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Accounting for Externalities in Benefit-Cost Measures: AnAnalysis of a Land Buyout and Associated Projects to Save theEverglades

Published online by Cambridge University Press:  26 January 2015

Andrew Schmitz ,
P. Lynn Kennedy  and
Julie Hill-Gabriel
Andrew Schmitz
Affiliation:
Department of Food and Resource Economics at the University of Florida, Gainesville, Florida
P. Lynn Kennedy
Affiliation:
Louisiana State University Agricultural Center, Baton Rouge, Louisiana
Julie Hill-Gabriel
Affiliation:
Audubon Florida, Miami, Florida
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Extract

As part of efforts to restore the Everglades, in 2008, Governor Crist ofFlorida proposed the acquisition of 187,000 acres of land from the U.S.Sugar Corporation (U.S. Sugar) for this purpose, but the final purchase inAugust 2010 totaled only 26,800 acres. This article presents the historybehind the alternatives, including the buyout of U.S. Sugar land, to improveFlorida's water quality and the health of the Everglades. To determine thebenefits and costs of several of the U.S. Sugar land buyout proposals, aspatial price equilibrium model of the U.S. sugar market is developed.Within this framework, all the benefit-cost ratios calculated show that thebenefits are less than the costs. Our analysis uses the concept of anEnvironmental Equivalent, which is the dollar amount of environmentalbenefits needed from the Everglades restoration or water quality projects togenerate benefits that are as great as or greater than its costs. Also, weconsider, within the context of ex ante vs. ex post benefit-cost analysis,the developments to clean up the Everglades since the U.S. Sugar landpurchase.

Keywords

benefitsbuyoutscostsEvergladesU.S. Sugar CorporationQlQ15Q51
Type
Invited Paper Sessions
Information
Journal of Agricultural and Applied Economics , Volume 45 , Issue 3 , August 2013 , pp. 421 - 433
Copyright
Copyright © Southern Agricultural Economics Association 2013

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References

Just, R.E., Hueth, D.L., and Schmitz, A.. The Welfare Economics of Public Policy: A Practical Approach to Project and Policy Evaluation. Cheltenham, UK: Edward Elgar Publishing, 2004.Google Scholar
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Mather Economics. Measuring the Economic Benefits of America's Everglades Restoration. Palmetto Bay, FL: Study Prepared for The Everglades Foundation, 2010.Google Scholar
Schmitz, A., Kennedy, P.L., and Hill-Gabriel, J.. “Restoring the Florida Everglades through a Sugar Land Buyout: Benefits, Costs, and Legal Challenges.” Environmental Economics 3(2012):72–87. Internet site: http://businessperspectives.org/component/option,com_journals/task,issue/id,196/jid,9/Itemd,74/ (Accessed January 15, 2013).Google Scholar
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