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There is great conflict between some developed countries and developing countries regarding attitudes toward reducing global warming (e.g. the USA vs China). The aim of this paper is to argue that open trade doesn't necessarily increase world pollution if clean development mechanism (CDM) is generously undertaken and if the CDM devotes considerable real resources in transfers of the associate abatement technology.

The impacts of trade on environment can be decomposed into scale, technique and composition effects. This paper incorporates abatement assets into Copeland and Taylor's model to argue that the technique effect stems from an increasing in pollution taxes and in international diffusion of abatement technology; however, the former is fully offset but the latter is facilitated by the CDM.

While world pollution is jointly determined by the composition and technique effects, in contrast to literature, open trade doesn't necessarily increase world pollution if CDM is generously undertaken with considerable real resources in abatement technology transfers.

Currently, there are more than about one half of the CDM projects that allocate no real resources in technology transfers. This study addresses how voluntary investment of the CDM from the North (e.g. the USA) to the South (e.g. China) might reduce pollution on a global level only if having “generously” technology transfer.

We examine the allocation of a pre-determined amount of aid from a donor to two recipient countries. The donor suffers from cross-border pollution resulting from production activities in the recipient countries. It is shown that the recipient with the higher fraction of aid allocated to public abatement and with the lower emission tax, receives a higher share of the aid when the donor allocates aid so as to maximize its own welfare. Competition for aid reduces cross-border pollution to the donor when recipients use the fraction of aid allocated to pollution abatement as a policy to divert aid from each other. But, it increases cross-border pollution when recipients use the emission tax to divert aid from each other.

The purpose of this paper is to examine the role of activism in determining the identity of the “green” median voter and the influence of the green voter on environmental regulatory stringency in the US states.

Regulatory stringency is measured using output weighted abatement spending and an industry concentration adjusted index of state environmental compliance costs for the period 1989-1994. Activism measures include environmental initiatives, median support for pollution standards and voter ideology. Fixed-effects panel methodology is used in empirical estimation.

The authors find that activism increases stringency in regulating overall as well as media-specific pollution. The results particularly highlight the nuances of different approaches to activism and their varied impact across pollution media.

A drawback of the empirical estimation is the lack of continuous historical abatement spending data. A longer panel with alternative stringency measure(s) would add explanatory power to activism, especially since some activism measures capture slow-changing institutional factors.

The study identifies the conditions under which activism can have the most impact on a society's environmental outcomes since pollution varies in damages, hence abatement costs, across pollution media.

The paper adds to the existing literature by incorporating three alternative measures of environmental activism to systematically investigate its impact on environmental stringency within a fixed-effects regression design. It also promotes a deeper understanding of the efficacy of the activism process by deconstructing policy stringency across pollution media to show that activism and its impacts are more nuanced than previously studied.

In this chapter we present a continuous time model with reversible abatement capital in order to analyze the effects of environmental policies on the value of the firm and investment decisions. We show that the effects depend on what sort of future policy are implemented. We focus on investment effects of changes in corrective taxes to control the use of polluting inputs, and subsidies to promote abatement investment. We show that (1) while taxes have a depressive effect on capital accumulation, subsidies boost investment; (2) the impact of these policies on the value of the firm is ambiguous. This latter result has important empirical implications insofar as investment are based on the average value of the firm rather than the (unobservable) marginal value.

Due to stringent regulations on carbon emissions, green manufacturing has become a critical issue in manufacturers’ strategic planning. Manufacturers are greening production through carbon abatement activities. The purpose of this paper is to investigate the factors that influence the effects of carbon abatement on environmental productivity growth.

Using data envelopment analysis with directional distance function, this study examines productivity growth associated with carbon abatement under regulated and unregulated production technologies. A pollution abatement index (PAI) is constructed for determining the effects of carbon abatement on environmental productivity growth. Panel data of 18 European countries in paper and pulp and coke sectors are collected for the analysis.

The empirical findings reveal that carbon abatement may positively or negatively affect environmental productivity growth which is dependent on the nature of technology in a sector, the innovation capabilities of a country and environmental regulations.

Conventional approaches in measuring productivity changes do not normally take undesired outputs (e.g. carbon emissions) into consideration. This study contributes to literature by constructing a PAI that considers productivity changes under a joint production technology (where both desired and undesired outputs are considered). The findings enhance current understandings on the effectiveness of carbon abatement activities and help managers establish corporate environmental strategies to adopt green manufacturing.

This paper seeks to explain how inefficient learning rules may lead to a perception of economic and ecological realities that may be systematically distorted in the long run.

The paper evaluates long‐term growth in standard growth‐pollution models. Expectations about future levels of pollution are formed under adaptive learning.

Socio‐economic players (private agents, governments, non‐profit organizations and/or groups of states) may fail in understanding, with full accuracy, long‐term environmental conditions. The perception about environment threats acquires a cyclical nature, even when ecological problems evolve steadily.

Relevant policy implications emerge if the agent is unable to compute the true levels of environmental pollution that will persist in the steady state. Authorities of several kinds are likely to underestimate or overestimate ecological problems.

The learning approach to the perception of the environment can be applied to other economic, social and biological issues, besides material growth. For instance, it can contribute to explain some cases of over‐exploitation of resources: even in the presence of a social planner capable of avoiding typical “tragedy of the commons” situations, this entity may fail in perceiving the reality and, thus, in applying the policies that prevent the exhaustion of resources.

The paper contributes to the literature on growth and environmental issues, but takes a step forward: it approaches not only the observed relation between economy and ecology, but also the impact over the observed relation of a systematically incorrect interpretation of such a connection.

Purpose – The chapter reports a laboratory emissions trading experiment with imperfect enforcement that introduces environmental framing as a treatment variable.

Methodology – The research uses the methodology of laboratory experimental economics. In the current design, subjects self-reported their “emissions” at the end of each trading period and were inspected probabilistically and fined when they underreported.

Findings – Transaction volume and compliance rates were significantly lower in the environmentally framed condition, compared to the more standard neutrally framed control.

Practical implications – The latter result suggests that environmental framing reduced subjects' incentives to honestly report “pollution” to the experimental “regulator.” As experimenters employ more “framed field experiments” outside the lab, it may be important to evaluate such pure framing effects in the lab if a main research goal is to compare lab and field experiment outcomes.

Originality/value – Experimental economics research rarely manipulates environmental framing as a treatment variable. The substantial impact of framing on subject behavior documented in this study highlights its importance, particularly in the presence of moral concerns such as honest reporting.

This article deals with the determination of the benefits of environmental assets, involving an application for noise. In determining these benefits the so‐called Cost of Illness Method is applied. An important part of the research is the estimation of the relationship between environmental pollution (noise) and the number of lost workdays. This relationship is estimated by using the Lisrel technique with latent variables. The empirical results show that, for the sample concerned, a relationship between noise and lost workdays does not exist. The research also shows that noise causes annoyance and that annoyance influences people′s wellbeing negatively.