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.

This study examines whether different biodiversity proxies – species, habitat and functionality – satisfy the scope sensitivity and plausibility criteria in willingness to pay (WTP) estimation using a choice experiment in Manu National Park, Peru. We introduce the network of species interactions as a proxy for functionality and apply latent class (LC) models, including attribute non-attendance (ANA), to account for heterogeneity in preferences. Our results indicate that functionality is the only proxy consistently meeting both validity criteria across all specifications. LC analysis reveals two segments: one (74.4 per cent) displaying coherent, scope-sensitive WTP across biodiversity attributes, and another (25.6 per cent) less engaged, disregarding standard proxies but still valuing networks. Even under ANA constraints, networks remain salient for less attentive respondents, underscoring their cognitive accessibility in complex ecological contexts. These findings highlight the methodological and policy relevance of functionality-based proxies for biodiversity valuation in megadiverse environments, where conventional measures may fail to elicit behaviourally consistent responses.

Drawing on unbalanced panel data with a maximum of 271,656 bilateral trade flow observations from 1996 to 2021, this study investigates both the linear and nonlinear influence of national Environmental, Social, and Governance (ESG) performance gaps on green exports. When the ESG performance of the exporting country exceeds that of the destination country, the results indicate that an increase in the ESG gap significantly stimulates green exports, and there is evidence that this stimulating effect is achieved by widening green innovation gaps. However, the marginal effect diminishes as environmental regulations in the destination country become more stringent. Conversely, when the exporting country’s ESG performance is lower, narrowing the ESG gap leads to an N-shaped relationship with green exports, which remains U-shaped after removing the extremes. This research provides empirical evidence and policy implications for the trade effects of ESG performance from a macro perspective, while supporting the rationality and necessity of the ESG concept.

The German grain legume market is characterized by fragmentation and limited competition, restricting farmers’ market access and legume cultivation. The aim of this study is to analyze the current trader structure and optimize its configurations using k-means clustering. Results reveal a concentration of traders in southern and western Germany, while many farmers lack access to traders, even within a 100 km radius. A more competitive market can be achieved without increasing the number of traders, but by expanding their trading distance between farmers and dealers. Optimized site selection is of central importance in this context. Policy should create incentives – for example, by supporting digital platforms – that encourage farmers to engage with more traders through improved information and transparency, and conversely, motivate traders to expand their service radius via drop shipping.

Artisanal-and-small-scale gold mining supports millions of livelihoods in the Global South but is the largest anthropogenic source of mercury emissions. Many initiatives promote mercury-free technologies that small miners could employ. Few document mercury impacts. We study an alternative: instead of processing themselves, small miners sell their ore to plants employing larger-scale, mercury-free technologies that also raise gold yields. Some ore-selling occurs without policy intervention, yet impacts on incomes and mercury use remain unclear. We assess ore-selling preferences of female waste-rock collectors (jancheras) in Ecuador, using a discrete-choice experiment. Results demonstrate that jancheras generally are open to ore-selling, yet often reject options similar to a recent pilot intervention. Offers that address formalization hurdles (invoicing), inabilities to meet quantity minima (given limits upon association, storage, and credit), and constraints on trust (including in plants’ ore testing) could increase adoption by tailoring related interventions to the preferences of and challenges for defined populations.

In many tourism-dependent islands, an acute imbalance between increasing demand for wastewater management and the capacity of existing sewage infrastructure represents an increased risk for ecosystems and population health. Given that locals may be opposed to increasing tourism taxes to fund investments in sewerage, promoting charitable giving among tourists may be an alternative to improve wastewater management in tourist destinations. Using a contingent valuation survey, this study assesses whether tourists are willing to donate to improve wastewater management in San Andres Island, Colombia. Split-sample treatments were implemented to examine the response of tourists' giving preferences to priming communications regarding the effects of poor wastewater management. Results indicate that tourists are willing to donate to improve local wastewater management. Our findings also provide useful insights about tourists' giving preferences to design effective charitable giving campaigns to improve wastewater management.

It has long been challenging to assess local residents’ quality of life, which is affected by numerous natural and man-made amenities. We develop a novel compensating differential model of quality-of-life rankings applicable to developing countries by introducing farm income into the household budget alongside housing and labour market differentials. We apply this model to Indonesia using detailed household data from the Indonesian Family Life Survey for two different time periods and combining estimates of agricultural, off-farm labour and housing market differentials. We find heterogeneous amenity impacts across the agricultural and off-farm labour sectors. We use our model to show how significant changes in rankings across time are consistent with contemporaneous internal migration patterns in Indonesia. These rankings yield important information for policymakers on expected changes in migration and can be used to help inform public investment.

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.

This study tests the null hypothesis that no significant differences exist in the relationship between economic growth and deforestation, based on the levels of growth and agricultural productivity in the municipalities of the Brazilian Legal Amazon. Grounded in the environmental Kuznets curve theory, this study employs a non-linear methodological approach to estimate the relationship between economic growth and deforestation. The results reject the null hypothesis, indicating that the relationship between growth and deforestation varies with the municipalities’ productive performance. Furthermore, the findings conclude that a negative monotonic relationship exists between economic growth and deforestation in the Brazilian Legal Amazon, suggesting that reductions in deforestation are achievable even during periods of economic expansion.

With the increasing demand for sustainable products, greenwashing has become more prevalent and sophisticated over the past decade. To better understand the incentives for firms to greenwash, we develop an evolutionary game-theoretic model in which firms may choose to mimic green behavior without having to bear the cost linked to green investment and production. We provide the conditions for the different evolutionarily stable equilibria. In a second step, we extend the model using agent-based simulations to incorporate path-dependent investment/production costs, history-dependent mimicry effectiveness, peer effects, and localized firm interactions. We show that the simpler model with random matching offers good approximations of the equilibrium conditions in more complex setups, but market segmentation supports green investment and production in contrast to higher penalties. While curtailing opportunities to pretend green behavior boosts green production, we also find that increasing cost efficiencies encourage firms to engage in green production, even in the face of increasingly sophisticated deceptive strategies. Based on our results, we suggest trio-targeted policies that reduce the (initial) costs of green investment/production, curtail opportunities to mimic green behavior, and support segmentation.

Despite the substantial evidence linking particulate matter exposure to adverse health outcomes, a large portion of the global population, particularly in low-income countries, continues to rely on highly polluting fuels, such as wood, for cooking and heating. This study evaluates the immediate effects of wood-burning restrictions, which are triggered by air quality warnings, on levels of fine (PM2.5) and coarse (PM10) particulate matter in southern Chile. Using a difference-in-differences design that incorporates pre-policy data, we provide plausible causal estimates indicating that wood-burning restrictions lead to significant reductions in hourly PM10 and PM2.5 concentrations during the most severe air quality warning. Additional analyses, including a regression discontinuity design, further support these findings. While our analysis suggests that wood-burning restrictions are effective, they may not be sufficient to reduce air pollution concentrations to levels that are considered safe for public health.

We examine the distributional impact of domestic carbon pricing in three Sub-Saharan African countries. We combine household expenditure surveys and sectoral carbon intensity data derived from a multi-regional input-output model for Ghana, Nigeria and Uganda. Our findings indicate that domestic carbon pricing is progressive in all three countries. This primarily results from higher budget allocations for direct energy consumption in wealthier households, especially concerning motor vehicles and electrical appliances. Disparities in welfare losses within income groups are primarily due to varying energy consumption patterns. Importantly, we identify low-income households as being disproportionately affected by carbon taxes. Lump-sum transfers could fully compensate most households in the bottom two income quintiles, significantly reducing poverty. Our comparative analysis emphasizes the importance of country-specific differences in energy expenditures and carbon intensities in shaping the distributional outcomes of carbon taxes.

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.

This article examines the interplay between fiscal policy and investments in climate change mitigation and adaptation. Adaptation is funded by public revenues from taxation and public bonds, whereas households can invest in mitigation and receive subsidies. We show that adaptation and mitigation are substitutes or complements, depending on the level of economic development and fiscal policy decisions. If the capital stock is initially low, adaptation and mitigation are complements (resp. substitutes) if the mitigation subsidy is low (resp. high). When the government is in debt, we show that increasing public spending to finance adaptation and/or mitigation could be beneficial if the capital stock is high enough but could be detrimental for countries with low capital stock. Thus, we add a new argument to the debate on the optimal mix between adaptation and mitigation, namely fiscal policy and the funding schemes of these investments. Finally, we propose extensions that consider a level of adaptation proportional to pollution flow, debt financing of public investment, and public mitigation investment alongside private adaptation investment.

Increasing consumer demand for sustainably-sourced products has created a need to benchmark sustainability at the field level. To address this issue, some companies are offering incentives to producers, but are still lacking participation. This study estimated producers’ willingness to accept for participating in sustainability programs and implementing sustainable practices at the field level using a double-bounded dichotomous-choice framework. The results revealed preferences for longer contracts in length of time, industry as the verification party, supplemental benefits that yield an economic incentive, and a per-bale payment. This project will give new insights to the value and importance of documenting, verification, and traceability throughout the supply chain.

In this paper, I discuss dual collective action problems in which a resource pool has simultaneous common pool and public good aspects in its usage, such as hunting (consumption) and conservation of wildlife. I then implement laboratory experiments to evaluate how spillovers between the two related uses of nature affect the consumption and conservation habits of stakeholders. The Nash predictions suggest that even the most selfish of profit-maximizing agents have an incentive to provide equally towards resource consumption and conservation when resource spillovers are present. Results from laboratory experiments are consistent with this hypothesis. As a policy intervention, I introduced and later revoked a common pool licensing policy based on U.S. hunting and fishing licensing. Under the same theoretical framework, removing a common pool licensing policy would increase welfare for all resource stakeholders. Contrary to this, experimental evidence indicates no overall change in welfare.

Public acceptability is crucial for the effectiveness of policy implementation. The carbon trading market is widely adopted by many countries and regions to achieve carbon neutrality and mitigate climate change. Our paper utilizes China's carbon trading market as a quasi-natural experiment, drawing on microdata from the China Residential Energy Consumption Survey to analyze the policy's impact on public acceptance of carbon pricing. We find that the carbon trading market significantly reduces the acceptability of carbon prices among households working in carbon-related industries in the pilot areas. This conclusion is still valid after a series of robustness checks. Regarding the mechanism of influence, the carbon trading market raises households' perceived costs, mainly reflected in the negative impact of rising product prices and increasing living costs. Finally, enhancing public perception of carbon, improving the distribution effect and decreasing the information asymmetry of the policy implementation can improve public acceptability of carbon prices.

We propose a simple indicator for the climate-related transition risks of bank lending based on transaction-level loan data. The underlying idea is that the higher the greenhouse gas intensity of an economic activity, and thus that of the debtor involved, the higher its transition risk. The relationship is mapped through two min-max-normalised functions, each of which represents a scenario for the future characteristics of the green transition. The concept is versatile and applicable to different dimensions at different levels of aggregation (banking system or individual banks, whole economy or specific sectors). As a practical example, we discuss the proposed indicator using Hungarian data for the period 2012–2020.

Energy inefficiency and environmental damages caused by this inefficiency are increasingly common in developing countries. As the largest developing country, China is experiencing a rapid growth in outward foreign direct investment (OFDI). Do OFDI firms have higher energy efficiency in the same sector? After OFDI, how does the energy efficiency of the firms change? In this study, we employ the data from Chinese industrial firms to empirically investigate these questions. Our results show that OFDI firms have higher energy efficiency and total factor energy efficiency (TFEE) relative to non-OFDI firms in the same sector. After OFDI, firms improve energy efficiency and TFEE through expanding output scale. In addition, these effects are found to be heterogeneous in terms of energy types as well as OFDI motivations and destinations. In general, this study provides some initial evidence for the relationship between OFDI and energy performance at the firm level.