Optimal land conversion and growth with uncertain biodiversity costs
AbstractAn important characteristic defining the threat of environmental crises is the uncertainty about their consequences for future welfare. Random processes governing ecosystem dynamics and adaptation to anthropogenic change are important sources of prevailing ecological uncertainty and contribute to the problem of how to balance economic development against natural resource conservation. The aim of this study is to examine optimal growth subject to non-linear dynamic environmental constraints. In a two-sector exogenous growth framework we model a stochastic environmental good, exhibiting uncertain ecological responses to environmental change, and describe the economic and environmental trade-offs that ensue for a risk-averse social planner. Allowing for ecological risk tends to slow economic growth if environmental impacts are assumed to increase exponentially as the rate of disturbance increases. Taken in isolation the effects of ecosystem resilience and ecological uncertainty on the rate of natural resource development are ambiguous and depend on normative parameters such as the social plannerâs attitude to risk and rate of time preference.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Ecological Economics.
Volume (Year): 61 (2007)
Issue (Month): 2-3 (March)
Contact details of provider:
Web page: http://www.elsevier.com/locate/ecolecon
Other versions of this item:
- Anke Leroux & John Creedy, 2005. "Optimal Land Conversion And Growth With Uncertain Biodiversity Costs," Department of Economics - Working Papers Series 957, The University of Melbourne.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dietrich Earnhart, 2000. "Liability for Past Environmental Contamination and Privatization," William Davidson Institute Working Papers Series 302, William Davidson Institute at the University of Michigan.
- Smulders, J.A. & Gradus, R.H.J.M., 1993.
"The trade-off between environmental care and long-term growth: Pollution in three proto-type growth models,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-153405, Tilburg University.
- Raymond Gradus & Sjak Smulders, 1993. "The trade-off between environmental care and long-term growth—Pollution in three prototype growth models," Journal of Economics, Springer, vol. 58(1), pages 25-51, February.
- Johansson-Stenman, Olof & Carlsson, Fredrik & Daruvala, Dinky, 2001. "Measuring Hypothetical Grandparents Preferences For Equality And Relative Standings," Working Papers in Economics 42, University of Gothenburg, Department of Economics.
- Santiago J. Rubio Jorge & Renan Ulrich Goetz, 1997.
"Optimal growth and land preservation,"
Working Papers. Serie EC
1997-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Charles Perrings, 1998. "Resilience in the Dynamics of Economy-Environment Systems," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 503-520, April.
- Swanson, Timothy M, 1994. "The Economics of Extinction Revisited and Revised: A Generalised Framework for the Analysis of the Problems of Endangered Species and Biodiversity Losses," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 800-821, Supplemen.
- Smulders, J.A. & Soest, D.P. van & Withagen, C.A.A.M., 2004.
"International trade, species diversity and habitat conservation,"
Open Access publications from Tilburg University
urn:nbn:nl:ui:12-140731, Tilburg University.
- Smulders, Sjak & van Soest, Daan & Withagen, Cees, 2004. "International trade, species diversity, and habitat conservation," Journal of Environmental Economics and Management, Elsevier, vol. 48(2), pages 891-910, September.
- repec:cdl:ucsdec:545419 is not listed on IDEAS
- Earnhart, Dietrich, 2000. "Liability for Past Environmental Contamination and Privatization," CEPR Discussion Papers 2571, C.E.P.R. Discussion Papers.
- Polasky, Stephen & Costello, Christopher & McAusland, Carol, 2004. "On trade, land-use, and biodiversity," Journal of Environmental Economics and Management, Elsevier, vol. 48(2), pages 911-925, September.
- Cicchetti, Charles J & Freeman, A Myrick, III, 1971. "Option Demand and Consumer Surplus: Further Comment," The Quarterly Journal of Economics, MIT Press, vol. 85(3), pages 528-39, August.
- Shlomo Benartzi & Richard H. Thaler, 1993.
"Myopic Loss Aversion and the Equity Premium Puzzle,"
NBER Working Papers
4369, National Bureau of Economic Research, Inc.
- Benartzi, Shlomo & Thaler, Richard H, 1995. "Myopic Loss Aversion and the Equity Premium Puzzle," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 73-92, February.
- Hofkes, Marjan W., 1996. "Modelling sustainable development: An economy-ecology integrated model," Economic Modelling, Elsevier, vol. 13(3), pages 333-353, July.
- Barrett, Scott, 1992. "Economic growth and environmental preservation," Journal of Environmental Economics and Management, Elsevier, vol. 23(3), pages 289-300, November.
- Pierre Dubois & Tomislav Vukina, 2004.
"Grower Risk Aversion and the Cost of Moral Hazard in Livestock Production Contracts,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 86(3), pages 835-841.
- Dubois, Pierre & Vukina, Tomislav, 2003. "Grower Risk Aversion and the Cost of Moral Hazard in Livestock Production Contracts," IDEI Working Papers 248, Institut d'Économie Industrielle (IDEI), Toulouse.
- Bernard M.S. van Praag & Adam S. Booij, 2003.
"Risk Aversion and the Subjective Time Discount Rate: A Joint Approach,"
CESifo Working Paper Series
923, CESifo Group Munich.
- Bernard M.S. van Praag & Adam S. Booij, 2003. "Risk Aversion and the Subjective Time Discount Rate: A Joint Approach," Tinbergen Institute Discussion Papers 03-018/3, Tinbergen Institute.
- Jeffrey A. Krautkraemer, 1998. "Nonrenewable Resource Scarcity," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2065-2107, December.
- Swallow, Stephen K., 1990. "Depletion of the environmental basis for renewable resources: The economics of interdependent renewable and nonrenewable resources," Journal of Environmental Economics and Management, Elsevier, vol. 19(3), pages 281-296, November.
- U Pascual & N P Russell & A A Omer, 2003. "Does Loss in Biodiversity Compromise Productivity in Intensive Agriculture?," The School of Economics Discussion Paper Series 0322, Economics, The University of Manchester.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.