Kirit S. Parikh

Linkages between climate change and sustainable development

Climate change does not yet feature prominently within the environmental or economic policy agendas of developing countries. Yet evidence shows that some of the most adverse effects of climate change will be in developing countries, where populations are most vulnerable and least likely to easily adapt to climate change, and that climate change will affect the potential for development in these countries. Some synergies already exist between climate change policies and the sustainable development agenda in developing countries, such as energy efficiency, renewable energy, transport and sustainable land-use policies. Despite limited attention from policy-makers to date, climate change policies could have significant ancillary benefits for the local environment. The reverse is also true as local and national policies to address congestion, air quality, access to energy services and energy diversity may also limit GHG emissions. Nevertheless there could be significant trade-offs associated with deeper levels of mitigation in some countries, for example where developing countries are dependent on indigenous coal and may be required to switch to cleaner yet more expensive fuels to limit emissions. The distributional impacts of such policies are an important determinant of their feasibility and need to be considered up-front. It follows that future agreements on mitigation and adaptation under the convention will need to recognise the diverse situations of developing countries with respect to their level of economic development, their vulnerability to climate change and their ability to adapt or mitigate. Recognition of how climate change is likely to influence other development priorities may be a first step toward building cost-effective strategies and integrated, institutional capacity in developing countries to respond to climate change. Opportunities may also exist in developing countries to use regional economic organisations to assist in the design of integrated responses and to exploit synergies between climate change and other policies such as those designed to combat desertification and preserve biodiversity.

THE ENVIRONMENTAL CONSEQUENCES OF URBAN GROWTH: CROSS-NATIONAL PERSPECTIVES ON ECONOMIC DEVELOPMENT, AIR POLLUTION, AND CITY SIZE

This study presents a quantitative assessment of the environmental consequences of urbanization in general and city bigness in particular in the context of the process of economic development. We focus attention on the relationship between ambient air quality and city size, and how it might differ between urban areas of developed and developing countries. First, the air pollution-city size relationship is characterized theoretically and explored empirically using ambient air quality data for various urban zones across an international sample of cities. While we find statistically significant relationships between pollution and city size, interesting developed-developing country differences emerge. Next, the relationship is re-estimated using contextual development covariates. Results show that the positive association between poor air quality and city size is not inevitable and tends to diminish with economic growth and the capacity for undertaking pollution abatement measures. It follows that restricting...

Rural works programs in India : costs and benefits

Abstract A sequential applied general equilibrium model of the Indian economy is used for analyzing the costs and benefits of a rural works program designed to provide employment during slack agricultural seasons through the creation of productive assets such as roads, irrigation works, schools etc. It is shown that such a program, if carried out efficiently, targeted effectively and financed in a way that does not jeopardize long-term growth, can be a very effective instrument for alleviating rural poverty in India.

Agricultural trade liberalization: growth, welfare and large country effects

The impacts of trade liberalization for India have been examined with an applied general equilibrium model with nine agricultural sectors, one non-tradeable nonagriculture sector and one tradeable nonagriculture sector and with five rural and five urban expenditure classes. Different scenarios are generated using the model. Since comparison of GDP in two alternative scenarios can be misleading, the policy alternatives are assessed on the basis of their impact on welfare in terms of equivalent incomes of different expenditure classes. A policy is assessed preferable only when the distribution of welfare is found to be preferable in a well defined way. It demonstrates the importance of accounting for large country effects in rice trade and estimates the welfare optimal tariff/ quota for rice exports for India-which is shown to be just half a million tons of net export of rice. The results also show that nonagricultural trade liberalization is even more important for agriculture than even agricultural trade liberalization, both of which help accelerate growth.

CO2 Emission Reduction Strategies and Economic Development of India

This article examines the consequences of alternative CO2 emission reduction strategies on economic development and, in particular, the implications for the poor by empirically implementing an economy-wide model for India over a 35-year time horizon. A multi-sectoral, inter-temporal model in the activity analysis framework is used for this purpose. The model with specific technological alternatives, endogenous income distribution and truly dynamic behaviour and that covers the whole economy is an integrated top-down–bottom-up model. The results show that CO2 emission reduction imposes costs in terms of lower GDP and higher poverty. Cumulative emission reduction targets are, however, preferable to annual reduction targets and that a dynamically optimum strategy can help reduce the burden of emission reductions. The scenarios involving compensation for the loss in welfare are not very encouraging as they require large capital inflows. Contrasted with these, scenarios involving tradable emission quota give India an incentive to be carbon efficient. It becomes a net seller for the first 25 years, and because of reduction in carbon intensity it would demand less in later years when it becomes a net buyer. The results suggest that for India and other developing countries, the window of opportunity to sell carbon quotas is the next two decades or so.

Indian agricultural policy: An applied general equilibrium model

Abstract A ten-sector, sequential applied general equilibrium model is formulated, estimated, and stimulated for analyzing agricultural policy choices for India until year 2000. Ten groups of consumers (five of them rural), each with its own preferences and claims on output are recognized in the model, the groups distinguished by the range of their per capita household (real) consumption expenditure. The simulations compare: four policies with respect to the compulsory purchase and subsidized distribution to consumers of a limited amount of foodgrains and four foreign trade and aid scenarios. Procuring and freely distributing 100 kgs of grain per capita per year and financing the cost through additional taxation improves income distribution with no reduction in growth. On the other hand, the same distributional policy financed by reducing investment has a negative impact on growth.

India: Crisis and Response

The first signs of India’s most recent balance of payments crisis became evident in the second half of 1990–91 when foreign exchange reserves began to fall. The immediate cause of the loss of reserves, which started in September 1990, was the rise in world oil prices following the annexation of Kuwait. This led to a sharp escalation in India’s oil import bill, from an average of

The Enron story and its lessons

287 million per month in June–August 1990 to

Measures of Competitiveness

671 million per month in the following six months. The effect of the increase in oil prices was aggravated by the events that followed. Indian workers employed in Kuwait had to be airlifted back to India and their remittances ceased to flow in. Further, the UN trade embargo on Iraq led to the stoppage of exports to Iraq and Kuwait, imposing a loss of approximately

Valuing environment in developing countries: a challenge

280 million on the economy. Thus, from a level of