We study the environmental and economic consequences of introducing a program to compensate peasants of a small economy for the damage caused by wildlife. We show that the widely held belief that compensation induces wildlife conservation may be erroneous. In a partially open economy, compensation can lower the wildlife stock and result in a net welfare loss for local people. In an open economy, compensation can trigger wildlife extinction and also reduce welfare. The conditions leading to a reduction of the wildlife stock are identified and the implications for current and planned compensation programs are discussed.
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Paper provided by University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group in its series Working Papers with number
2003-01.
Find related papers by JEL classification: O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies F18 - International Economics - - Trade - - - Trade and Environment
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