Natural resources,governance and institutional quality: The role of resource funds

This paper investigates the relationship between resource funds, governance and institutional quality in resource-rich countries. The study is motivated by the relatively recent and inconclusive debate on resource funds and on their role in the addressing of the “resource curse”. The estimation results suggest that resource funds may be associated with governance and institutional quality improvements. The analysis complements the debate on the tools of addressing the “resource curse” and on the determinants of governance and institutional quality. The findings remain important for their policy implications. The estimation results suggest that resource funds may prove useful tools in the hands of the policy makers in the attempt to address governance and institutional quality deterioration induced by resource abundance.     

The fate of the poor in growing mineral and energy economies

There are frequent suggestions that countries specializing in mineral and energy extraction have a type of growth that is bad for the poor. Others claim that extraction-led growth is particularly good for the poor. Both claims are made without the support of substantial empirical evidence. This paper uses longitudinal data on income growth by quintile in 57 developed and developing countries to statistically assess how mineral and energy extraction has affected the relationship between growth and the poor. We can find no evidence that the data support either the claim that extraction-led growth is good for the poor or that extraction-led growth is bad for the poor. This finding does not rule out that extractive activity can have special positive or negative impacts on the poor in some countries or regions. Rather, it simply brings to light that such effects are not evident as a persistent statistical phenomenon in the national level data that are available, which may be why the debate tends to move along without resolution.     

Resource windfalls,investment, and long-term income

We develop a simple mechanism to explain why resource windfalls are likely to lower income levels in the long run. Most mineral-producing countries, in particular, fail to maintain incentives for savings and investment after positive resource shocks. Our analysis focuses on this savings–investment transmission channel through which resource rents affect welfare, and develops an OverLapping-Generations (OLG) model with features from endogenous growth theory to study the mechanism. In this model, savings adjust downwards to income from natural resources, investments adjust to savings, and subsequently the level of overall productivity falls. Resource affluence has two counteracting effects on income. In the short term, resource wealth augments income, but in the long-term, it decreases income through a crowding-out effect on knowledge creation.     

Oil Funding and International Financial Arrangements

The traditional source of funds for exploration and development of petroleum resources has been privately-owned petroleum companies. However, many of these same companies have recently borrowed heavily to finance their acquisitions of other petroleum companies. This may limit the ability of those companies to finance future exploration and development efforts, particularly in developing countries. Special financial arrangements may be needed if the funds required are to be available. The form of such arrangements is discussed, and emphasis is placed on the need to reconcile the differing needs of borrowers and lenders.     

Making private capital flows to developing countries environmentally sustainable: the policy challenge

The 1990s have seen a dramatic shift in capital flows into the developing world. Despite pledges made at the 1992 UNCED Conference in Rio de Janeiro, official development aid has declined in real terms. At the same time, private direct investment and lending to developing countries has risen from $44 billion at the beginning of this decade to $256 billion in 1997, supporting a record economic boom in the developing world. Developing countries have become significant sources of capital, as well as hosts to transnational corporations.
Cases illustrating the negative impacts of large investments under environmentally lax conditions are contrasted with the rise of environmental screening of funds by commercial entities, such as banks, insurance companies and investors. Although the new inflows of foreign capital may have brought the spread of Western consumerism, this new economic potential has also contributed cutting-edge environmental technologies, that may assist developing countries leapfrog over the most damaging phases of industrialization.
The article discusses the role of public lending agencies, international organizations and NGOs in setting the investment climate that determines the effects of foreign capital on the natural resources base, communities and the environment. Various mechanisms for defining environmental standards are discussed, and a more active role for governments and the United Nations is advocated.     

Can developing countries benefit from innovative pricing in the power sector?

This study explores electricity pricing as a demand-side management (DSM) strategy, looking to the developed country experience for insights into the types of approaches currently used, their effects, and the direction in which electricity pricing is headed. The discussion should be especially useful for electric utilities in developing countries that are exploring alternatives to capacity expansion to meet current and future electric power demand. For these electric utilities, demand-side options are especially important under today's conditions in which the capital cost of new generating capacity is increasing rapidly, international funds for expanding power sectors are not expected to be sufficient for meeting projected capacity needs and environmental concerns over fossil fuel emissions have raised new questions about constructing thermal power plants.     

ECONOMIC EVALUATION OF ON-FARM WATER MANAGEMENT PROJECTS1

ABSTRACT: During the last three decades, developing countries have invested enormous amounts of resources (running into billions of dollars) in the development of large surface irrigation systems. Investment funds were largely spent on the development of the main systems such as dams, canals and distributaries. Very little attention and resources have been spent on the development of below-the-outlet subsystems, in spite of very low levels of water use efficiency due to lack of proper land leveling, high water losses in field channels, and skewed distribution of available water among farmers served by individual water courses. This state of affairs has resulted in a lack of confidence on the part of most farmers in the reliability of surface irrigation systems to deliver water on time and in adequate quantities which, in turn, has resulted in farmers using below optimum levels of all other complementary inputs except labor. Realizing the importance of improving water use efficiency, both the domestic governments and donor agencies are increasingly paying serious attention to these problems. On-Farm Water Management (OFWM) as a strategy to improve water use efficiency and consequently agricultural production in many developing countries has been currently receiving very wide and vigorous consideration among economists, water management experts, policymakers, and donor agencies. A judicious use of the newly allocated funds of OFWM projects obviously needs proper evaluation procedures so that money could be allocated for the most deserving purposes and projects. In particular, recently, private profitability calculations due to public investments in OFWM activities have received attention from economists and decision makers in developing countries’governments and in donor agencies are very much interested in knowing the impacts of their investments in OFWM activities on farmers’income and welfare. However, the evaluation procedures commonly used in empirical studies, using a production function approach, seem to be at variance and sometimes inconsistent with proper comparative-static procedures. Thus, the primary objective of this paper is to develop consistent procedures for evaluating the impacts created by OFWM investments on farmers’income and resource use. In this context, the paper examines the critical relationship between the market price of the agricultural output and production function parameters which are affected by the OFWM investments.     

“One thing leads to another”—Commodities,linkages and industrial development

With a particular focus on low income economies in SSA, this paper addresses the nature and determinants of linkages from the commodities sectors and challenges the received view that enclave development is an inherent characteristic of resource extraction, particularly in the hard and energy commodities sectors. It argues that there has been a steady increase in linkage development and that there are significant opportunities for deepening this process. The opportunities may be greater for backward than for forward linkages, particularly in the minerals and energy sectors. In making this case, this Discussion Paper draws on the experience of high income countries which have resource intensive economic structures, the geographical specificity of many resources and the growing interest of large resource extracting firms in outsourcing the production of inputs which are outside of their core competences and in supporting local production of some inputs, it sets out a general model of linkage development which distinguishes between win–win and win–lose outcomes.     

Sources of funds for developing country petroleum development

The Third World debt crisis has drastically altered the options open to Third World countries to fund petroleum development. Restricted access to international capital markets means that developing countries are having to reconsider alternative financial options to achieve a satisfactory rate of petroleum development. Of these, only foreign direct investmentis capable of compensating for the loss of more traditional sources of funds. To this end, developing countries are revising and harmonizing prior restrictive direct investment rules and tax codes, with recent financial innovations further underwriting the process.     

Key factors that influence households’ tree planting behaviour

Despite a decrease in indigenous forests and a growing demand for tree products in developing countries, tree planting activities are not considerably expanding in Tanzania. In this paper, we analyse factors that influence households’ tree planting behaviour, as well as the number of trees planted. Coast and Morogoro regions in the east of Tanzania were selected as the case, and data was gathered from 202 households in 11 villages in these regions where tree planting programmes have been or still are active. A Heckman model is used to analyse the factors that drive tree planting behaviour. Results indicate that households get wood energy from forest reserves (57%), in addition to their own planted trees (9.1%). Emperical findings show that the most important factors have significantly positive effects on households’ tree planting behaviour, as well as the extent to which it was implemented. These factors include households’ land sizes, households’ awareness of tree planting programmes, tree planting for wood energy, and the age of the head of the household. The right/freedom to harvest and transport tree products, households’ attitudes towards tree planting, and family size have significantly negative effects on households’ tree planting behaviour. This paper is perhaps the first comprehensive study to analyse the factors that influence households’ tree planting behaviour in Tanzania, and it uncovers results that are useful, even for other developing countries with similar conditions.     

典型发达国家适应气候变化资金机制及对中国的启示

气候变化是全人类面临的严峻挑战,我国受到气候变化的不利影响更为显著,加快采取雄心勃勃的适应气候变化行动显得尤为重要,但资金机制一直是我国适应进程中的主要障碍,亟须借鉴国际经验构建完善适应气候变化的资金机制。基于此,本文首先简要分析国际适应气候变化资金机制的基本情况,然后选取适应进程较为完善的美、英、德、日等典型发达国家,分别从适应政策体系、国内适应资金和国际援助资金等三个方面梳理总结各国适应气候变化资金机制,最后分析我国适应气候变化资金机制及存在的问题,并提出对我国适应气候变化资金机制的启示。研究发现,《联合国气候变化框架公约》及其气候变化国际谈判进程是各国推进适应气候变化资金机制的主要动因,发达国家重视适应政策的法制化,但政策力度和运行模式有所不同,公共部门是各国适应资金的主要来源,私人资金潜力尚待挖掘,国际气候援助注重减缓与适应并重,但援助力度有待加强。未来我国应从完善适应气候变化顶层设计、建立适应气候变化资金保障机制、提高适应气候援助力度、加强国际交流与合作等方面完善我国适应气候变化资金机制。     

Forest Protection and Reforestation in Costa Rica: Evaluation of a Clean Development Mechanism Prototype

/ Costa Rica has recently established a program that provides funds for reforestation and forest protection on private lands, partly through the sale of carbon certificates to industrialized countries. Countries purchasing these carbon offsets hope one day to receive credit against their own commitments to limit emissions of greenhouse gases. Costa Rica has used the proceeds of the sale of carbon offsets to Norway to help finance this forest incentive program, called the Private Forestry Project, which pays thousands of participants to reforest or protect forest on their lands. The Private Forestry Project is accompanied by a monitoring program conducted by Costa Rican forest engineers that seeks to determine net carbon storage accomplished on these lands each year. The Private Forestry Project, which is officially registered as an Activity Implemented Jointly, is a possible model for bundled projects funded by the Clean Development Mechanism (CDM) established by the 1997 Kyoto Protocol to the UN Framework Convention on Climate Change. It also serves as an interesting example for the CDM because it was designed by a developing country host-not by an industrialized country investor. Accordingly, it reflects the particular "sustainable development" objectives of the host country or at least the host planners. Early experience in implementing the Private Forestry Project is evaluated in light of the main objectives of the CDM and its precursor-Activities Implemented Jointly. It is concluded that the project appears to meet the criteria of global cost-effectiveness and financing from non-ODA sources. The sustainable development implications of the project are specific to the region and would not necessarily match the ideals of all investing and developing countries. The project may be seen to achieve additional greenhouse gas abatement when compared against some (although not all) baselines.     

Citizen Advisory Groups in Remedial Action Planning: Paper Tiger or Key to Success?

In accordance with the Great Lakes Water Quality agreement and the Great Lakes Critical Protections Act, the Great Lakes States have developed (or are developing) remedial action plans (RAPs) for severely degraded areas of concern (AOCs). To provide citizen input into the planning process, state environmental agencies have established citizens' advisory groups (CAGs) for each AOC. These CAGs have been hailed as the key to RAP success, yet little is known about their role in the planning process. In this paper, we examine the constitution, organization and activities of CAGs in three Lake Michigan AOCs by comparing CAGs to municipal planning commissions, citizen advisory commissions and councils of government. We find that CAGs, like other advisory bodies, can provide public input into the planning process, foster communication between government agencies and special interest groups, and facilitate intergovernmental co-ordination. Also like other advisory bodies, however, CAGs can fail to represent all constituencies in the AOCs, have limited influence on agencies plans and activities, and lack the authority to assure the co-operation of local governments.     

The resource curse

Countries that possess rich mineral deposits, it is widely assumed, are fortunate. Such deposits are assets, part of a country's natural capital. Mining is the key that converts dormant mineral wealth into schools, homes, ports, and other forms of capital that directly contribute to economic development. Over the past two decades, however, a more negative view of mining has emerged that questions the positive relationship between mineral extraction and economic development. The impetus for the alternative view came from empirical studies suggesting that countries where mining is important have not grown as rapidly as other countries. More recent studies have explored the possible reasons behind the disappointing performance of many mineral producing countries. While the central point of contention between the conventional and alternative views — namely, whether or not mining usually promotes economic development — remains unresolved, there is widespread agreement that rich mineral deposits provide developing countries with opportunities, which in some instances have been used wisely to promote development, and in other instances have been misused, hurting development. The consensus on this issue is important, for it means that one uniform policy toward all mining in the developing world is not desirable, despite the recent suggestions by some to the contrary. The appropriate public policy question is not should we or should we not promote mining in the developing countries, but rather where should we encourage it and how can we ensure that it contributes as much as possible to economic development and poverty alleviation.     

Multinational,Freshwater Biomonitoring Programs in the Developing World: Lessons Learned from African and Southeast Asian River Surveys

Biomonitoring programs are widely used in developed countries. They also offer many advantages in assessing ecological consequences of perturbations in developing countries, including reducing the equipment-operation, maintenance, and training costs associated with physicochemical monitoring. Three case histories of river biomonitoring using freshwater organisms (fish, benthic macroinvertebrates, diatoms, zooplankton) are described that involve (1) documentation of environmental effects from long-term, large-scale applications of insecticides to control insect-vectors of river blindness (onchocerciasis) in 11 West African countries; (2) water quality assessments and restoration planning in and around national parks in three East African countries; and (3) evaluation of overall ecological health of the Lower Mekong River in four Southeast Asian countries. As in developed countries, benthic macroinvertebrates are the organisms most widely used in biomonitoring in developing countries. Conflicting opinions of system resilience and whether expected changes are within natural variation may result in differences in underlying hypotheses proposed, study designs implemented, and study execution; each may lead to uncorrectable bias. Direct transfers of approaches used from developed to developing countries are often appropriate; however, techniques dependent on pollution-tolerance values are often region specific and not transferable. Typically expressed concerns about applications of biomonitoring in developing countries include poor coordination among agencies; lack of legislation, identification keys, and trained personnel; and incomplete information on how tropical rivers function. Problems are real but solvable, as evident from accomplishments in several multicountry programs in developing countries. Developed countries requiring coordinated monitoring of international rivers may benefit from examining successful programs under way in developing countries.     

Biofuels: Efficiency,Ethics, and Limits to Human Appropriation of Ecosystem Services

Biofuels have lately been indicated as a promising source of cheap and sustainable energy. In this paper we argue that some important ethical and environmental issues have also to be addressed: (1) the conflict between biofuels production and global food security, particularly in developing countries, and (2) the limits of the Human Appropriation of ecosystem services and Net Primary Productivity. We warn that large scale conversion of crops, grasslands, natural and semi-natural ecosystem, (such as the conversion of grasslands to cellulosic ethanol production, or plantation of sugar cane and palm oil), may have detrimental social and ecological consequences. Social effects may concern: (1) food security, especially in developing countries, leading to an increase of the price of staple food, (2) transnational corporations and big landowners establishing larger and larger landholdings in conflict with indigenous areas and the subsistence of small farmers. Ecological effects may concern: (1) competition with grazing wild and domesticated animals (e.g., millions of grazing livestock in USA prairies), (2) an excessive appropriation of Net Primary Production from ecosystems, (3) threatening biodiversity preservation and soil fertility. We claim that is it well known how ecological and social issues are strictly interwoven and that large scale biofuels production, by putting high pressure on both fronts, may trigger dangerous feedbacks, also considering the critical fact that 9 billion people are expected to inhabit the planet by 2050. There is a need to conduct serious and deep analysis on the environmental and social impact of large scale biofuels production before important energy policies are launched at global level. Biofuels will not represent an energetic panacea and their role in the overall energy consumption will remain marginal in our present highly energivorous society, while their effect on food security and environment preservation may have detrimental results. We should also have the courage to face two key issues: (1) we cannot keep increasing resources consumption at present pace, and have to change our life style accordingly, and (2) we have to deal with population growth; we cannot expect to have 9–10 billions people inhabiting the earth by 2050, without this representing a major impact on its support system.     

An alternative role for economic instruments: Sustainable finance for environmental management

Economic instruments, such as effluent fees and tradable discharge permits (TDP), have often been suggested by economists as efficient or cost-effective means to control pollution. In recent years such instruments have received increasing attention due to their growing political acceptability. Still, their use in practice has been tentative. The interest in possible application of such instruments has led to a set of studies regarding their practical potential. These studies indicate that economic instruments require substantial government involvement, entailing high administration cost; require restrictions so as to prevent significant deterioration in receptor areas; and have ambivalent effects on innovation adoption. Consequently, the efficiency gains from such instruments may be smaller than potential gains identified in earlier studies. In addition, the distributional impacts of such instruments and their possible adverse effect on market contestability reduce their attractiveness in some cases. These findings raise the question: what is the desired role of economic instruments in addressing environmental concerns? In recent years the demand for environmental services has increased dramatically. Current legislation and studies indicate that desired environmental expenditures are likely to increase. At the same time environmental programs face increasing competition from other programs for a declining pool of general revenues. One outcome of these processes has been the search for alternative sources of funds for environmental programs. Furthermore, as the competition for general revenue funds increases, the allocation of such funds for environmental programs becomes less predictable. This may endanger many long-term environmental programs that require stable funding. This article suggests that economic instruments may prove one source of dedicated funds for many environmental goals. Consequently, studies of environmental-program financing as well as studies of economic instruments may well explore the possible role of economic instruments as financing tools. Some examples of the potential of such tools for estuary cleanup programs are discussed.     

For the sake of the lake: multi-signification and improvisation in the practices of two lake restoration projects in Finland

In many countries over the last decades, state initiatives have emerged to promote and support public participation in policy-making. Despite the emphasis on participation and deliberation, there are groups that remain outside the participatory proceedings. We follow through two case studies from Finland on how active citizen groups became excluded in the policy processes but decided to act nevertheless. Conceptually, the article tells two stories about multi-signification and improvisation in nature conservation processes from the citizen participation point of view. Using practice-oriented policy analysis, we explore the actors' conflicting interpretations of acting for “the sake of the lake”. We argue that in these kinds of complex policy processes, improvisation should be given more space.     

A Review of the External Positions of the Oil-Importing Developing Countries and their Relationship to the World Oil Market

Many oil-importing developing countries faced greater difficulties coping with the second oil shock (1979–80) than with the first (1973–74). The recent decline in oil prices has offset only a small part of the adverse effect of the earlier increases, and a number of these countries continue to face severe problems in servicing their external debt. This paper explores the reasons for these difficulties, which are associated in part with the higher levels of real interest rates in recent years and with the slowdown in economic activity in industrial countries. Estimates are provided of the effects of changing oil prices on the net real cost of oil imports in developing countries. The paper concludes with an assessment of the medium-term prospects for the financing of external deficits.     

Long-term trends in the Real real prices of primary commodities: Inflation bias and the Prebisch-Singer hypothesis

Following the Boskin et al., (1996) report, it became widely recognized that price indexes in the U.S. and elsewhere overstate inflation. Svedberg and Tilton (2006) highlighted that this inflation bias may have important implications for estimated long-term trends in nonrenewable resource prices. ST construct an inflation-bias corrected CPI (and PPI) for the U.S. and use their corrected deflator(s) to define a so-called ‘real real’ price of copper. Their ‘real real’ price of copper is then used to re-estimate long-term trends in real copper prices. This paper proposes a quick method for obtaining inflation-bias-corrected estimates of long-run trends in real primary commodity prices directly from estimates in the published literature. Our approach obviates the need re-do existing empirical studies using a corrected or ‘real real’ price of nonrenewable resources. The two approaches are mathematically equivalent.