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Accounting for private benefits in ecological restoration planning

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  • Polyakov, Maksym
  • Pannell, David J.

Abstract

Opportunity cost constitutes a substantial component of the costs of ecological restoration projects undertaken in agricultural landscapes. Private benefits generated by restored environmental assets are also important in determining the success of restoration projects. In this study, we compare the implications of using different assumptions about private benefits and opportunity cost for the optimal spatial pattern of ecological restoration of a cleared agricultural landscape in north-central Victoria, Australia. We employ a spatially explicit bio-economic model that optimizes ecological restoration through revegetation of a cleared landscape. We compare implications of using different assumptions about opportunity cost: (a) fixed marginal opportunity costs based on property value, and (b) variable marginal opportunity costs that take into account land value and private benefits generated by environmental assets on the property. Using variable marginal opportunity costs that account for private benefits captured by the landowners gives a better biodiversity outcome than using fixed marginal opportunity cost subject to the same budget constraints. Spatial patterns of ecological restoration of these scenarios differ substantially, with ecological restoration pattern shifting towards smaller properties (lifestyle landowners) in the variable-marginal-value scenario. Our results show that in order to avoid providing misleading recommendations to environmental managers about priorities for ecological restoration on private lands, it is important to take into account amenity values to land owners of native vegetation and variable opportunity costs.

Suggested Citation

  • Polyakov, Maksym & Pannell, David J., 2014. "Accounting for private benefits in ecological restoration planning," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169823, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea14:169823
    DOI: 10.22004/ag.econ.169823
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    References listed on IDEAS

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    1. Maksym Polyakov & David J. Pannell & Ram Pandit & Sorada Tapsuwan & Geoff Park, 2015. "Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural Landscape," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 299-314.
    2. Polyakov, Maksym & Pannell, David J. & Rowles, Alexei & Park, Geoff & Roberts, Anna M., 2011. "Optimising the spatial pattern of landscape revegetation," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100697, Australian Agricultural and Resource Economics Society.
    3. Polyakov, Maksym & Pannell, David J. & Pandit, Ram & Tapsuwan, Sorada & Park, Geoff, 2013. "Valuing Environmental Assets on Rural Lifestyle Properties," Agricultural and Resource Economics Review, Cambridge University Press, vol. 42(1), pages 159-175, April.
    4. David J. Pannell, 2008. "Public Benefits, Private Benefits, and Policy Mechanism Choice for Land-Use Change for Environmental Benefits," Land Economics, University of Wisconsin Press, vol. 84(2), pages 225-240.
    5. McBride, Marissa F. & Wilson, Kerrie A. & Burger, Jutta & Fang, Yi-Chin & Lulow, Megan & Olson, David & O’Connell, Mike & Possingham, Hugh P., 2010. "Mathematical problem definition for ecological restoration planning," Ecological Modelling, Elsevier, vol. 221(19), pages 2243-2250.
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    Keywords

    Environmental Economics and Policy; Land Economics/Use;

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