This article considers the case where a number of countries produce goods from labor, government input and natural resources. Because conservation of natural resources anywhere yields utility in all countries and there is no benevolent international government, the coordination of conservation must be delegated to a regulator that may have its own interests. This article examines what is the efficient package of tools for that regulator. It is shown that if the minimum standards for conservation are used, then conservation subsidies are welfare decreasing, involving excessive conservation. This suggests that e.g. in the EU project called NATURA 2000, it is not appropriate to provide ’’co-financing’’ for sites.

This paper proposes two residual-based diagnostic tests for noninvertible ARMA models. The tests are analogous to the portmanteau tests developed by Box and Pierce (1970), Ljung and Box (1978) and McLeod and Li (1983) in the conventional invertible case. We derive the asymptotic chi-squared distributions for the tests and study the size and power properties in a Monte Carlo simulation study. An empirical application employing financial time series data points out the usefulness of noninvertible ARMA model in analyzing stock returns and the use of the proposed test statistics.