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The Market for Conservation and Other Hostages

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  • Bård Harstad

Abstract

A “conservation good” (such as a tropical forest) is owned by a seller who is tempted to consume (or cut), but a buyer benefits more from conservation. The seller does conserve if the buyer is expected to buy, but the buyer is unwilling to pay as long as the seller conserves. This contradiction implies that the market for conservation cannot be efficient and conservation is likely to fail. A leasing market is inefficient for similar reasons and dominates the sales market if and only if the conservation value is low, the consumption value high, and the buyer’s protection cost large. The theory explains why optimal conservation often fails and why conservation abroad is leased, while domestic conservation is bought.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4296.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4296

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Keywords: conservation; deforestation; dynamic games; sales v rental markets;

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Cited by:
  1. Georgy Egorov & Bård Harstad, 2013. "Private Politics and Public Regulation," NBER Working Papers 19737, National Bureau of Economic Research, Inc.
  2. Frederick van der Ploeg, 2013. "Cumulative Carbon Emissions and the Green Paradox," OxCarre Working Papers 110, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  3. Bård Harstad, 2011. "The Market for Conservation and Other Hostages," NBER Working Papers 17409, National Bureau of Economic Research, Inc.
  4. May, Peter H. & Soares-Filho, Britaldo Silveira & Strand, Jon, 2013. "How much is the Amazon worth ? the state of knowledge concerning the value of preserving amazon rainforests," Policy Research Working Paper Series 6668, The World Bank.
  5. Suzi Kerr, 2012. "The Economics of International Policy Agreements to Reduce Emissions from Deforestation and Degradation," Working Papers 12_12, Motu Economic and Public Policy Research.

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