IDEAS home Printed from https://ideas.repec.org/a/eee/resene/v38y2014icp1-18.html
   My bibliography  Save this article

Implementing efficient conservation portfolio design

Author

Listed:
  • Mallory, Mindy L.
  • Ando, Amy W.

Abstract

Modern tools for cost-effective conservation reserve site planning require the planner to have information about spatial distributions of conservation costs and benefits. Climate change creates unprecedented uncertainty about future land values and species habitat ranges, such that conservation scientists cannot map costs and benefits with certainty anymore. This paper contributes to the literature on the economics of conservation in the face of climate change uncertainty. It advances a new method for using modern portfolio theory to choose lands to protect that yield total conservation returns with less uncertainty. It explores the implications for portfolio recommendations of variation in the correlations between ecological and land-value responses to climate change. It also tests the robustness of the method to shortcuts that might be taken to simplify analysis, identifying problems that arise if conservation costs are ignored in portfolio analysis and demonstrating when portfolio recommendations are sensitive to how ecological benefits are quantified.

Suggested Citation

  • Mallory, Mindy L. & Ando, Amy W., 2014. "Implementing efficient conservation portfolio design," Resource and Energy Economics, Elsevier, vol. 38(C), pages 1-18.
  • Handle: RePEc:eee:resene:v:38:y:2014:i:c:p:1-18
    DOI: 10.1016/j.reseneeco.2014.05.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0928765514000402
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:hrv:faseco:33373343 is not listed on IDEAS
    2. Ross, Stephen A., 1976. "The arbitrage theory of capital asset pricing," Journal of Economic Theory, Elsevier, vol. 13(3), pages 341-360, December.
    3. Gloy, Brent A. & Boehlje, Michael & Dobbins, Craig L. & Hurt, Christopher & Baker, Timothy G., 2011. "Are Economic Fundamentals Driving Farmland Values?," Choices, Agricultural and Applied Economics Association, vol. 26(2).
    4. Andrew J. Morton & Stanley R. Pliska, 1995. "Optimal Portfolio Management With Fixed Transaction Costs," Mathematical Finance, Wiley Blackwell, vol. 5(4), pages 337-356.
    5. Robert Mendelsohn & Ariel Dinar, 2003. "Climate, Water, and Agriculture," Land Economics, University of Wisconsin Press, vol. 79(3), pages 328-341.
    6. Mendelsohn, Robert & Nordhaus, William D & Shaw, Daigee, 1994. "The Impact of Global Warming on Agriculture: A Ricardian Analysis," American Economic Review, American Economic Association, vol. 84(4), pages 753-771, September.
    7. Wolfram Schlenker & W. Michael Hanemann & Anthony C. Fisher, 2005. "Will U.S. Agriculture Really Benefit from Global Warming? Accounting for Irrigation in the Hedonic Approach," American Economic Review, American Economic Association, vol. 95(1), pages 395-406, March.
    8. Olivier Deschênes & Michael Greenstone, 2007. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather," American Economic Review, American Economic Association, vol. 97(1), pages 354-385, March.
    9. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
    10. David J. Lewis & Andrew J. Plantinga & JunJie Wu, 2009. "Targeting Incentives to Reduce Habitat Fragmentation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1080-1096.
    11. Martin L. Weitzman, 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 1-19, February.
    12. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    13. Dissanayake, Sahan T.M. & ├ľnal, Hayri, 2011. "Amenity driven price effects and conservation reserve site selection: A dynamic linear integer programming approach," Ecological Economics, Elsevier, vol. 70(12), pages 2225-2235.
    14. John Pattison & Peter C. Boxall & Wiktor L. Adamowicz, 2011. "The Economic Benefits of Wetland Retention and Restoration in Manitoba," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 59, pages 223-244, June.
    15. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    16. Schnitkey, Gary D. & Sherrick, Bruce J., 2011. "Income And Capitalization Rate Risk In Agricultural Real Estate Markets," Choices, Agricultural and Applied Economics Association, vol. 26(2).
    17. Lewis, David J. & Plantinga, Andrew J. & Nelson, Erik & Polasky, Stephen, 2011. "The efficiency of voluntary incentive policies for preventing biodiversity loss," Resource and Energy Economics, Elsevier, vol. 33(1), pages 192-211, January.
    18. Costello, Christopher & Polasky, Stephen, 2004. "Dynamic reserve site selection," Resource and Energy Economics, Elsevier, vol. 26(2), pages 157-174, June.
    19. Lichtenberg, Erik & Tra, Constant & Hardie, Ian, 2007. "Land use regulation and the provision of open space in suburban residential subdivisions," Journal of Environmental Economics and Management, Elsevier, vol. 54(2), pages 199-213, September.
    20. Albers, Heidi J. & Ando, Amy W. & Chen, Xiaoxuan, 2008. "Spatial-econometric analysis of attraction and repulsion of private conservation by public reserves," Journal of Environmental Economics and Management, Elsevier, vol. 56(1), pages 33-49, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:eee:ecoser:v:27:y:2017:i:pa:p:25-37 is not listed on IDEAS

    More about this item

    Keywords

    Conservation; Reserve-site selection; Climate change; Uncertainty; Portfolio; Risk; Spatial; Prairie Pothole Region;

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:resene:v:38:y:2014:i:c:p:1-18. 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: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/505569 .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.