An Equilibrium Model of Habitat Conservation Under Uncertainty and Irreversibility

Corato, Luca Di; Moretto, Michele; Vergalli, Sergio

doi:10.2139/ssrn.1737642

Cited by 4 publications

(4 citation statements)

References 72 publications

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“…14 In this case, a payment equal to 2 B(t) with 2 2 [0; 1 ] 15 may be o¤ered to compensate the landholder. 16 In addition, besides the Government …xes an upper level A on total land conversion. These two limits may be …xed to account for critical ecological thresholds at which, if crossed, the ES provision may dramatically lower or vanish.…”

Section: The Governmentmentioning

confidence: 99%

Land conversion pace under uncertainty and irreversibility: too fast or too slow?

2013

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In this paper stochastic dynamic programming is used to investigate land conversion decisions taken by a multitude of landholders under uncertainty about the value of environmental services and irreversible development. We study land conversion under competition on the market for agricultural products when voluntary and mandatory measures are combined by the Government to induce adequate participation in a conservation plan. We study the impact of uncertainty on the optimal conversion policy and discuss conversion dynamics under di¤erent policy scenarios on the basis of the relative long-run expected rate of deforestation. Interestingly, we show that uncertainty, even if it induces conversion postponement in the short-run, increases the average rate of deforestation and reduces expected time for total conversion in the long run. Finally, we illustrate our …ndings through some numerical simulations. keywords: optimal stopping, deforestation, payments for environmental services, natural resources management. jel classification: C61, D81, Q24, Q58.We wish to thank Guido Candela for helpful comments. We are also grateful for comments and suggestions to participants at the 12th International BIOECON conference; the 51st SIE conference; the 18th Annual EAERE Conference; the 8th workshop of the International Society of Dynamic Games; and to seminar participants at

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Section: The Governmentmentioning

confidence: 99%

Land conversion pace under uncertainty and irreversibility: too fast or too slow?

2013

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“…1 3 In the following, "landholder" refers to an agent conserving land and "farmer" to an agent cultivating it. 16 In addition, besides the Government …xes an upper level A on total land conversion. These two limits may be …xed to account for critical ecological thresholds at which, if crossed, the ES provision may dramatically lower or vanish.…”

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confidence: 99%

Land Conversion Pace Under Uncertainty and Irreversibility: Too Fast or Too Slow?

2012

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SummaryIn this paper stochastic dynamic programming is used to investigate land conversion decisions taken by a multitude of landholders under uncertainty about the value of environmental services and irreversible development. We study land conversion under competition on the market for agricultural products when voluntary and mandatory measures are combined by the Government to induce adequate participation in a conservation plan. We study the impact of uncertainty on the optimal conversion policy and discuss conversion dynamics under different policy scenarios on the basis of the relative long-run expected rate of deforestation. Interestingly, we show that uncertainty, even if it induces conversion postponement in the short-run, increases the average rate of deforestation and reduces expected time for total conversion in the long run. Finally, we illustrate our findings through some numerical simulations. Keywords AbstractIn this paper stochastic dynamic programming is used to investigate land conversion decisions taken by a multitude of landholders under uncertainty about the value of environmental services and irreversible development. We study land conversion under competition on the market for agricultural products when voluntary and mandatory measures are combined by the Government to induce adequate participation in a conservation plan. We study the impact of uncertainty on the optimal conversion policy and discuss conversion dynamics under di¤erent policy scenarios on the basis of the relative long-run expected rate of deforestation. Interestingly, we show that uncertainty, even if it induces conversion postponement in the short-run, increases the average rate of deforestation and reduces expected time for total conversion in the long run. Finally, we illustrate our …ndings through some numerical simulations. keywords: optimal stopping, deforestation, payments for environmental services, natural resources management. jel classification: C61, D81, Q24, Q58.We wish to thank Guido Candela for helpful comments. We are also grateful for comments and suggestions to participants at the 12th International BIOECON conference; the 51st SIE conference; the 18th Annual EAERE Conference; the 8th workshop of the International Society of Dynamic Games; and to seminar participants at

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“…8 The optimal sequence of policies is obtained by solving a non-cooperative intergenerational dynamic game. 9 Each generation's life is random and regulated by a Poisson death process.…”

Section: Introductionmentioning

confidence: 99%

Optimal conservation policy under imperfect intergenerational altruism

Corato¹

2012

JFE

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SummaryIn this paper we study the optimal forest conservation policy by a hyperbolically discounting society. Society comprises a series of non-overlapping imperfectly altruistic generations each represented by its own government. Under uncertainty about future pay-offs we determine, as solution of an intergenerational dynamic game, the optimal timing of irreversible harvest. Earlier harvest occurs and the option value attached to the forest clearing decision is eroded under both the assumptions of naïve and sophisticated belief about future time-preferences. This results in a bias toward the current generation gratification which affects the intergenerational allocation of benefits and costs from harvesting and conserving a natural forest. Keywords AbstractIn this paper we study the optimal forest conservation policy by a hyperbolically discounting society. Society comprises a series of non-overlapping imperfectly altruistic generations each represented by its own government. Under uncertainty about future pay-offs we determine, as solution of an intergenerational dynamic game, the optimal timing of irreversible harvest. Earlier harvest occurs and the option value attached to the forest clearing decision is eroded under both the assumptions of naïve and sophisticated belief about future time-preferences. This results in a bias toward the current generation gratification which affects the intergenerational allocation of benefits and costs from harvesting and conserving a natural forest.

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An Equilibrium Model of Habitat Conservation Under Uncertainty and Irreversibility

Cited by 4 publications

References 72 publications

Land conversion pace under uncertainty and irreversibility: too fast or too slow?

Land conversion pace under uncertainty and irreversibility: too fast or too slow?

Land Conversion Pace Under Uncertainty and Irreversibility: Too Fast or Too Slow?

Optimal conservation policy under imperfect intergenerational altruism

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