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Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands

Author

Listed:
  • Daniel Aronoff
  • Will Rafey

Abstract

We introduce an empirical framework for valuing markets in environmental offsets. Using newly collected data on wetland conservation and offsets, we apply this framework to evaluate a set of decentralized markets in Florida, where land developers purchase offsets from long-lived producers who restore wetlands over time. We find offsets led to substantial private gains from trade, creating $2.4 billion of net surplus from 1995 to 2020 relative to direct conservation. Offset trading also generated new hydrological externalities. A locally differentiated Pigouvian tax would have prevented $1.6 billion of new flood damage while preserving more than two-thirds of the private gains from trade.

Suggested Citation

  • Daniel Aronoff & Will Rafey, 2026. "Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands," American Economic Review, American Economic Association, vol. 116(5), pages 1723-1764, May.
    • Handle: RePEc:aea:aecrev:v:116:y:2026:i:5:p:1723-64
    DOI: 10.1257/aer.20231016
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    More about this item

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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