Conservation Payments under Risk: A Stochastic Dominance Approach
AbstractConservation payments can be used to preserve forest and agroforest systems in developing countries. To explain landowners’ land-use decisions and determine the appropriate conservation payments, it is necessary to focus on risk associated with agricultural price and yield volatility. A theoretical framework is provided for assessing land-use allocation problems under risk and setting risk-efficient conservation payments when returns are not necessary normally distributed. Stochastic dominance rules are used to derive conditions for determining the conservation payments required to guarantee that the environmentally-preferred land use dominates, even when land uses are not considered to be mutually exclusive. An empirical application to shaded-coffee protection in the biologically important El Chocó region of West Ecuador shows that conservation payments required for preserving shaded-coffee areas are much higher than those calculated under the assumption of risk-neutrality. Further, the extant distribution of land has a strong impact on the required conservation payments.
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.
Bibliographic InfoPaper provided by University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group in its series Working Papers with number 2004-05.
Length: 35 pages
Date of creation: 2004
Date of revision:
risk; conservation payments; land allocation; stochastic dominance; agroforest systems; portfolio diversification;
Other versions of this item:
- Pablo C. Ben�tez & 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.
- Pablo Benítez & Timo Kuosmanen & Roland Olschewski & G. Cornelis van Kooten, 2005. "Conservation Payments under Risk: A Stochastic Dominance Approach," Working Papers 2005-14, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
- R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Catherine M. Chambers & Paul E. Chambers & John R. Crooker & John C. Whitehead, 2008.
"Stochastic Dominance, Entropy and Biodiversity Management,"
0807, University of Central Missouri, Department of Economics & Finance, revised May 2008.
- 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.
- Kitti, Mitri & Heikkila, Jaakko & Huhtala, Anni, 2006.
"Fair policies for the coffee trade - protecting people or biodiversity?,"
11858, MTT Agrifood Research Finland.
- Kitti, Mitri & Heikkilä, Jaakko & Huhtala, Anni, 2009. "‘Fair’ policies for the coffee trade – protecting people or biodiversity?," Environment and Development Economics, Cambridge University Press, vol. 14(06), pages 739-758, December.
- Charles Palmer & Markus Ohndorf & Ian A. MacKenzie, 2009. "Life’s a breach! Ensuring ‘permanence’ in forest carbon sinks under incomplete contract enforcement," CER-ETH Economics working paper series 09/113, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
- Knoke, Thomas & Steinbeis, Otto-Emmanuel & Bösch, Matthias & Román-Cuesta, Rosa María & Burkhardt, Thomas, 2011. "Cost-effective compensation to avoid carbon emissions from forest loss: An approach to consider price-quantity effects and risk-aversion," Ecological Economics, Elsevier, vol. 70(6), pages 1139-1153, April.
- Ian A. MacKenzie & Markus Ohndorf & Charles Palmer, 2010.
"Enforcement-proof contracts with moral hazard in precaution: ensuring ‘permanence’ in carbon sequestration,"
Grantham Research Institute on Climate Change and the Environment Working Papers
27, Grantham Research Institute on Climate Change and the Environment.
- Ian A. MacKenzie & Markus Ohndorf & Charles Palmer, 2012. "Enforcement-proof contracts with moral hazard in precaution: ensuring 'permanence' in carbon sequestration," Oxford Economic Papers, Oxford University Press, vol. 64(2), pages 350-374, April.
- Engel, Stefanie & Pagiola, Stefano & Wunder, Sven, 2008. "Designing payments for environmental services in theory and practice: An overview of the issues," Ecological Economics, Elsevier, vol. 65(4), pages 663-674, May.
- Veronesi, Marcella & Schlondorn, Tim & Zabel, Astrid & Engel, Stefanie, 2012. "Designing REDD+ Schemes to Address Permanence Concerns: Empirical Evidence from Kenya," Congress Papers 124131, Italian Association of Agricultural and Applied Economics (AIEAA).
- Stefanie Engel & Charles Palmer & Luca Taschini & Simon Urech, 2012. "Cost-effective payments for reducing emissions from deforestation under uncertainty," Grantham Research Institute on Climate Change and the Environment Working Papers 72, Grantham Research Institute on Climate Change and the Environment.
- Levy, Moshe, 2009. "Almost Stochastic Dominance and stocks for the long run," European Journal of Operational Research, Elsevier, vol. 194(1), pages 250-257, April.
- Marcella Veronesi & Tim Schloendorn & Astrid Zabel & Stefanie Engel, 2012. "Designing Redd+ Schemes When Forest Users Are Not Forest Landowners: Evidence From A Survey-Based Experiment In Kenya," Working Papers 15/2012, University of Verona, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (G.C. van Kooten).
If references are entirely missing, you can add them using this form.