A situation is analysed in which two countries negotiate the financing of the incremental costs which accrue if one of them switches from a non-sustainable onto a sustainable development path. The other country's incentive to pay arises as it benefits from the developing country's environmental...

Although there is a rationale for a more conservative management of the remaining tropical forests, policy-makers in the tropical countries tend to be reluctant to implement appropriate policy measures, because they fear the short-run economic costs of environmental protection. Taking Indonesia...