Economics of ecosystem restoration: using derived demand to promote sustainable ecosystems

Abstract

Land managers face a complex set of choices when developing restoration and management strategies to promote resilient landscapes. Restoring landscapes is costly; making full restoration beyond the means of most land management agencies. This necessitates difficult choices and a careful consideration of which areas of the landscapes to restore and how intensively they should be restored to achieve the greatest net benefit. We define the problem in the context of derived demand where optimal restoration is derived from the value to the ecosystem or landscape. The derived demand framework enables us to closely integrate economics with ecological principles of restoration and resiliency to arrive at cost effective solutions. We develop the economic framework for identifying and selecting the most advantageous sites to restore given a fixed restoration budget. This framework informs and guides budget allocations across market and nonmarket goods and services to optimally restore the natural capital. The theoretical development is demonstrated with a case study showing the value added achieved from introducing a restoration management effort (fuel treatment) at Sequoia and King's Canyon National Park in the United States.

Science-Based Budgeting for National Fire Programs

“…More research is still need to further explore the potential of using these well-defined econometric functions and implementing them in the real-world budget allocation. Figure 1: Comparison of the ROI from park specific analysis results [8] (the hollow black dots) and the estimated ROI (solid red dots) from the translog production functions at the five national parks.…”

“…In this study, we use the empirical data from detailed fuel treatment and preparedness analyses for each park [8] to fit a set of translog production functions to capture the ROI of each park i. The coefficients of these production functions either reflect different elasticities from the suppression preparedness investment and the fuel treatment investment, or the elasticities from the joint impacts of the two programs.…”

“…These production functions are listed in Table 2. We are able to graph the ROI from the fuel treatment program and the preparedness program using the park specific analysis results [8] with the ROI estimated using the translog production functions in Table 2 (see Fig. 1).…”

Comparing alternative budget allocation models to support strategic wildland fire program analysis across US National Parks

“…Equation 1takes a different form for each specific national park. In this study, we use the empirical fuel treatment and preparedness analyses in each park [9] to fit a set of nonlinear equations to create the response surface of q(B p,i , B f,i ) for each park i.…”

“…Given a budget level, this surface can be used to determine the optimal combination of investment in the IA preparedness and the fuel reduction programs to maximize the total investment return. The graph is constructed based on empirical data from park level analysis [9].…”