International Biodiversity Management with Technical Change
I consider the case where the conservation of land yields utility through biodiversity, firms improve their efficiency by in-house R&D and a large number of countries establish a self-interested government for biodiversity management. I compare the regulation of land use with direct subsidies for conserved land and obtain following results. Regulation promotes biodiversity and economic growth. Because revenue-rasing taxes hamper growth, the replacement of regulation by subsidies decreases biodiversity, growth and welfare. Applied to NATURA 2000 in the EU, this suggests that regulation without any budget may be an appropriate degree of authority for the Commission.
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