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Stochastic Dominance, Entropy and Biodiversity Management

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Listed:
  • Catherine M. Chambers
  • Paul E. Chambers
  • John R. Crooker
  • John C. Whitehead

Abstract

In this paper we develop a model of population dynamics using the Shannon entropy index, a measure of diversity that allows for global and specific population shocks. We model the effects of increasing the number of parcels on biodiversity, varying the number of spatially diverse parcels to capture risk diversification. We discuss the concepts of stochastic dominance as a means of project selection, in order to model biodiversity returns and risks. Using a Monte Carlo simulation we find that stochastic dominance may be a useful theoretical construct for project selections but it is unable to rank every case. Key Words: Stochastic Dominance, Entropy, Biodiversity Management

Suggested Citation

  • Catherine M. Chambers & Paul E. Chambers & John R. Crooker & John C. Whitehead, 2008. "Stochastic Dominance, Entropy and Biodiversity Management," Working Papers 08-08, Department of Economics, Appalachian State University.
    • Handle: RePEc:apl:wpaper:08-08
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    File URL: http://econ.appstate.edu/RePEc/pdf/wp0808.pdf
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    References listed on IDEAS

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    1. Pablo C. Benítez & Timo Kuosmanen & Roland Olschewski & G. Cornelis van Kooten, 2006. "Conservation Payments under Risk: A Stochastic Dominance Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 1-15.
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    More about this item

    Keywords

    stochastic dominance; entropy; biodiversity management;
    All these keywords.

    JEL classification:

    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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