The additionality of forest conservation interventions is frequently questioned. In particular, they are often considered to be located in places where forests are not threatened, which points to the existence of location biases. Revisiting this location bias concept, we conceptually distinguish potential and effective additionality and theoretically consider how the objectives of the implementer affect the siting choice of the forest conservation interventions and their additionality. Our theoretical intuition is that the choices of the implementers are influenced by the quality of institutions. Our results show that (1) the implementer's objective and local institutions may lead the implementer to select a site with low development potential and low forest threat, and (2) the selection of a site with low development potential, which is frequently presented as a location bias, does not necessarily preclude additionality.

We examine how agricultural subsidies may induce deforestation and interact with conservation programs by analyzing two large-scale national programs in Mexico that have existed simultaneously for more than a decade: an agricultural subsidy for livestock (PROGAN) and a program of payments for ecosystem services (PES). Looking across the entire Mexican landscape, we exploit the surprises in the timing of enrollment in PROGAN's waves, fluctuations in program payments, and the change in the value of the subsidy induced by inflation and currency fluctuations to identify the impacts of the livestock subsidy on environmental outcomes. We find that PROGAN increased municipal deforestation by 7 per cent. The deforestation effects of PROGAN were smaller in municipalities with higher concentrations of PES recipients. We suggest that livestock subsidies could be better targeted to places with low deforestation risk and high livestock productivity to maximize food production and minimize negative externalities caused by deforestation.

Land protection not only supports vital ecosystem services but also poses important challenges for social equity. Three key concerns emerge from economic frameworks about land protection policies: potential lost local economic development, reinforcement of existing structural inequalities, and disparities in access to the benefits of protected land. This article reviews evidence for each concern and identifies research needs as well as potential improvements in policy that could better support equity goals. Pathways forward towards greater equity include specific mechanisms that can ensure local communities benefit from land protection, attention to issues of spatial impacts and timing, explicit prioritization of equity in land protection initiatives, and community-centred processes. Economists have and can continue to play a role in strengthening these dimensions of land protection policies.

We explore the economic merits of on-farm water storage with tailwater recovery systems to reduce aquifer depletion in a region with expanding irrigated acreage and substantial off-season precipitation. Gains are substantial on a broad scale and long planning horizon, including more than $4 billion in producer surplus, 5 million acre-feet of conserved groundwater, and land capitalization of $24 per acre. Sensitivity analyses provide insights with respect to the impact of discount rates, rainfed returns, return flows, and aquifer recharge rates. Results can inform stakeholders about the optimal allocation of funds directed at agricultural practice adoption and agricultural water investments.

The European Union provides firm support to the maritime sector to reach the policy objectives in the Common Fisheries Policy. This paper analyzes to what extent the investment support to aquaculture and fish processing firms in Sweden increases firm investment activity. By doing so, the paper also quantifies the amount of investments that would have been undertaken also without support (deadweight losses, DWL). The results show that the support increases investment in aquaculture with a factor of 0.65, thus with a DWL of 35%. The corresponding number for fish processing is a DWL of 77%.

Due to COVID-19, many households faced hardships in the spring of 2020 – unemployment, an uncertain economic future, forced separation, and more. At the same time, the number of people who participated in outdoor recreation in many areas increased, as it was one of the few activities still permitted. How these experiences affect the public’s willingness to pay (WTP) for environmental public goods is unknown. During the early months of the pandemic, we conducted a stated preference survey to value statewide water quality improvements in Delaware. While a majority of participants report experiencing hardship of some sort (economic, emotional, etc.), mean household WTP declined by only 7 % by May 2020.

Three broad categories of transformative changes have been recommended in The Economics of Biodiversity: The Dasgupta Review (henceforth Review): (i) The need to address the imbalance between our demands on Nature and its supply. (ii) The need to change our measures of economic success. (iii) The need for institutional change. However, what the private citizen would like to find in the Review differs from what someone in a government department or an international agency or a private company seeks. These notes have been prompted by the many virtual meetings I have had since the Review’s launch and they further explore aspects of the Review’s recommendations.

In this article, we present a model of the electricity sector where generation technologies are intermittent. The economic value of an electricity generation technology is given by integrating its production profile with the market price of electricity. We use estimates of the consumer's intertemporal elasticity of substitution for electricity consumption while parameterizing the model empirically to numerically calculate the elasticity between renewables and fossil energy. We find that there is a non-constant elasticity of substitution between renewable and fossil energy that depends on prices and intermittency. This suggests that the efficacy and welfare effects of carbon taxes and renewable subsidies vary geographically. Subsidizing research into battery technology and tailoring policy for local energy markets can mitigate these distributional side effects while complementing traditional policies used to promote renewable energy.

An issue for generic advertising in agricultural markets with unregulated supplies is that the promotion-induced demand shift could lead to a supply response that substantially attenuates the price effects of the promotion. For the generic promotion of fish exports, however, the concern is generally just the opposite—the possibility that extensive government supply controls could render promotion efforts to expand export sales ineffectual due to little or no supply response. This study considers the effects of government whitefish (cod, haddock, and others) supply controls on the effectiveness of the Norwegian Seafood Council (NSC) whitefish export promotion program. We use an econometric simulation model to measure the effectiveness and returns to NSC whitefish export promotion under a range of possible export supply control conditions. Results indicate that effective supply control maximizes the return to promotion and that ineffectual supply control imposes a potentially large opportunity cost on the promoting industry.

In response to the CITES ban on trade in elephant ivory, mammoth ivory began to be produced in post-Soviet Russia. We investigate how this substitute to elephant ivory has affected the poaching of elephants. We argue that the early success of the 1989 ivory ban at increasing the African elephant population was driven in part by increasing supply of mammoth ivory. The more recent increases in poaching appear to be driven by increasing demand and falling African institutional quality. We find that absent the 80 tonnes of Russian mammoth ivory exports per annum 2010–2012, elephant ivory prices would have doubled from their $ 100 per kilogram level and that the current poaching level of 34,000 elephants per year may have increased by as many as 55,000 elephants per year on a population of roughly half a million animals.

In 2008, the Brazilian government blacklisted municipalities in the Amazon to better target efforts to repress deforestation. Not only were law enforcement and monitoring activities intensified, but also economic sanctions and political pressures were imposed on those municipalities. We use a differences-in differences approach to compare deforestation reduction in blacklisted municipalities and non-blacklisted municipalities. We find that: (i) the blacklisting has significantly reduced deforestation; and (ii) this effect was primarily driven by the monitoring and law enforcement channel – there is no effect on agricultural production or credit concessions.

This research aimed to illicit nonfarming absentee landowners’ and producers’ preferences for the benefits and characteristics derived from conservation practices during adoption decisions using maximum difference scaling, also called the best-worst method. Both groups are found to rank and value the attributes and reasons for adoption of conservation practices differently at the 95% significance level. This difference between the two groups reinforced the importance of land tenure in decision making. This indicated the need for new extension educational efforts, research efforts, and economic incentives to reduce negative externalities that could be ameliorated from adoption of soil and water conservation practices.

We examine how much on-farm reservoirs can increase groundwater quantity and improve surface water quality using a spatial-dynamic model of farm profit maximization in the Arkansas Delta. Sensitivity analysis of the farm profit objective by including the value of surface water quality and the groundwater buffer value evaluates how accounting for environmental value affects the optimal crop mix, water use, and farm profits. The best policy for a critical water resource area is to have the government cost share construction of on-farm reservoirs because groundwater conservation and surface water quality goals are achieved efficiently for a modest redistribution of income.

In the face of strong policy interest in the possible regulation–jobs linkage and weak analytical evidence to support a generalizable conclusion, what should a regulatory agency like the Environmental Protection Agency do in a regulatory impact analysis (RIA)? Initially, an RIA should start with a clear concept of what the regulatory agency is trying to estimate. Much of the popular debate is looking for a total job effect. Yet one thing we do know is that, in aggregate, there will not be a net job change unless the economy deviates from its normal rate of full employment. The gist of our literature review suggests that looking to historic data for stable statistical relationships between regulatory spending and job changes, even in a single industry, is tenuous at best. However, the intuition is relatively easy to trace out with certain assumptions: (1) added costs imply added activity that entails added jobs; (2) higher product prices or other regulatory limits imply less production that entails fewer jobs. Taking an average employment rate per dollar of relevant economic activity, coupled with an assumed demand elasticity, these effects can be multiplied out into job changes, although such simple calculations must be tested by validating key assumptions or exploring the estimates sensitivity to alternatives. New estimates by Belova, Gray, Linn and Morgenstern [(2013a). Environmental Regulation And Industry Employment: A Reassessment. Center for Economic Studies, U.S. Census Bureau Discussion Paper, CES 1336, July.] indicate that extending and expanding the widely cited approach by Morgenstern, Pizer and Shih [(2002). Jobs Versus the Environment: An Industry-Level Perspective. Journal of Environmental Economics and Management, 43, 412–436] is unlikely to be successful. Finally, more effort is needed to inform the public about the potential job impacts of new regulations, especially the distinction of these impacts from long-term technological and economic trends.

This article presents current investment and operating costs of ethanol and biodiesel plants for alternative prices of feedstock. The price of these two fuels is estimated for alternative prices of crude oil with the existing renewable fuels policy. The excise tax credit, currently $0.51 per gallon of ethanol and $1.00 per gallon of biodiesel, is a major contributor to the fuel price and profitability of these industries. The analysis demonstrates how the crude oil price, feedstock price, and excise tax credits interact to impact profitability of these industries.

The impact of the U.S. cotton policy depends on several interrelated factors: how input subsidies interact with producer price supports, producer price expectations, and the extent to which price supports are decoupled from production. Cotton subsidies have a direct impact on world cotton prices, depending on the extent to which price supports are coupled to production. At one extreme, there is a price impact of 12.4% when producers make decisions at the loan rate, but the average price impact is 20.9% when producers make decisions based on the target price. Results are presented for intermediate cases of decoupling.

Shrimp farming in Thailand has had disastrous effects on the environment in the past, which has prompted a government ban on shrimp production in inland areas. However, a new low-salinity shrimp farming system has developed that seems to have fewer disease and environmental problems than previous systems but competes with rice production for land and water resources. The present study found that shrimp farming exhibits increasing returns to scale and is much more profitable than rice farming, which offers opportunities for rice farmers to improve their incomes through diversification. No evidence was found for external environmental effects of shrimp production on rice production or vice versa. A total ban on shrimp production in rice farming areas does not seem justified, although further analysis on the environmental effects of this farming system is warranted.

The optimal size and location of an invasive species population depend upon spatially differentiated biological growth, economic costs, and damages. Although largely absent from most economic models, spatial considerations matter because the likelihood and magnitude of the invasion vary spatially and the threatened assets may be unevenly distributed across space. We map the current and future populations of an invasive species, Miconia calvescens, on Oahu, Hawaii, and the potential damages to water quantity, quality, and endangered-species habitat, and weigh these against treatment costs. We find that optimal densities vary from approximately 1% to 18% cover throughout the island.

Because of excessive water impairment, federal and state agencies have enacted regulations to reduce water pollution from animal feeding operations. Many of the regulations are based on numbers of animals rather than the potential of an operator to impair water quality. To enhance efficiency, critical production indicators and location screening factors might be used to exempt operations that are not significantly impairing water quality. In this manner, regulations could avoid imposing unnecessary costs on the regulated public and more effectively target monitoring and enforcement resources of the regulatory agency.

There is rapidly growing interest in the use of market-based (MB) instruments in environmental policy. The papers in this session discuss three relatively new areas for such policies: groundwater contamination, nonpoint source surface-water pollution and carbon sequestration. The papers point out the potential for MB policies in these areas, but significant challenges remain. This comment highlights challenges related to five issues: monitoring and enforcement, trading ratios, baselines, transaction costs, and risk and uncertainty. All these issues must be addressed before MB policies can take the full step from economic theory to regulatory reality.