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Species preservation versus development: An experimental investigation under uncertainty

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  • Grijalva, Therese
  • Berrens, Robert P.
  • Shaw, W. Douglass

Abstract

The safe minimum standard (SMS) is a decision rule to preserve renewable resources, unless the social costs of doing so are intolerable. While unpersuasive to many, support for the SMS has been advocated by some economists for settings involving irreversibility and a high degree of uncertainty. The objective of this paper is to explore decision-making involving species preservation versus development within an experimental laboratory setting, and involving uncertainty. The experimental design implements a number of prior game-theoretic investigations of the SMS (Bishop, 1978; Ready and Bishop, 1991; Palmini, 1999), involving insurance, and lottery or combined games against nature. The choices are between species preservation, which possibly provides a cure for a disease, or developing habitat, leading to irreversible depletion. Econometric results from a random parameters logit model, using responses from 117 participants (across both U.S. and Mexican university student samples) and 9 treatment choices, indicate that support for the SMS varies across the type of game, the imposed maximum regret condition concerning the relative magnitude of the costs of disease and net benefits of development, a constructed measure of respondents' risk aversion, and other factors. There is also strong evidence of unobservable heterogeneous preferences for preservation within our sample.

Suggested Citation

  • Grijalva, Therese & Berrens, Robert P. & Shaw, W. Douglass, 2011. "Species preservation versus development: An experimental investigation under uncertainty," Ecological Economics, Elsevier, vol. 70(5), pages 995-1005, March.
  • Handle: RePEc:eee:ecolec:v:70:y:2011:i:5:p:995-1005
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    References listed on IDEAS

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    Cited by:

    1. John Rolfe & Jill Windle, 2015. "Do Respondents Adjust Their Expected Utility in the Presence of an Outcome Certainty Attribute in a Choice Experiment?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(1), pages 125-142, January.
    2. Antonio Filippin & Paolo Crosetto, 2016. "A Reconsideration of Gender Differences in Risk Attitudes," Management Science, INFORMS, vol. 62(11), pages 3138-3160, November.
    3. Therese Grijalva & Jayson Lusk & W. Shaw, 2014. "Discounting the Distant Future: An Experimental Investigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(1), pages 39-63, September.
    4. Shaw, W. Douglass & Woodward, Richard T., 2010. "Water Management, Risk, and Uncertainty: Things We Wish We Knew in the 21st Century," Western Economics Forum, Western Agricultural Economics Association, vol. 9(02).

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