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Pricing the Ecosystem and Taxing Ecosystem Services: A General Equilibrium Approach

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  • Thomas Eichner
  • Rüdiger Pethig

Abstract

In an integrated dynamic general equilibrium model of the economy and the ecosystem humans and wildlife species compete for land and prey biomass. We introduce a competitive allocation mechanism in both submodels such that economic prices and ecosystem prices guide the allocation in the economy and in the ecosystem, respectively. We distinguish the scenarios of an open accessible habitat and a privately owned habitat. In both scenarios efficiency requires different corrective taxes/subsidies to internalize consumption services externalities. In the case of an open access habitat additional sources of inefficiency are the divergence of prices for biomass and land in both subsystems. Finally, we determine values of all components of the ecosystem in an efficient steady state with special emphasis on the role and the interplay of ecosystem and economic prices.

Suggested Citation

  • Thomas Eichner & Rüdiger Pethig, 2007. "Pricing the Ecosystem and Taxing Ecosystem Services: A General Equilibrium Approach," CESifo Working Paper Series 1991, CESifo.
    • Handle: RePEc:ces:ceswps:_1991
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    2. Haoran Pan & Pierre Failler & Qianyi Du & Christos Floros & Loretta Malvarosa & Emmanuel Chassot & Vincenzo Placenti, 2022. "An Inter-Temporal Computable General Equilibrium Model for Fisheries," Sustainability, MDPI, vol. 14(11), pages 1-23, May.
    3. Amegashie, J. Atsu & Ouattara, Bazoumanna & Strobl, Eric, 2007. "Moral Hazard and the Composition of Transfers: Theory with an Application to Foreign Aid," MPRA Paper 3158, University Library of Munich, Germany, revised 06 May 2007.
    4. John Tschirhart, 2012. "Biology as a Source of Non-convexities in Ecological Production Functions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(2), pages 189-213, February.
    5. Yoshida, Jun & Imoto, Tomoko & Kono, Tatsuhito, 2022. "Agricultural and urban land use policies to manage human–wildlife conflicts," MPRA Paper 115375, University Library of Munich, Germany.
    6. Yoshida, Jun & Kono, Tatsuhito, 2022. "Cities and biodiversity: Spatial efficiency of land use," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 685-705.
    7. Thomas Eichner & Rüdiger Pethig, 2007. "Harvesting in an integrated general equilibrium model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 233-252, May.
    8. Rafat Alam & Nguyen Quyen, 2018. "The conversion of biodiversity-rich land and ecosystem services," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(1), pages 157-178, January.
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    10. Hussain, A.M. Tanvir & Tschirhart, John, 2013. "Economic/ecological tradeoffs among ecosystem services and biodiversity conservation," Ecological Economics, Elsevier, vol. 93(C), pages 116-127.
    11. Finnoff, David & Gong, Min & Tschirhart, John, 2012. "Perspectives on Ecosystem Based Management for Delivering Ecosystem Services with an Example from an Eighteen-Species Marine Model," International Review of Environmental and Resource Economics, now publishers, vol. 6(1), pages 79-118, January.

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    More about this item

    Keywords

    land; biomass; ecosystem services;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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