Practical Alternatives to Estimate Opportunity Costs of Forest Conservation
Numerous studies have shown the merits of targeting the costs of conservation besides environmental benefits and aligning payments for ecosystem services with incurred costs. However, cost-effective and precise estimation of site specific opportunity costs is a major challenge. In this paper we test two approaches to estimate opportunity costs of conservation: One approach derives opportunity costs from annual land rents, and the other models regresses opportunity costs on easily obtainable and difficult to manipulate spatial and socio-economic independent variables such as soil quality. None of these approaches appeared to estimate opportunity costs sufficiently well. But since this judgment is based on how well the estimates compare to the reference opportunity costs, which were computed from farm budgets, we also considered potential flaws in the reference data and tested their plausibility. The tests confirmed the plausibility of data. Based on the results presented in this paper none of the two cost estimation approaches can be recommended for practical application in conservation programs. Yet, further research is necessary to confirm these findings giving special attention to the techniques that are applied to deliver reference point data on opportunity costs.
|Date of creation:||2011|
|Contact details of provider:|| Web page: http://www.eaae.org|
More information through EDIRC
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.:
- Lazarus, William F., 2000. "Minnesota Agricultural Economist 699," Minnesota Applied Economist/Minnesota Agricultural Economist 13198, University of Minnesota, Department of Applied Economics.
- Fuss, Melvyn & McFadden, Daniel & Mundlak, Yair, 1978. "A Survey of Functional Forms in the Economic Analysis of Production," Histoy of Economic Thought Chapters,in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 4 McMaster University Archive for the History of Economic Thought.
- Wünscher, Tobias & Engel, Stefanie & Wunder, Sven, 2008. "Spatial targeting of payments for environmental services: A tool for boosting conservation benefits," Ecological Economics, Elsevier, vol. 65(4), pages 822-833, May.
- Ferraro, Paul J., 2003. "Conservation Contracting in Heterogeneous Landscapes: An Application to Watershed Protection with Threshold Constraints," Agricultural and Resource Economics Review, Cambridge University Press, vol. 32(01), pages 53-64, April.
- Ferraro, Paul J., 2008. "Asymmetric information and contract design for payments for environmental services," Ecological Economics, Elsevier, vol. 65(4), pages 810-821, May.
- Alix-Garcia, Jennifer & De Janvry, Alain & Sadoulet, Elisabeth, 2008. "The role of deforestation risk and calibrated compensation in designing payments for environmental services," Environment and Development Economics, Cambridge University Press, vol. 13(03), pages 375-394, June.
When requesting a correction, please mention this item's handle: RePEc:ags:eaae11:115774. 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: (AgEcon Search)
If references are entirely missing, you can add them using this form.