The Economics of Nature Managing Biological Assets

by Van Kooten, G. Cornelis; Bulte, Erwin H.

• ISBN13: 9780631218951
• ISBN10: 0631218955
• Format: Paperback
• Copyright: 2000-07-26
• Publisher: Wiley-Blackwell

Summary

The Economics of Nature Management takes a unique "portfolio management" perspective on the worldwide deterioration of the natural environment. For many emerging countries, nature conservation boils down to the purely economic decision of "investing" limited funds in nature potentially at the expense of investing in other necessary imperatives such as education or infrastructure. As a result, the authors see the function of the book as twofold. First, to measure environmental services and biological assets and second it demonstrates how it applies the economic theory of nature management through case studies.

Author Biography

G. Cornelis van Kooten is Professor in Agricultural Sciences and Forestry as well as Associate Director of the Forest Economics and Policy Analysis (FEPA) Research Unit at the University of British Columbia. He is on the editorial boards of several international journals, and has published more than 100 articles and books on natural resource and environmental economics as they relate to agriculture and forestry.

Erwin H. Bulte is Assistant Professor in Tilburg University's Department of Economics and in Wageningen University's Department of Economics and Management. He has published widely in the areas of endangered species conservation, renewable resource management, and forestry. He serves as Secretary General of the European Association of Environmental and Resource Economists (EAERE).

Table of Contents

List of Tables	xii
List of Figures	xv
Preface	xvii
Managing the Earth's Biological Assets	1	(5)
Consumer Welfare Measurement	6	(29)
Consumer Demand Theory	6	(7)
The primal problem	7	(1)
The dual problem	8	(1)
Restrictions on demand systems	9	(2)
Utility maximisation: Some issues	11	(2)
Measuring Changes in the Well Being of Consumers	13	(12)
Consumer surplus	13	(6)
Compensating and equivalent variations	19	(6)
Public Goods and Welfare Change	25	(3)
General Equilibrium Considerations	28	(7)
General equilibrium demand curve	29	(1)
Measuring welfare in one market with distortions in other markets	30	(2)
Appendix: Consumer Surplus and Path Dependency	32	(3)
Producer Welfare and Aggregation of Well Being	35	(24)
Measuring Producer Surplus via the Input Market	36	(12)
Changes in input prices	36	(4)
Resource income and backward-bending supply	40	(5)
Sequential measurement versus measurement in a single market	45	(1)
Quantity restrictions	46	(2)
Aggregation of Economic Welfare	48	(7)
Aggregation of producer welfare	48	(1)
Aggregation of consumer welfare	49	(1)
Welfare effects impacting more than one market	49	(3)
Welfare impacts in one market: Empirical considerations	52	(2)
Aggregate welfare impacts: An illustration	54	(1)
Compensation Tests and Social Welfare Functions	55	(4)
Resource Rents and Rent Capture	59	(41)
What is Rent?	59	(7)
Transfer price or opportunity cost	63	(1)
Resource and scarcity rents	63	(1)
Quasi-rents	64	(1)
Other types of rent	65	(1)
Agricultural Land and Rent Capture	66	(3)
Taxation, Charges and Rent Capture in Forestry	69	(17)
Rent capture and efficiency	70	(3)
Methods of rent capture	73	(4)
Rent capture in British Columbia	77	(3)
Rent capture in Indonesia	80	(3)
Rent dissipation in forestry	83	(3)
Property Rights and Rent Dissipation in Fisheries	86	(14)
Property rights and rent dissipation	86	(6)
Management instruments	92	(8)
Valuing Nonmarket Benefits	100	(52)
Expenditure Function Approach	101	(12)
Market valuation of public goods via physical linkages	101	(3)
Market valuation of public goods via behavioural linkages	104	(6)
Property values, benefit estimation and hedonic pricing	110	(3)
Recreation Demand and the Travel Cost Method	113	(7)
Household production function approach	115	(1)
Limited dependent variable models	116	(1)
Travel cost model with site attributes	117	(3)
The Contingent Valuation Method	120	(20)
Welfare measurement using CVM: Theory	123	(9)
Contingent valuation survey techniques: Some issues	132	(2)
Is the contingent valuation method a panacea?	134	(6)
Other Direct Valuation Methods	140	(11)
Choice experiments	140	(2)
Constructed preferences	142	(1)
Fuzzy logic and its potential for nonmarket valuation	143	(8)
Discussion	151	(1)
Evaluating Natural Resource Policy	152	(31)
Policy Evaluation and the Role of Government	153	(3)
A Brief Background to Cost-Benefit Analysis	156	(4)
Choice of Social Discount Rate	160	(3)
The discount rate and biological assets	162	(1)
Mechanics of Cost-Benefit Analysis	163	(4)
Applications of Cost-Benefit Analysis	167	(15)
Ozone damage and opportunity cost	167	(1)
Water quality improvements and composting livestock wastes	168	(2)
Evaluation of British Columbia's Forest Practices Code	170	(12)
Conclusions	182	(1)
Economic Dynamics and Renewable Resource Management	183	(49)
Background	184	(5)
Optimal Population Size and Economic Dynamics	189	(6)
Managing population quality: Micro-evolution of species	194	(1)
Extinction	195	(6)
Bioeconomic models and extinction	195	(4)
Ecological considerations and extinction	199	(2)
Property Rights and Dynamics	201	(3)
Uncertainty in Resource Exploitation	204	(11)
Extinction revisited: Minimum viabie populations and uncertainty	207	(4)
Meta-populations: Stochastic and spatial aspects	211	(4)
Beyond Bioeconomic Models? Species Interaction	215	(17)
Appendix I: Deterministic Optimal Control Methods	218	(3)
Discounting	221	(2)
Discrete maximum principle and Bellman equation	223	(1)
Appendix II: Stochastic Dynamic Optimisation	224	(1)
Introduction to Ito calculus	225	(4)
Stochastic dynamic programming	229	(3)
Sustainable Development and Conservation	232	(38)
Background	233	(5)
What is to be sustained?	233	(2)
Viewpoints and sustainability	235	(1)
Sustainable consumption (utility)	236	(2)
Sustainability Paradigms: Maintaining Capital Stocks	238	(7)
Strong sustainability: The ecological paradigm	238	(2)
Weak sustainability: The neoclassical paradigm	240	(3)
The paradigms in contrast	243	(2)
Sustainable Development: Related Concepts	245	(15)
Economics of conservation	245	(2)
The safe minimum standard (SMS)	247	(2)
Coevolutionary development	249	(4)
Population pressure	253	(3)
Resource scarcity	256	(4)
Sustainability Indicators and Evidence	260	(6)
Weak and strong sustainability: Evidence	260	(2)
The ecological footprint	262	(4)
The Environmental Kuznets Curve	266	(2)
Conclusions	268	(2)
Biological Diversity and Habitat	270	(49)
Biological Diversity: Background	271	(14)
What are species?	272	(1)
At what rate are species disappearing?	273	(7)
Measuring biodiversity	280	(5)
Economics, Values and Endangered Species Legislation	285	(8)
Takings	288	(1)
Takings and endangered species legislation	289	(4)
Economic Values and Biodiversity	293	(14)
Resilience and quasi-option value	293	(6)
How valuable are species and their habitat?	299	(8)
Nature Conservation and Protected Areas	307	(11)
Economic considerations	308	(3)
Defining protected areas	311	(2)
Global distribution of protected areas: General trends	313	(5)
Conclusions	318	(1)
Threatened and Endangered Species	319	(52)
Protecting Biological Diversity by Treaties	320	(5)
The African Elephant	325	(30)
Welfare economics of an ivory trade ban (no poaching)	326	(3)
The ivory trade ban and elephant numbers	329	(9)
Open-access, the trade ban and poaching	338	(3)
Enforcement to protect elephants	341	(7)
Declining marginal nonuse benefits and strategic culling	348	(4)
Conclusions concerning the ivory trade ban	352	(2)
Joint harvesting of endangered species: Rhinoceros and elephants	354	(1)
Game Ranching to Conserve Wildlife in Kenya	355	(9)
Bioeconomic model of game ranching	358	(2)
Empirical model of game cropping in Kenya	360	(2)
Economics of game cropping: Policy insights	362	(2)
Should Whales be Harvested?	364	(5)
Conclusions	369	(2)
Forest Management	371	(58)
Forest Competitiveness and Certification	375	(7)
Public ownership of forestlands	375	(1)
Silvicultural investment and competitiveness	376	(3)
Forest certification and eco-labelling	379	(3)
Optimal Forest Rotation Age	382	(14)
Maximising sustainable yield	382	(1)
Maximising net benefits from a single cut: Fisher rotation age	383	(2)
Faustmann or financial rotation age	385	(6)
Hartman rotation age: Non-timber benefits	391	(1)
Hartman-Faustmann rotation age	392	(3)
Summary	395	(1)
The Allowable Cut Effect and Even Flow Constraints	396	(2)
Climate Change and Forestry	398	(30)
Managing forests for carbon fluxes	402	(9)
Planting trees on marginal agricultural land for carbon uptake	411	(17)
Conclusions	428	(1)
Tropical Deforestation	429	(35)
Tropical Deforestation: Global Patterns and Rates	431	(4)
Economic Value of Tropical Forests	435	(6)
Production functions of tropical forests	436	(1)
Regulatory functions of tropical forests	437	(2)
Habitat, biodiversity and nonuse values	439	(1)
Summary	440	(1)
Causes of Tropical Deforestation	441	(14)
Commercial logging	442	(1)
Conversion to agriculture	443	(1)
Economic models of deforestation: Farm-level, regional and global	444	(4)
Income and deforestation	448	(2)
Population and deforestation	450	(1)
Role of government in tropical deforestation	451	(4)
Is Tropical Deforestation Excessive?	455	(7)
International forest conservation measures	458	(2)
Trade measures	460	(1)
International transfers	461	(1)
Conclusions	462	(2)
Concluding Remarks	464	(5)
References	469	(32)
Index	501