Jesper Stage

Economic valuation of climate change adaptation in developing countries

This paper reviews the literature on the economics of climate change adaptation in developing countries, and identifies three key points for consideration in future studies. One key point is that all development policy should be formulated using forecasts from climate science as a baseline. When this is not done, there is risk that a false status quo without climate change is seen as an implicit baseline. Another key point is that authors must be clearer about their behavioral assumptions: Many studies either (problematically) assume profit maximization on the side of farm households, or do not specify behavioral assumptions at all. A third important point is that the allocation of rights is crucial for the results; if households have a right to maintain their current livelihoods, the costs of climate change in developing countries are considerably greater than traditional willingness‐to‐pay studies would indicate. Thus, costs and benefits of climate change adaptation cannot be analyzed using economic aspects only; climate science, behavioral science, and legal and moral aspects have crucial implications for the outcome of the analysis.

Is urbanization contributing to higher food prices

Urbanization has been mentioned as one possible cause of higher food prices, and in this paper we examine some of the suggested links between urbanization and food prices. We conclude that urbanization, conventionally defined as the increasing share of the population living in urban settlements, is being conflated with related but separate processes, such as economic growth, population growth and environmental degradation. We discuss factors that affect food prices and conclude that the one important way in which urbanization in poor countries may affect food prices is that it increases the number of households that depend on commercial food supplies, rather than on own production, as their main source, and hence are likely to hoard food if they fear future price increases. One policy option for managing this is larger food reserves. Attempts to curb urbanization, on the other hand, would be ill-advised.

Potential monopoly rents from international wildlife tourism: An example from Uganda’s gorilla tourism

The economic benefits many African countries derive from international wildlife tourism are very few, especially when viewed from existing potentials in terms of resources and uniqueness. African wildlife tourism has natural barriers to entry and thus is basically a monopolistic market. However, the countries have done virtually nothing to take advantage of this situation. Rather than focusing on cost recovery or revenue maximisation, the governments should therefore aim at maximising profits from international tourism. Uganda is the case study of this paper in this regard. Data collected from a travel cost survey indicates that in 1997, even under uniform pricing, Ugandans profit from gorilla tracking in the Bwindi Impenetrable National Park alone could have been increased by between USD 30,000 and USD 220,000 (depending on assumptions about social costs). Besides, unlike most government revenue sources, monopoly prices on international tourism do not impose deadweight losses on the domestic economy.

Formal microlending and adverse (or nonexistent) selection: a case study of shrimp farmers in Bangladesh

Microcredit schemes have become a popular means of improving smallholders’ access to credit and making long term investment possible. However, it remains to be explored whether the current microcredit schemes are more successful than earlier formal small scale lending in identifying successful borrowers. We studied shrimp farming in a rural region in Bangladesh where formal microlending is well established, but where more expensive informal microlending coexists with the formal schemes. Farmers – both those who exclusively use formal loans and those who also use informal loans – remain credit-constrained; both types overutilize labour in order to reduce the need for working capital. However, the credit constraint is actually milder for the informal borrowers: the implicit shadow price of working capital is substantially higher in the group that only takes formal loans than in the group that also uses informal loans. These results suggest that informal lenders – with their closer ties to the individual farmers – remain more successful in identifying those smallholder farmers that are most likely to use the borrowed funds successfully. Informal lenders have an information advantage that formal microlenders lack: the latter need to find routes to access this information in order for formal microcredit schemes to succeed.