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Fires have attracted interest and generated alarm since the early 1980s. This con- cern has been particularly evident in tropical forests of Southeast Asia and the Amazon, but disastrous fires in recent summers in Australia, Europe, and the United States have drawn worldwide attention. Concern about forest fires, and related air pollution and biodiversity impacts, led inter- national organisations and northern countries - such as the Asian Development Bank, the European Union, the Food and Agriculture Organisation, the United Nations Environment Programme, the World Bank, and the government of Germany - to undertake fire assessments and provide technical assistance. Nongovernmental organisations, such as the International Union for Conservation of Nature and Natural Resources and World Wide Fund for Nature, have also devoted increased attention to fires. Aiming at prevention of future fires, 40 fire projects and missions costing well over US$30 million have worked in Indonesia over the last 20 years. Despite the money and effort spent on them, fires continue to burn every year. It may appear to some that efforts to address the 'fire problem' have not been effective as fires still occur.

This paper presents estimates of short-run sectoral and economy-wide effects of the introduction of a carbon tax in Australia. The results are derived using an enhanced version of the ORANI multi-sectoral model of the Australian economy. We simulate the introduction of a carbon tax at a rate of 1991-92 $25 per tonne, designed to achieve the Toronto target of a 20 per cent reduction in carbon dioxide emissions below the 1988 level by 2005. We find that the macroeconomic impact would depend critically on the extent to which price rises flowed through into wage rates. Assuming fixed money wages, real GDP would be decreased by an estimated 0.9 per cent, and employment by 1.2 per cent. To maintain a given employment level in the face of the carbon tax would require a reduction in the foreign-currency-equivalent wage rate estimated at 2.8 per cent. This would also entail a decrease in the real wage rate (defined with respect to the consumption price deflator) of 2.8 per cent. Government could promote lower wage outcomes by returning the carbon tax revenue to the community through reductions in other taxes. Enhancements to ORANI used in this simulation include disaggregation of the fossil fuel sector and provision for carbon taxation.

This paper articulates and applies frameworks for examining whether consumption is excessive. We consider two criteria for the possible excessiveness (or insufficiency) of current consumption. One is an intertemporal utility-maximization criterion: actual current consumption is deemed excessive if it is higher than the level of current consumption on the consumption path that maximizes the present discounted value of utility. The other is a sustainability criterion, which requires that current consumption be consistent with non-declining living standards over time. We extend previous theoretical approaches by offering a formula for the sustainability criterion that accounts for population growth and technological change. In applying this formula, we find that some poor regions of the world are failing to meet the sustainability criterion: in these regions, genuine wealth per capita is falling as investments in human and manufactured capital are not sufficient to offset the depletion of natural capital.

Price floors in greenhouse gas emissions trading schemes can guarantee minimum abatement efforts if prices are lower than expected, and they can help manage cost uncertainty, possibly as complements to price ceilings. Provisions for price floors are found in several recent legislative proposals for emissions trading. Implementation however has potential pitfalls. Possible mechanisms are government commitments to buy back permits, a reserve price at auction, or an extra fee or tax on acquittal of emissions permits. Our analysis of these alternatives shows that the fee approach has budgetary advantages and is more compatible with international permit trading than the alternatives. It can also be used to implement more general hybrid approaches to emissions pricing.

The global community has been struggling with the issue of how to effectively respond to the threat of climate change for several decades. In 1992, the United Nations Earth Summit in Rio de Janeiro produced a landmark treaty on climate change that undertook to stabilize greenhouse gas concentrations in the atmosphere. By focusing on stabilization, however, the treaty implicitly adopted the position that the risks posed by climate change require that emissions be reduced no matter what the cost. The agreement, signed and ratified by more than 186 countries, including the United States, spawned numerous subsequent rounds of climate negotiations aimed at rolling back emissions from industrialized countries to the levels that prevailed in 1990. To date, however, the negotiations have had little effect on greenhouse gas emissions and have not produced a detectable slowing in the rate of emissions growth. The treaty’s implementing protocol, the 1997 Kyoto agreement, has stalled after being heavily diluted at subsequent negotiations in Bonn and Marrakesh.2 The survival of the Kyoto Protocol in its current form is waiting for ratification from Russia. More than a decade of negotiations has produced a policy that is very strict in principle but completely ineffective in practice.

AbstractThis study examines the nature and consequences of China's rise to the center of world economic affairs through manufacturing‐led development. Our historical analysis shows that China is still well short of the point in its developmental process where its growth might be reasonably expected to slow, or the energy, resource and carbon intensity of growth to recede. The study argues that the current trajectory of industrialization will have to be altered when China becomes more actively engaged in dealing with structural issues at home and abroad against the background of the unwinding of global imbalances. One profitable strategy that China might employ would be to approximate the incredibly fruitful mass‐market integration efforts of the USA that eventually elevated it to its position of global primacy. The cyclical re‐emergence of excess capacity in Chinese heavy industry, serious questions about the medium term ability of other major regions to accommodate further large gains in Chinese market share, and the stark conflict between the contemporary style of industrial development and the health of the biosphere indicate strongly that now is the time to catalyze the required adjustment and reform processes that will underpin sustainable long‐run prosperity.

The saving and investment nexus as postulated by Feldstein and Horioka (FH) (1980) is revisited. The saving investment correlation for China is estimated over the periods 1952-1998 and 1952-1994, the latter culminating in a period of fixed exchange rate regime. Amongst the key results, it is found that saving and investment are correlated for China for both the period of the fixed exchange rate and the entire sample period. With high saving-investment correlation, the results suggest that the Chinese economy is in conformity with the FH hypothesis. This is a valid outcome, for in China capital mobility was fairly restricted over the 1952-1994 period as indicated by the relatively low foreign direct investment.