Burn the forest!: A bargaining theoretic analysis of a seemingly perverse proposal to protect the rainforest

Consider a country possessing a specific production factor in fixed quantity, producing in combination with land a stream of services through time. Some of these services are consumed domestically. The bulk of it, however, is consumed world-wide. Despite the services the country provides to the world it does not earn any income from these exports. This is because it lacks a technology turning services produced into the exclusive property of the country. Possessing a sector which produces such a good, how can the country earn income from the services it provides? This is a stylised description of the problem faced by countries which host the world's rainforests. As determinants of the global climate rainforests provide a multitude of environmental services. Some of these services escape the home countries of forests, spill over abroad and are consumed there as a free lunch. In this sense, countries do not possess exclusive property rights over the forests they host. This global commonality of a national production factor creates a series of problems which endangers the environment.

Courts of appeal, bureaucracies and conditional project permits: The role of negotiating non-exclusive property rights over the environment

Much of what may be coined the creeping degradation of the environment is due to economic projects which are subject to public approval. The erection of buildings, the siting of factories, all require permission from bureaucracies. To answer the question whether there is too much or not enough of the environment thus requires an analysis of the criteria under which private projects are publicly approved. An omnipotent and benevolent dictator will undertake an environmentally sensitive project under the safeguards of an optimal emission control if the public environmental costs are exceeded by the private net gains from the project, or so the story goes. To continue the tale, a benevolent bureaucracy possessing absolute authority over the use of the environment will permit projects, given optimal safeguards, if the same condition is fulfilled.

Environmental norms, society, and economics

Environmental norms seem to be on the upsurge everywhere. Norm-orientation is, however, neglected in neoclassical economics which is fixed on homo economicus as the model of human behaviour. The paper addresses the question whether homo economicus needs to give way to a norm-oriented concept in environmental economics. This question is tackled in an interdisciplinary and evolutionary approach. Using economic concepts, forces are identified which are detrimental to or which promote environmental norms in the process of civilisation. This investigation provides some clues on the likely importance of environmental norms in a future ecologically oriented society. These clues provide in turn one answer to the fundamental question posed, whether the neoclassical concept of human behaviour will likely remain or cease to be the 'standard' tool in environmental economics. Rather .than tackling the question in greatest generality the analysis takes recourse to an example: the problem of the commons. The commons is particularly suited for this investigation because it is well roamed by all the disciplines which are of relevance for the undertaking.

International environmental negotiations and non-exclusive domestic property rights

A folk theorem in environmental economics suggests that in the presence of transboundary environmental spillovers international negotiations may improve on environmental quality. More so, if side-payments according to the victim-pays principle are undertaken, environmental safeguards agreed upon by the parties to an international agreement can be optimal from the point of view of a global social planner. Implicitly, this folk theorem makes an important assumption: All requirements emanating from the stipulations of an international environmental agreement are smoothly and completely executed within the home countries of the parties to the contract, or so the story goes. However, this presumption is not necessarily fulfilled. In particular, the execution of what the agreement requires from the parties involved may be severely thwarted by either of three reasons.

Crises within communism and temporary aid

An explanation is given why communist economies usually react smoothly but sometimes very dramatically to seemingly minor changes in the political and economic environment. In this paper such dramatic reactions materialize in a sudden clamp-down on individual freedom and sudden economic prosperity or in quick political liberalization and a quick demise of economic success. Furthermore, the consequences of temporary economic aid in the face of these potential crises are analysed

Sustainable development and international distribution: Theory and application to rainforests as carbon sinks

A situation is analysed in which two countries negotiate the financing of the incremental costs which accrue if one of them switches from a non-sustainable onto a sustainable development path. The other country's incentive to pay arises as it benefits from the developing country's environmental resources, but at an ever declining rate as long as development remains non-sustainable. The paper shows that such negotiations generally induce a redistribution of welfare in favour of the developing country. This would hold even if both countries were identical except for the resource "ownership". Conditions are derived under which the developing country has an incentive to get on a "less" sustainable path in the pre-agreement phase. Furthermore, the analysis suggests the existence of a "window of history" implying that an agreement can only be reached in a subinterval of the resources' lifetime, if the window is open at all. In an application to the protection of tropical rainforests as carbon sinks it is shown that North to South redistribution of welfare would indeed be substantial, yet the North would still gain enormously in efficiency terms. An explanation is given why the Rio Conference failed in terms of rainforest protection

Incredibility of perfect threats in repeated games: The dilemma of a rational player

The implicit assumption made when deterrence solutions to repeated games are constructed, is that perfectness is a sufficient condition for the credibility of threats. In this paper it is shown that the validity of this assumption hinges on another assumption which proves to be unsatisfactory - namely that players exhibit a different rationality at different stages of the game. A consequence of making rationality independent of time is that sufficient conditions for the credibility of threats fail to exist

Courts of appeal, bureaucracies and conditional project permits: The role of negotiating non-exclusive property rights over the environment

Much of what may be coined the creeping degradation of the environment is due to economic projects which are subject to public approval. The erection of buildings, the siting of factories, all require permission from bureaucracies. To answer the question whether there is too much or not enough of the environment thus requires an analysis of the criteria under which private projects are publicly approved. An omnipotent and benevolent dictator will undertake an environmentally sensitive project under the safeguards of an optimal emission control if the public environmental costs are exceeded by the private net gains from the project, or so the story goes. To continue the tale, a benevolent bureaucracy possessing absolute authority over the use of the environment will permit projects, given optimal safeguards, if the same condition is fulfilled

Environmental norms, society, and economics

Environmental norms seem to be on the upsurge everywhere. Norm-orientation is, however, neglected in neoclassical economics which is fixed on homo economicus as the model of human behaviour. The paper addresses the question whether homo economicus needs to give way to a norm-oriented concept in environmental economics. This question is tackled in an interdisciplinary and evolutionary approach. Using economic concepts, forces are identified which are detrimental to or which promote environmental norms in the process of civilisation. This investigation provides some clues on the likely importance of environmental norms in a future ecologically oriented society. These clues provide in turn one answer to the fundamental question posed, whether the neoclassical concept of human behaviour will likely remain or cease to be the 'standard' tool in environmental economics. Rather .than tackling the question in greatest generality the analysis takes recourse to an example: the problem of the commons. The commons is particularly suited for this investigation because it is well roamed by all the disciplines which are of relevance for the undertaking