Optimal Land Conversion And Growth With Uncertain Biodiversity Costs
An important characteristic defining the threat of environmental crises is the uncertainty about their consequences for future welfare. Random processes governing ecosystem dynamics and adaptation to anthropogenic change are important sources of prevailing ecological uncertainty and contribute to the problem of how to balance economic development against natural resource conservation. The aim of this study is to examine optimal growth subject to non-linear dynamic environmental constraints. In a two-sector exogenous growth framework we model a stochastic environmental good, exhibiting uncertain ecological responses to environmental change, and describe the economic and environmental trade-offs that ensue for a risk-averse social planner. Allowing for ecological risk tends to slow economic growth if environmental impacts are assumed to increase exponentially as the rate of disturbance increases. Taken in isolation the effects of ecosystem resilience and ecological uncertainty on the rate of natural resource development are ambiguous and depend on normative parameters such as the social planner’s attitude to risk and rate of time preference.
|Date of creation:||2005|
|Date of revision:|
|Note:||This paper is forthcoming (2006) in: Creedy, J. and Leroux, A. , Optimal Land Conversion and Growth with Uncertain Biodiversity Costs, Ecological Economics.|
|Contact details of provider:|| Postal: Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia|
Phone: +61 3 8344 5355
Fax: +61 3 8344 6899
Web page: http://fbe.unimelb.edu.au/economics
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.:
- Carson, Richard T & Mitchell, Robert Cameron, 2000.
"Public Preferences Towards Environmental Risks: The Case of Trihalomethanes,"
University of California at San Diego, Economics Working Paper Series
qt12t5g549, Department of Economics, UC San Diego.
- Richard T. Carson & Robert Cameron Mitchell, 2006. "Public Preferences Toward Environmental Risks: The Case of Trihalomethanes," Chapters, in: Handbook on Contingent Valuation, chapter 19 Edward Elgar Publishing.
- Bernard M.S. van Praag & Adam S. Booij, 2003.
"Risk Aversion and the Subjective Time Discount Rate: A Joint Approach,"
CESifo Working Paper Series
923, CESifo Group Munich.
- Bernard M.S. van Praag & Adam S. Booij, 2003. "Risk Aversion and the Subjective Time Discount Rate: A Joint Approach," Tinbergen Institute Discussion Papers 03-018/3, Tinbergen Institute.
- Dietrich Earnhart, 2000. "Liability for Past Environmental Contamination and Privatization," William Davidson Institute Working Papers Series 302, William Davidson Institute at the University of Michigan.
- Swanson, Timothy M, 1994. "The Economics of Extinction Revisited and Revised: A Generalised Framework for the Analysis of the Problems of Endangered Species and Biodiversity Losses," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 800-821, Supplemen.
- Jeffrey A. Krautkraemer, 1998. "Nonrenewable Resource Scarcity," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2065-2107, December.
- Pierre Dubois & Tomislav Vukina, 2004.
"Grower Risk Aversion and the Cost of Moral Hazard in Livestock Production Contracts,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 86(3), pages 835-841.
- Dubois, Pierre & Vukina, Tomislav, 2003. "Grower Risk Aversion and the Cost of Moral Hazard in Livestock Production Contracts," IDEI Working Papers 248, Institut d'Économie Industrielle (IDEI), Toulouse.
- Swallow, Stephen K., 1990. "Depletion of the environmental basis for renewable resources: The economics of interdependent renewable and nonrenewable resources," Journal of Environmental Economics and Management, Elsevier, vol. 19(3), pages 281-296, November.
- U Pascual & N P Russell & A A Omer, 2003. "Does Loss in Biodiversity Compromise Productivity in Intensive Agriculture?," The School of Economics Discussion Paper Series 0322, Economics, The University of Manchester.
- Smulders, J.A. & Gradus, R.H.J.M., 1993.
"The trade-off between environmental care and long-term growth : Pollution in three proto-type growth models,"
Other publications TiSEM
f3ec6de7-f996-4ac0-b872-0, Tilburg University, School of Economics and Management.
- Raymond Gradus & Sjak Smulders, 1993. "The trade-off between environmental care and long-term growth—Pollution in three prototype growth models," Journal of Economics, Springer, vol. 58(1), pages 25-51, February.
- Charles J. Cicchetti & A. Myrick Freeman III, 1971. "Option Demand and Consumer Surplus: Further Comment," The Quarterly Journal of Economics, Oxford University Press, vol. 85(3), pages 528-539.
- Johansson-Stenman, Olof & Carlsson, Fredrik & Daruvala, Dinky, 2001. "Measuring Hypothetical Grandparents Preferences For Equality And Relative Standings," Working Papers in Economics 42, University of Gothenburg, Department of Economics.
- N. Kaldor, 1971. "A Comment," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 45-46.
- Shlomo Benartzi & Richard H. Thaler, 1995. "Myopic Loss Aversion and the Equity Premium Puzzle," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 73-92.
- Polasky, Stephen & Costello, Christopher & McAusland, Carol, 2004. "On trade, land-use, and biodiversity," Journal of Environmental Economics and Management, Elsevier, vol. 48(2), pages 911-925, September.
- Santiago J. Rubio Jorge & Renan Ulrich Goetz, 1997.
"Optimal growth and land preservation,"
Working Papers. Serie EC
1997-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Hofkes, Marjan W., 1996. "Modelling sustainable development: An economy-ecology integrated model," Economic Modelling, Elsevier, vol. 13(3), pages 333-353, July.
- repec:cdl:ucsdec:545419 is not listed on IDEAS
- Smulders, Sjak & van Soest, Daan & Withagen, Cees, 2004.
"International trade, species diversity, and habitat conservation,"
Journal of Environmental Economics and Management,
Elsevier, vol. 48(2), pages 891-910, September.
- Smulders, J.A. & van Soest, D.P. & Withagen, C.A.A.M., 2004. "International trade, species diversity and habitat conservation," Other publications TiSEM 806c53bc-ccb6-4c9a-b301-c, Tilburg University, School of Economics and Management.
- Earnhart, Dietrich, 2000. "Liability for Past Environmental Contamination and Privatization," CEPR Discussion Papers 2571, C.E.P.R. Discussion Papers.
- Barrett, Scott, 1992. "Economic growth and environmental preservation," Journal of Environmental Economics and Management, Elsevier, vol. 23(3), pages 289-300, November.
- Charles Perrings, 1998. "Resilience in the Dynamics of Economy-Environment Systems," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 503-520, April.
When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:957. 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: (Katherine Perez)
If references are entirely missing, you can add them using this form.