What's Nature Done for You Lately: Measuring the Value of Ecosystem Services

ecosystem services, ecological production function, non-market valuation, public goods, Resource /Energy Economics and Policy, Q57, Q20, Q51, Q15,

ENVIRONMENTAL REGULATION WITH INNOVATION AND LEARNING: RULES VERSUS DISCRETION

We analyze a model of environmental regulation with learning about environmental damages and endogenous choice of emissions abatement technology by a polluting firm. We compare environmental policy under discretion, in which policy is updated upon learning new information, versus under rules, in which policy is not updated. When investment in abatement technology is made prior to the resolution of uncertainty, neither discretion nor rules with either taxes or standards achieve an efficient solution. When there is little uncertainty, rules are superior to discretion because discretionary policy gives the firm an incentive to distort investment in order to influence future regulation. However, when uncertainty is large, discretion is superior to rules because it allows regulation to incorporate new information. Under discretionary policy, taxes are superior to standards regardless of the relative slopes of marginal costs and marginal damages.Environmental Economics and Policy,

ANALYSIS OF A HIGHLY MIGRATORY FISH STOCKS FISHERY: A GAME THEORETIC APPROACH

This paper develops a two-period noncooperative game-theoretic model of a Highly Migratory Fish Stocks (HMFS) fishery. In each period, the fish stock migrates from the Exclusive Economic Zone (EEZ) of a coastal state into the high seas, where distant water fishing (DWF) harvesters may harvest. We show that having an EEZ improves total welfare by reducing total harvest and that the degree of the welfare improvement increases when the number of harvesters in an HMFS fishery increases. We also show that an increase in the number of DWF harvesters leads to a larger harvest and rent dissipation. With open-access in the second stage, resource rent is totally dissipated for DWF harvesters, but not for the coastal state harvesters, which still earn positive rent.Resource /Energy Economics and Policy,

Cooperation in the Commons with Unobservable Actions

We model a dynamic common property resource game with unobservable actions and non-linear stock dependent costs. We propose a strategy profile that generates a worst perfect equilibrium in the punishment phase, thereby supporting cooperation under the widest set of conditions. We show under what set of parameter values for the discount rate, resource growth rate, harvest price, and the number of resource users, this strategy supports cooperation in the commons as a subgame perfect equilibrium. The strategy profile that we propose, which involves harsh punishment after a defection followed by forgiveness, is consistent with human behavior observed in experiments and common property resource case studies.Common property resource, cooperation, dynamic game, unobservable actions

The Efficiency of Voluntary Incentive Policies for Preventing Biodiversity Loss

In this paper we analyze the efficiency of voluntary incentive-based land-use policies for biodiversity conservation. Two factors combine to make it difficult to achieve an efficient result. First, the spatial pattern of habitat across multiple landowners is important for determining biodiversity conservation results. Second, the willingness of private landowners to accept a payment in exchange for enrolling in a conservation program is private information. Therefore, a conservation agency cannot easily control the spatial pattern of voluntary enrollment in conservation programs. We begin by showing how the distribution of a landowner's willingness-to-accept a conservation payment can be derived from a parcel-scale land-use change model. Next we combine the econometric land-use model with spatial data and ecological models to simulate the effects of various conservation program designs on biodiversity conservation outcomes. We compare these results to an estimate of the efficiency frontier that maximizes biodiversity conservation at each level of cost. The frontier mimics the regulator's solution to the biodiversity conservation problem when she has perfect information on landowner willingness-to-accept. Results indicate that there are substantial differences in biodiversity conservation scores generated by the incentive-based policies and efficient solutions. The performance of incentive-based policies is particularly poor at low levels of the conservation budget where spatial fragmentation of conserved parcels is a large concern. Performance can be improved by encouraging agglomeration of conserved habitat and by incorporating basic biological information, such as that on rare habitats, into the selection criteria.

Implementing the Optimal Provision of Ecosystem Services

Many ecosystem services are public goods whose provision depends on the spatial pattern of land use. The pattern of land use is often determined by the decisions of multiple private landowners. Increasing the provision of ecosystem services, while beneficial for society as a whole, may be costly to private landowners. A regulator interested in providing incentives to landowners for increased provision of ecosystem services often lacks complete information on landowners’ costs. The combination of spatially-dependent benefits and asymmetric cost information means that the optimal provision of ecosystem services cannot be achieved using standard regulatory or payment for ecosystem services (PES) approaches. Here we show that an auction that pays a landowner for the increased value of ecosystem services generated by the landowner’s actions provides incentives for landowners to truthfully reveal cost information, and allows the regulator to implement the optimal provision of ecosystem services, even in the case with spatially-dependent benefits and asymmetric information

Can Conservation and Profits Co-Exist?: The Case of Lion Hunting

Resource /Energy Economics and Policy,

Measures of the effects of agricultural practices on ecosystem services

Agriculture produces more than just crops. Agricultural practices have environmental impacts that affect a wide range of ecosystem services, including water quality, pollination, nutrient cycling, soil retention, carbon sequestration, and biodiversity conservation. In turn, ecosystem services affect agricultural productivity. Understanding the contribution of various agricultural practices to the range of ecosystem services would help inform choices about the most beneficial agricultural practices. To accomplish this, however, we must overcome a big challenge in measuring the impact of alternative agricultural practices on ecosystem services and of ecosystem services on agricultural production. A framework is presented in which such indicators can be interpreted as well as the criteria for selection of indicators. The relationship between agricultural practices and land-use change and erosion impact on chemical use is also discussed. Together these ideas form the basis for identifying useful indicators for quantifying the costs and benefits of agricultural systems for the range of ecosystem services interrelated to agriculture

Conserving biodiversity by conserving land

Society faces difficult choices over whether to allow habitat conversion for economic gain versus conserving habitat to protect biodiversity. Because the conservation of biodiversity and the material well being of the human population are both important goals, it is important to set conservation priorities intelligently and minimize the reduction in other goals from pursuing conservation. In this paper, our objective is to ensure that the maximum amount of biodiversity is conserved for any given level of cost. We illustrate our approach to this problem using land value data, taxonomic and geographical distribution data for breeding bird species in Oregon