We examine how agricultural subsidies may induce deforestation and interact with conservation programs by analyzing two large-scale national programs in Mexico that have existed simultaneously for more than a decade: an agricultural subsidy for livestock (PROGAN) and a program of payments for ecosystem services (PES). Looking across the entire Mexican landscape, we exploit the surprises in the timing of enrollment in PROGAN's waves, fluctuations in program payments, and the change in the value of the subsidy induced by inflation and currency fluctuations to identify the impacts of the livestock subsidy on environmental outcomes. We find that PROGAN increased municipal deforestation by 7 per cent. The deforestation effects of PROGAN were smaller in municipalities with higher concentrations of PES recipients. We suggest that livestock subsidies could be better targeted to places with low deforestation risk and high livestock productivity to maximize food production and minimize negative externalities caused by deforestation.

This paper tests the pollution emissions and institutional quality nexus in Africa. Specifically, we analyze the effect of the political regime and the quality of political governance on CO2 emissions. To control for endogeneity, we apply the system generalized method of moments on a dynamic panel of African countries over the period 1996–2020. The key finding suggests that better institutions have a negative and significant effect on pollution in Africa. The findings also validate the environmental Kuznets curve hypothesis. Moreover, the results support the pollution haven hypothesis. Finally, if digitalization significantly curbs pollution, then industrialization, natural resources, as well as the intensive use of energy, are considered as positive predictors. All the sensitivity and robustness tests globally validate the strength of the negative association between the good quality of institutions and the level of polluting emissions in Africa. The results call for some policy recommendations in environmental regulation for African economies.

This paper examines the impact of cross-ownership on the strategic incentive of environmental corporate social responsibility (ECSR) within a green managerial delegation contract in a triopoly market engaged in price competition. It demonstrates that bilateral cross-ownership between insiders provides weak incentives to undertake ECSR, which has a non-monotone relationship with cross-ownership shares, while it provides strong incentives for outsiders, which increases the ECSR level as cross-ownership increases. It also compares unilateral cross-ownership and finds that a firm that owns shares in its rival has a greater incentive to undertake ECSR than its partially-owned rival, while an outsider has more incentive than firms in bilateral scenarios. These findings reveal that a firm's incentive to increase a market price through ECSR critically depends on its cross-ownership share, while it decreases environmental damage and increases social welfare when the environmental damage is serious.

It is well known that a consumer price-neutral reform of consumption taxes and import tariffs is welfare-improving. This paper shows that such price controls are inferior to quantity controls in terms of welfare improvement. The paper next turns to a comparison of different abatement strategies. Whether or not policy changes should fix private abatement or public abatement relates to the level of earmarking, and depends on the relationship between private production and public abatement. There are cases in which increased public abatement only improves welfare by more than both increased private and public abatement together. The paper recommends that environmental earmarking in the form of public abatement should be delivered to cushion price hikes and sustain private energy consumption.