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  • Keywords: environmental externalities x
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The production of food, fiber, and fuel often results in negative externalities due to impacts on soil, water, air, or habitat. There are two broad ways to incentivize farmers to alter their land use or management practices on that land to benefit the environment: (1) provide payments to farmers who adopt environmentally beneficial actions and (2) introduce direct controls or regulations that require farmers to undertake certain actions, backed up with penalties for noncompliance. Both the provision of payments for environmentally beneficial management practices (BMPs) and a regulatory requirement for use of a BMP alter the incentives faced by farmers, but they do so in different ways, with different implications and consequences for farmers, for the policy, for politics, and consequently for the environment. These two incentive-based mechanisms are recommended where the private incentives conflict with the public interest, and only where the private incentives are not so strong as to outweigh the public benefits. The biggest differences between them probably relate to equity/distributional outcomes and politics rather than efficiency. Governments often seem to prefer to employ beneficiary-pays mechanisms in cases where they seek to alter farmers’ existing practices, and polluter-pays mechanisms when they seek to prevent farmers from changing from their current practices to something worse for the environment. The digital revolution has the potential to help farmers produce more food on less land and with fewer inputs. In addition to reducing input levels and identifying unprofitable management zones to set aside, the technology could also alter the transaction costs of the policy options.


Jinbo Song, Lulu Jin, Chen Qian, and Yan Sun

With the upgrading of living standards and rapid urbanization around the globe, waste treatment has become a ubiquitous environmental issue. Increased waste generation and narrowed prospects for landfill and composting have brought strong growth prospects for the waste-to-energy (WtE) industry. WtE is considered an effective method for waste treatment because it can significantly reduce the land use and environmental pollutants caused by other methods and can generate energy by means of electricity or heat from the treatment of waste. However, there have been supportive and opposing opinions about WtE from the economic, environmental, and social perspectives. Whether WtE plants are the best option depends not only on associated investment and operating costs but also on the environmental and social costs (termed as external cost) as compared to other waste treatment options. Economic costs are generally estimated by market price of materials, labor, and equipment. Social costs normally refer to health effects, transportation congestion, and environmental impacts, including the emission of gas and leachate. Qualitative and quantitative methods are proposed to assist in decision making on waste disposal alternatives. The qualitative method relies on the expert experience to rank waste treatment options, such as analytic hierarchy process and multicriteria decision model, while the quantitative method, such as life cycle assessment and social cost-benefit analysis, calculates the economic cost and monetizes the abstract external cost in the light of the historical data. The two methods offer different advantages and disadvantages, and thus cater to different conditions. In developed countries, along with the rapid development of WtE and the increase in available cost data, the estimation of the economic, environmental, and social costs is achievable, which promotes the popularization of quantitative method. In China and other developing countries, quantitative analysis is limited to the estimation of economic cost and the qualitative method is still dominated in the evaluation of environmental and social impacts due to the lack of cost data.