Inserting Ecological Detail into Economic Analysis: Agricultural Nutrient Loading of an Estuary Fishery

Abstract

Linked general equilibrium economic and ecological models are connected through agricultural runoff and the fisheries. They are applied to a North Carolina estuary in which agricultural runoff alters phytoplankton densities and the resulting hypoxia leads to diminished fisheries. The effects of hypoxia on multiple species across space are analyzed and the joint economic and ecosystem wide response to a policy of reduced runoff is quantified. The approach provides an assessment of changes in ecological welfare (in terms of species populations) and economic welfare (in terms of equivalent variations) following reductions in runoff.

The Architecture and Measurement of an Ecosystem Services Index

“…For example, future fishing and other harvesting activities may adapt (with either positive or negative consequences) to stock changes Q. In fact, such changes are often a focus of bioeconomic models (e.g., [20,21]). In principle, depletion analysis can and should also take these kinds of behavioral and policy predictions into account.…”

“…We consider in detail two innovative ecological production models, constructed by economists and ecologists, associated with a particular landscape context: the Neuse River watershed and estuary in North Carolina [20,21]. The models are of particular interest for two reasons.…”

“…In Finnoff and Tschirhart's model [21], a nitrogen load reduction leads to changes in algal populations of dinoflagellates and diatoms. Spatially explicit ecological interactions are also a feature of their model.…”

“…For interdisciplinary models of ecosystems and economic systems (e.g., [20,21]), the ecosystem services can be thought of as the value of "exports" from the ecosystem sector of the model to the man-made economic sector. As we discuss in this section, the analogy to GDP accounting and the so-called "index number problem" helps clarify the distinct roles to be played by an index that constructs a bundle of services and an index measuring the anthropocentric value of such a bundle of services.…”

“…Within certain models, these relationships can be computed. For example, Brock and Xepapadeas [43] model the dynamic relationship between genetic diversity and crop survival; Smith and Crowder [20] and Finnoff and Tschirhart [21] model interactions between predator/prey relationships and marine animal population adjustments over time. The predictive power of these models, however, is yet to be tested.…”