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At the end of my undergraduate studies in economics I was ready to go into graduate studies in finance, monetary policy or macroeconomics. At that time in my country, the choices were not much broader than that. In order to complete my studies I needed 30 days of community work, so I went to Ostional National Wildlife Refuge (ONWR), one of a few places in the world where sea turtles come to nest in massive numbers. My task was to craft a set of rules and incentives for the local community to organize better around the unique resources of this protected area.

For decades, government agencies and nongovernmental organizations have invested in programs aimed at alleviating poverty and those aimed at protecting the environment. Whether these investments mutually reinforce each other or act in opposition has been widely debated by scholars. Studies that have tried to resolve this debate suffer from a variety of shortcomings, including the challenge of inferring causal relationships from non-experimental data. To help address some of these shortcomings, randomized controlled trials (RCTs) can play an important role. When done well, RCTs permit credible causal inferences and can be designed to directly test competing assumptions about how the world works. Yet few RCTs of poverty programs examine their effects on the environment. Worse, we know of no RCTs reporting the poverty effects of environmental interventions, which may be unsurprising given that environmental scholars rarely use RCTs. The lack of RCTs that can shed light on the relationships between actions to alleviate poverty and actions to reverse global environmental change is an obstacle to advancing the science and practice of sustainability. If scholars of poverty include environmental outcomes in their RCTs, and if environmental scholars use RCTs to study the poverty effects of environmental programs, the longrunning debates about the dual challenges of alleviating poverty and protecting the environment could be resolved.

For the most part, economic research in Latin America has had a 'macro' orientation (e.g., economic growth, monetary and fiscal policy, hyperinflation crisis). This is perfectly understandable because of the macro instability that has affected the entire region for decades and that still remains in many places. However, the composition of research is gradually changing as more attention is paid to a wider set of problems. Nowadays we see an increasing number of researchers in the region focusing on a variety of economic problems dealing with health, education, poverty alleviation, competition policy and the protection of natural resources and pollution control, among many others. This special issue of Environment and Development Economics presents a small sample of four research papers on these latter topics by researchers in established academic institutions in the region.

AbstractIn this paper, we investigate how different levels of entrance fees affect donations for a public good, a natural park. To explore this issue, we conducted a stated preference study focusing on visitors' preferences for donating money to raise funds for a protected area in Costa Rica given different entrance fee levels. The results reveal that there is incomplete crowding out of donations when establishing an entrance fee.

To cope with losses from extreme hydro-meteorological events, governments typically implement disaster relief programs and offer debt relief to affected parties. Governments in developing countries have made extensive use of total and partial debt coverage as a way to encourage investment in key sectors and in agriculture in particular. In the context of climate change, such practices are not viable because risk is systemic and losses can easily surpass most governments' debt relief budgets. Insurance is an obvious alternative, but insurance uptake in developing countries is typically low, and little is known about the interaction between investment, insurance, and debt relief programs, which effectively reduce borrowers' liability. This paper examines the effect of farmers' liability on demand for credit with and without insurance. We test predictions of a theoretical model in a lab in the field experiment with coffee farmers in Costa Rica. Farmers choose how much to invest in six different settings, described on the one hand by whether the loan is insured or not, and on the other by the probability that the government provides full debt relief. As expected, uptake of loans with insurance is significantly higher than without insurance when farmers are fully liable, and insurance is not relevant for investments if debt relief is guaranteed. Interestingly, uncertainty about liability is enough to trigger the uptake of insured debt. Our results suggest that well-defined rules for disaster relief are needed to support development of insurance markets.

To cope with losses from extreme hydro-meteorological events, governments typically implement disaster relief programs and offer debt relief to affected parties. Governments in developing countries have made extensive use of total and partial debt coverage as a way to encourage investment in key sectors and in agriculture in particular. In the context of climate change, such practices are not viable because risk is systemic and losses can easily surpass most governments' debt relief budgets. Insurance is an obvious alternative, but insurance uptake in developing countries is typically low, and little is known about the interaction between investment, insurance, and debt relief programs, which effectively reduce borrowers' liability. This paper examines the effect of farmers' liability on demand for credit with and without insurance. We test predictions of a theoretical model in a lab in the field experiment with coffee farmers in Costa Rica. Farmers choose how much to invest in six different settings, described on the one hand by whether the loan is insured or not, and on the other by the probability that the government provides full debt relief. As expected, uptake of loans with insurance is significantly higher than without insurance when farmers are fully liable, and insurance is not relevant for investments if debt relief is guaranteed. Interestingly, uncertainty about liability is enough to trigger the uptake of insured debt. Our results suggest that well-defined rules for disaster relief are needed to support development of insurance markets.

A growing set of policies involve transfers conditioned upon socially desired actions, such as attending school or conserving forest. However, given a desire to maximize the impact of limited funds by avoiding transfers that do not change behavior, typically some potential recipients are excluded on the basis of their characteristics, their actions or at random. This paper uses a laboratory experiment to study the behavior of individuals excluded on different bases from a new incentive that encourages real monetary donations to a public environmental conservation program. We show that the donations from the individuals who were excluded based on prior high contributions fell significantly. Yet the rationale used for exclusion mattered, in that none of the other selection criteria used as the basis for exclusion resulted in negative effects on contributions.

When designing schemes such as conditional cash transfers or payments for ecosystem services, the choice of whom to select and whom to exclude is critical.We incentivize and measure actual contributions to an environmental public good to ascertain whether being excluded from a rebate can affect contributions and, if so, whether the rationale for exclusion influences such effects. Treatments, i.e., three rules that determine who is selected and excluded, are randomly assigned. Two of the rules base exclusion on subjects' initial contributions. The third is based upon location and the rationales are always explained. The rule that targets the rebate to low initial contributors, who have more potential to raise contributions, is the only rule that raised contributions by those selected. Yet by design, that same rule excludes the subjects who contributed the most initially. They respond by reducing their contributions even though their income and prices are unchanged.

A growing set of policies involve transfers conditioned upon socially desired actions, such as attending school or conserving forest. However, given a desire to maximize the impact of limited funds by avoiding transfers that do not change behavior, typically some potential recipients are excluded on the basis of their characteristics, their actions or at random. This paper uses a laboratory experiment to study the behavior of individuals excluded on different bases from a new incentive that encourages real monetary donations to a public environmental conservation program. We show that the donations from the individuals who were excluded based on prior high contributions fell significantly. Yet the rationale used for exclusion mattered, in that none of the other selection criteria used as the basis for exclusion resulted in negative effects on contributions.