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Prioritizing payment for environmental services: Using nonmarket benefits and costs for optimal selection

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  • Duke, Joshua M.
  • Dundas, Steven J.
  • Johnston, Robert J.
  • Messer, Kent D.

Abstract

This article provides a practical, applied analysis of optimal targeting in agricultural land preservation, comparing the performance of four alternative targeting strategies. Nonmarket benefit data and hedonic cost estimates are used for parcels in Sussex County, Delaware. The results show that branch-and-bound optimization (OPT) does not significantly outperform the much simpler benefit–cost ratio targeting (BCRT). However, significant losses of potential net benefits occur when applied methods overlook either benefits or costs. In this application, benefit targeting (BT) and cost targeting (CT) significantly underperform both OPT and BCRT, with BT underperforming all other methods.

Suggested Citation

  • Duke, Joshua M. & Dundas, Steven J. & Johnston, Robert J. & Messer, Kent D., 2014. "Prioritizing payment for environmental services: Using nonmarket benefits and costs for optimal selection," Ecological Economics, Elsevier, vol. 105(C), pages 319-329.
  • Handle: RePEc:eee:ecolec:v:105:y:2014:i:c:p:319-329
    DOI: 10.1016/j.ecolecon.2014.06.014
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    3. Zack Dorner & Daniel A. Brent & Anke Leroux, 2019. "Preferences for Intrinsically Risky Attributes," Land Economics, University of Wisconsin Press, vol. 95(4), pages 494-514.
    4. Wang, Haoluan & Swallow, Brent M., 2017. "Linking Agricultural Land Conservation and Provision of Ecosystem Services: A Choice Experiment Approach," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258537, Agricultural and Applied Economics Association.
    5. Hai-Ying Gu & Qing-Mi Hu & Tian-Qiong Wang, 2019. "Payment for Rice Growers to Reduce Using N Fertilizer in the GHG Mitigation Program Driven by the Government: Evidence from Shanghai," Sustainability, MDPI, Open Access Journal, vol. 11(7), pages 1-17, April.
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    7. Campanhão, Ligia Maria Barrios & Ranieri, Victor Eduardo Lima, 2019. "Guideline framework for effective targeting of payments for watershed services," Forest Policy and Economics, Elsevier, vol. 104(C), pages 93-109.
    8. Jacob R. Fooks & Kent D. Messer & Maik Kecinski, 2018. "A Cautionary Note on the Use of Benefit Metrics for Cost-Effective Conservation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(4), pages 985-999, December.
    9. Dorner, Zach & Brent, Daniel A. & Leroux, Anke, 2016. "Eliciting Risk Preferences for Intrinsic Attributes," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236644, Agricultural and Applied Economics Association.
    10. Sharma, Bijay P. & Cho, Seong-Hoon & Yu, T. Edward, 2019. "Designing cost-efficient payments for forest-based carbon sequestration: An auction-based modeling approach," Forest Policy and Economics, Elsevier, vol. 104(C), pages 182-194.

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