Optimal land conversion and growth with uncertain biodiversity costs
An important characteristic defining the threat of environmental crises is the uncertainty about their consequences for future welfare. Random processes governing ecosystem dynamics and adaptation to anthropogenic change are important sources of prevailing ecological uncertainty and contribute to the problem of how to balance economic development against natural resource conservation. The aim of this study is to examine optimal growth subject to non-linear dynamic environmental constraints. In a two-sector exogenous growth framework we model a stochastic environmental good, exhibiting uncertain ecological responses to environmental change, and describe the economic and environmental trade-offs that ensue for a risk-averse social planner. Allowing for ecological risk tends to slow economic growth if environmental impacts are assumed to increase exponentially as the rate of disturbance increases. Taken in isolation the effects of ecosystem resilience and ecological uncertainty on the rate of natural resource development are ambiguous and depend on normative parameters such as the social planner’s attitude to risk and rate of time preference.
(This abstract was borrowed from another version of this item.)
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeffrey A. Krautkraemer, 1998. "Nonrenewable Resource Scarcity," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2065-2107, December.
- Smulders, J.A. & van Soest, D.P. & Withagen, C.A.A.M., 2004.
"International trade, species diversity and habitat conservation,"
Other publications TiSEM
806c53bc-ccb6-4c9a-b301-c, Tilburg University, School of Economics and Management.
- Smulders, Sjak & van Soest, Daan & Withagen, Cees, 2004. "International trade, species diversity, and habitat conservation," Journal of Environmental Economics and Management, Elsevier, vol. 48(2), pages 891-910, September.
- Polasky, Stephen & Costello, Christopher & McAusland, Carol, 2004. "On trade, land-use, and biodiversity," Journal of Environmental Economics and Management, Elsevier, vol. 48(2), pages 911-925, September.
- Pierre Dubois & Tomislav Vukina, 2004.
"Grower Risk Aversion and the Cost of Moral Hazard in Livestock Production Contracts,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 86(3), pages 835-841.
- Dubois, Pierre & Vukina, Tomislav, 2003. "Grower Risk Aversion and the Cost of Moral Hazard in Livestock Production Contracts," IDEI Working Papers 248, Institut d'Économie Industrielle (IDEI), Toulouse.
- N. Kaldor, 1971. "A Comment," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 45-46.
- repec:cdl:ucsdec:545419 is not listed on IDEAS
- Johansson-Stenman, Olof & Carlsson, Fredrik & Daruvala, Dinky, 2001. "Measuring Hypothetical Grandparents Preferences For Equality And Relative Standings," Working Papers in Economics 42, University of Gothenburg, Department of Economics.
- Barrett, Scott, 1992. "Economic growth and environmental preservation," Journal of Environmental Economics and Management, Elsevier, vol. 23(3), pages 289-300, November.
- Bernard M.S. van Praag & Adam S. Booij, 2003. "Risk Aversion and the Subjective Time Discount Rate: A Joint Approach," CESifo Working Paper Series 923, CESifo Group Munich.
- Charles Perrings, 1998. "Resilience in the Dynamics of Economy-Environment Systems," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 503-520, April.
- U Pascual & N P Russell & A A Omer, 2003. "Does Loss in Biodiversity Compromise Productivity in Intensive Agriculture?," The School of Economics Discussion Paper Series 0322, Economics, The University of Manchester.
- Raymond Gradus & Sjak Smulders, 1993.
"The trade-off between environmental care and long-term growth—Pollution in three prototype growth models,"
Journal of Economics,
Springer, vol. 58(1), pages 25-51, February.
- Smulders, J.A. & Gradus, R.H.J.M., 1993. "The trade-off between environmental care and long-term growth : Pollution in three proto-type growth models," Other publications TiSEM f3ec6de7-f996-4ac0-b872-0, Tilburg University, School of Economics and Management.
- Santiago J. Rubio Jorge & Renan Ulrich Goetz, 1997.
"Optimal growth and land preservation,"
Working Papers. Serie EC
1997-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Shlomo Benartzi & Richard H. Thaler, 1995. "Myopic Loss Aversion and the Equity Premium Puzzle," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 73-92.
- Charles J. Cicchetti & A. Myrick Freeman III, 1971. "Option Demand and Consumer Surplus: Further Comment," The Quarterly Journal of Economics, Oxford University Press, vol. 85(3), pages 528-539.
- Carson, Richard T & Mitchell, Robert Cameron, 2000. "Public Preferences Towards Environmental Risks: The Case of Trihalomethanes," University of California at San Diego, Economics Working Paper Series qt12t5g549, Department of Economics, UC San Diego.
- Dietrich Earnhart, 2000. "Liability for Past Environmental Contamination and Privatization," William Davidson Institute Working Papers Series 302, William Davidson Institute at the University of Michigan.
- Hofkes, Marjan W., 1996. "Modelling sustainable development: An economy-ecology integrated model," Economic Modelling, Elsevier, vol. 13(3), pages 333-353, July.
- Earnhart, Dietrich, 2000. "Liability for Past Environmental Contamination and Privatization," CEPR Discussion Papers 2571, C.E.P.R. Discussion Papers.
- Swallow, Stephen K., 1990. "Depletion of the environmental basis for renewable resources: The economics of interdependent renewable and nonrenewable resources," Journal of Environmental Economics and Management, Elsevier, vol. 19(3), pages 281-296, November.
- Swanson, Timothy M, 1994. "The Economics of Extinction Revisited and Revised: A Generalised Framework for the Analysis of the Problems of Endangered Species and Biodiversity Losses," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 800-821, Supplemen.
When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:61:y:2007:i:2-3:p:542-549. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.