility of measuring “intangible” benefits like recreation opportunities, mortality risks, and equity. These episodes, together with critiques of economics from philosophers of science, suggest we are best served by being as transparent as possible about the ways values influence BCA reasoning, without arrogating political decisions into it.

Green rooftops, also known as vegetated roofs, will play a critical role in enhancing the resilience of urban areas in the face of climate change and other contemporary environmental and social challenges. To ensure the optimal design and implementation of these green technologies, it is vital to understand the public’s preferences, values, and attitudes toward the government support for green rooftops. This study employs contingent valuation methods, specifically utilizing a payment card and a choice experiment, to investigate these topics that have received inadequate exploration within the current body of literature. Our findings indicate that 45% of the public is aware of green rooftops, and the most desired features on an extensive green rooftop, ranked by importance, are: flowers, grass, trees, and walking paths. The majority (79%) of the public supports a federally proposed legislation currently under review (the Public School Green Rooftop Program) and has a mean willingness to pay of approximately $176 per household as a one-time payment. Additionally, the results show that individuals place a higher value on green rooftops that incorporate solar energy technology compared to those without. Furthermore, there is a perceived, loss of value when access to a green rooftop is limited, as opposed to having open access.

The plan to introduce a carbon pricing scheme in Australia has focused attention on the future relevance and necessity of using other policy instruments to reduce carbon emissions. Significant reports, including the Wilkins Review and reports by the Productivity Commission, have argued using the standard neoclassical economics framework that once a carbon price is established, it should be (almost) the only instrument needed to tackle climate change mitigation in Australia. With a small number of exceptions for complementary instruments to address some market failures, the use of other climate policy instruments, it is argued, will result only in unnecessary duplication and potential distortions. The aim of this article is to show that there are, in fact, a significant number of rationales for implementing several climate policy instruments in combination with a carbon price, and we should not be too quick to dismiss certain climate policy instrument combinations.

We make four main contributions in this paper related to the theory and practice of benefit–cost analysis (BCA). First, we show that most BCAs of policy interventions do not consider the welfare consequences in secondary markets, where goods or services can be complements or substitutes to those in the directly regulated markets. Second, we provide a general theoretical analysis for examining the sign of welfare effects in secondary markets, showing how the results depend on the welfare measure of interest and on whether the goods are complements or substitutes. We conclude that the welfare effects in secondary markets will typically be negative in cases most relevant for policy analysis. Third, we develop a straightforward tool that BCA analysts can use to evaluate the potential magnitude of secondary-market effects in particular applications. The tool itself highlights how secondary markets are likely to be relatively small in most circumstances. Finally, we illustrate use of the tool in different applications that provide further evidence that secondary-market effects are likely to be small.

Nigeria is endowed with abundant sunshine year-round; thus, solar PV would solve the environmental problems associated with petrol-powered generators. However, it is unclear whether households are willing to transition. Thus, we analyze households’ willingness to pay (WTP) for solar PV under four scenarios: (i) WTP when a solar PV is complemented with a generator, (ii) WTP when a solar PV completely displaces a generator, (iii) WTP when a solar PV is complemented with a generator, plus a subsidy, and (iv) WTP when a solar PV completely displaces a generator, given a subsidy. We find that WTP for solar PV is higher when it can displace generators completely. Subsidy plus monthly rather than upfront payment would scale up the adoption of solar PV by about 6 per cent. Furthermore, the cost benefit analysis results show that solar PV investment is profitable. Thus, there is a need to implement policies aimed at scaling up the energy transition.

The value of statistical life (VSL) is arguably the most important number in benefit–cost analyses of environmental, health, and transportation policies. However, agencies have used a wide range of VSL values. One reason may be the embarrassment of riches when it comes to VSL studies. While meta-analysis is a standard way to synthesize information across studies, we now have multiple competing meta-analyses and reviews. Thus, to analysts, picking one such meta-analysis may feel as hard as picking a single “best study.” This article responds by taking the meta-analysis another step, estimating a meta-analysis (or mixture distribution) of seven meta-analyses. The baseline model yields a central VSL of $8.0 m, with a 90 % confidence interval of $2.4–$14.0 m. The provided code allows users to easily change subjective weights on the studies, add new studies, or change adjustments for income, inflation, and latency.

Housing price comovements are an important issue in economics. This study focuses on monthly housing prices of 99 major cities in China for the years 2010–2019 by using correlation-based hierarchical analysis and synchronisation analysis, through which one could determine interactions and interdependence among the prices, heterogeneous patterns in price synchronisations and their changing paths over time. Empirical results show that the degree of comovements is slightly lower after March 2017 but no persistent drop is found. Several groups of cities are identified, each of which has its members showing relatively strong but volatile price synchronisations. Certain cities show potential of serving as price leaders within a group. Results here could be useful to policy analysis regarding housing price comovements.

The effects of transgenic corn use and federal biofuel policies on state-level cropping patterns in the US Corn Belt region are investigated using state-level data from 2000 to 2019. During this time, producers moved away from diverse cropping patterns and toward simpler rotational practices. Empirical evidence indicates that the intensification of corn acres planted was positively impacted by the spread of genetically modified (GM) soybeans—used as a proxy for GM corn for biofuel usage—but the effects of biotech advancements on producer planting decisions vary across states. This suggests that future policy changes affecting corn production decisions at the farm level will also be heterogeneous across states.

Political economists assume that global externalities, such as pandemics and climate change, require global or multi-national solutions. Yet, many aspects of these externalities can be addressed at the micro-level. As Elinor Ostrom pointed out, what scholars perceive as global externalities are in fact nested externalities that are organized in multiple, overlapping scales. By drawing on Ostrom's oeuvre, we explore the notions of nested externalities, polycentricity, and co-production in the context of pandemic governance. We highlight two crucial features of pandemics: first, preventative measures such as social distancing are co-production processes that cannot be provided by governments alone. Second, pandemics, much like climate change, pose nested externalities problems at different levels. Thus, pandemic externalities are better viewed as collective action problems arranged at multiple, nested, and/or overlapping scales. Finally, we propose an alternative institutional take that considers the nestedness of pandemic externalities and the diversity in institutional conditions across jurisdictions.

The outcome of environmental actions from participation in the export market are examined by unpacking some mechanisms that explain the estimated relationship. The empirical strategy utilizes the variation in the distance between the location of the sampled enterprises and the top 25 destinations of Vietnamese exports across sectors, and the weight of each sampled export to total exports in each period, to obtain exogenous variation in the enterprise's export market participation. The result shows a positive relationship between the enterprise's export participation and its overall engagement in environmental actions (such as the sum of its environmental actions, the sum of actions in the investments in equipment towards environmental issues, and total expenditure for the purchase of equipment for environmental actions). Possible mechanisms are international standardization, national certification, and strong enforcement of environmental regulations from export market engagement.

This paper shows that strengthening land rights via a land certification program may reduce the negative economic impact of climatic anomalies in the highlands of Ethiopia. The results support the hypothesis that certification enhances the likelihood of adapting some of the land-related investments, thus supporting adaptation enhancing mechanisms and the resilience of the farming sector. Institutional factors may play a key role in supporting farmers’ adaptive capacity to climatic challenges.

The presence of nonzero conjectural variations in pollution abatement and output make emission taxes less effective with respect to reducing emissions. This has implications for the characterization of the optimal emission tax, particularly in an international context where there are large asymmetries in pollution intensities. A higher degree of collusion in output between polluting firms results in higher emissions taxes in the non-cooperative equilibrium. In contrast, a higher degree of collusion in abatement between polluting firms results in lower emissions taxes in the non-cooperative equilibrium. These results rely on the presence of nonzero conjectural variations and large asymmetries in pollution intensities across countries. The analysis is relevant to the design of international environmental policy, including cases where countries face increasing global competition and damages from rising global emissions.