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Pricing the Ecosystem and Taxing Ecosystem Services: A General Equilibrium Approach

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  • Thomas Eichner
  • Rüdiger Pethig

Abstract

In an integrated dynamic general equilibrium model of the economy and the ecosystem humans and wildlife species compete for land and prey biomass. We introduce a competitive allocation mechanism in both submodels such that economic prices and ecosystem prices guide the allocation in the economy and in the ecosystem, respectively. We distinguish the scenarios of an open accessible habitat and a privately owned habitat. In both scenarios efficiency requires different corrective taxes/subsidies to internalize consumption services externalities. In the case of an open access habitat additional sources of inefficiency are the divergence of prices for biomass and land in both subsystems. Finally, we determine values of all components of the ecosystem in an efficient steady state with special emphasis on the role and the interplay of ecosystem and economic prices.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2007/wp-cesifo-2007-05/cesifo1_wp1991.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1991.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_1991

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Keywords: land; biomass; ecosystem services;

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References

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  1. Finnoff, David & Tschirhart, John, 2003. "Harvesting in an eight-species ecosystem," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 589-611, May.
  2. William Brock & Anastasios Xepapadeas, 2001. "Valuing Biodiversity from an Economic Perspective: A Unified Economic, Ecological and Genetic Approach," Working Papers, University of Crete, Department of Economics 0102, University of Crete, Department of Economics.
  3. Thomas Eichner & Rüdiger Pethig, 2004. "Efficient Nonanthropocentric Nature Protection," CESifo Working Paper Series 1262, CESifo Group Munich.
  4. van den Bergh, Jeroen C. J. M. & Nijkamp, Peter, 1991. "Operationalizing sustainable development: dynamic ecological economic models," Ecological Economics, Elsevier, vol. 4(1), pages 11-33, October.
  5. Robert Deacon & Charles Kolstad & Allen Kneese & David Brookshire & David Scrogin & Anthony Fisher & Michael Ward & Kerry Smith & James Wilen, 1998. "Research Trends and Opportunities in Environmental and Natural Resource Economics," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 383-397, April.
  6. Gardner Brown, 2000. "Renewable Natural Resource Management and Use Without Markets," Working Papers 0025, University of Washington, Department of Economics.
  7. Gardner Brown, 2000. "Renewable Natural Resource Management and Use Without Markets," Discussion Papers in Economics at the University of Washington, Department of Economics at the University of Washington 0025, Department of Economics at the University of Washington.
  8. A. Lans Bovenberg & Lawrence H. Goulder, 1994. "Optimal Environmental Taxation in the Presence of Other Taxes: General Equilibrium Analyses," NBER Working Papers 4897, National Bureau of Economic Research, Inc.
  9. Ann Wolverton & Don Fullerton, 2003. "The Two-Part Instrument in a Second-Best World," NCEE Working Paper Series, National Center for Environmental Economics, U.S. Environmental Protection Agency 200304, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Aug 2003.
  10. John Tschirhart, 2003. "Ecological Transfers in Non-Human Communities Parallel Economic Markets in a General Equilibrium Ecosystem Model," Journal of Bioeconomics, Springer, vol. 5(2), pages 193-214, May.
  11. Gardner M. Brown, 2000. "Renewable Natural Resource Management and Use without Markets," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 875-914, December.
  12. Albers, Heidi J., 1996. "Modeling Ecological Constraints on Tropical Forest Management: Spatial Interdependence, Irreversibility, and Uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 73-94, January.
  13. de Bovenberg, A Lans & Mooij, Ruud A, 1994. "Environmental Levies and Distortionary Taxation," American Economic Review, American Economic Association, vol. 84(4), pages 1085-89, September.
  14. Thomas Christiaans & Thomas Eichner & Rüdiger Pethig, 2005. "A Micro-Level 'Consumer Approach' to Species Population Dynamics," CESifo Working Paper Series 1530, CESifo Group Munich.
  15. Ayres, Robert U & Kneese, Allen V, 1969. "Production , Consumption, and Externalities," American Economic Review, American Economic Association, vol. 59(3), pages 282-97, June.
  16. David Finnoff & John Tschirhart, 2003. "Protecting an Endangered Species While Harvesting Its Prey in a General Equilibrium Ecosystem Model," Land Economics, University of Wisconsin Press, vol. 79(2), pages 160-180.
  17. Thomas Eichner & Rüdiger Pethig, 2005. "Ecosystem and Economy: An Integrated Dynamic General Equilibrium Approach," Journal of Economics, Springer, vol. 85(3), pages 213-249, 09.
  18. Thomas Crocker & John Tschirhart, 1992. "Ecosystems, externalities, and economies," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(6), pages 551-567, November.
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Citations

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Cited by:
  1. John Tschirhart, 2012. "Biology as a Source of Non-convexities in Ecological Production Functions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(2), pages 189-213, February.
  2. Ouattara, Bazoumana & Amegashie, J. Atsu & Strobl, Eric, 2009. "Moral Hazard and the Composition of Transfers: Theory with an Application to Foreign Aid," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 24, Verein für Socialpolitik, Research Committee Development Economics.
  3. Hussain, A.M. Tanvir & Tschirhart, John, 2013. "Economic/ecological tradeoffs among ecosystem services and biodiversity conservation," Ecological Economics, Elsevier, vol. 93(C), pages 116-127.
  4. Finnoff, David & Gong, Min & Tschirhart, John, 2012. "Perspectives on Ecosystem Based Management for Delivering Ecosystem Services with an Example from an Eighteen-Species Marine Model," International Review of Environmental and Resource Economics, now publishers, vol. 6(1), pages 79-118, January.
  5. Thomas Eichner & Rüdiger Pethig, 2007. "Harvesting in an integrated general equilibrium model," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(1), pages 233-252, May.

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