It is now standard in economics to model natural resources as a special form of capital that can be depleted or accumulated. The following review shows how such an approach can be extended to ecosystems, implying that they are a form of natural asset that produces a flow of beneficial goods and services over time. The review includes a discussion of valuing ecosystem services, focusing on the problem of benefits that vary spatially across landscapes and illustrated with the example of coastal ecosystems. The starting point of the basic natural asset model is the assumption that any ecological landscape that is conserved must compete with other assets in the portfolio of wealth owners in the economy. The model shows the importance of valuing ecosystem services to the optimal allocation of landscape among competing uses. It includes the possibility of an ecological transition, when it becomes technologically feasible to restore developed land as ecological landscape. The basic model is then extended to allow for the value of an ecosystem service and the costs of maintaining this service to vary with the spatial distance across the natural landscape; for the implications when the economy is opened to trade; and finally, for examining the effects of the risk of ecological collapse.
Abstract This paper develops a methodology for including ecosystem services in a wealth accounting framework. Accounting for ecosystems and their services leads to adjusting net domestic product (NDP) for the direct benefits provided by the current stock of ecosystems but not for their indirect contributions in terms of protecting or supporting economic activity, property and human lives. When ecosystems are irreversibly converted for economic development, NDP must be further modified to reflect any capital revaluation that occurs with the current conversion of ecological capital to other land uses. The risk of collapse also requires adjustments to NDP, as any capital revaluation associated with ecosystem conversion must be adjusted for this risk, and the discounted minimum value of ecosystems associated with collapse must be subtracted from NDP. These various contributions of ecological capital to wealth accounts are illustrated with the example of mangroves in Thailand over the period 1970–2009.
Abstract This paper bridges the gap between two‐country Ricardian trade models where differences in environmental policies create pollution havens in a poorer region with weaker pollution regulations, and 2 × 2 Heckscher–Ohlin models that predict under certain conditions that pollution havens may occur in a richer region with tighter regulations. By relaxing the Heckscher–Ohlin assumptions of factor price equalization and no specialization, we show how creation of pollution havens in either region is possible, due to the interplay of policy and factor‐endowment motives. We also analyze the conditions for creating pollution havens in the cases of exogenous and endogenous environmental policy.
An era of expanding deep-ocean industrialization is before us, with policy makers establishing governance frameworks for sustainable management of deep-sea resources while scientists learn more about the ecological structure and functioning of the largest biome on the planet. Missing from discussion of the stewardship of the deep ocean is ecological restoration. If existing activities in the deep sea continue or are expanded and new deep-ocean industries are developed, there is need to consider what is required to minimize or repair resulting damages to the deep-sea environment. In addition, thought should be given as to how any past damage can be rectified. This paper develops the discourse on deep-sea restoration and offers guidance on planning and implementing ecological restoration projects for deep-sea ecosystems that are already, or are at threat of becoming, degraded, damaged or destroyed. Two deep-sea restoration case studies or scenarios are described (deep-sea stony corals on the Darwin Mounds off the west coast of Scotland, deep-sea hydrothermal vents in Manus Basin, Papua New Guinea) and are contrasted with on-going saltmarsh restoration in San Francisco Bay. For these case studies, a set of socio-economic, ecological, and technological decision parameters that might favor (or not) their restoration are examined. Costs for hypothetical restoration scenarios in the deep sea are estimated and first indications suggest they may be two to three orders of magnitude greater per hectare than costs for restoration efforts in shallow-water marine systems.
We develop a game-theoretic framework of negotiation over sharing of trans-boundary resources between neighboring countries. The downstream country offers a non-water “leverage” good in exchange for water access and makes a take-it-or-leave-it offer to the upstream country. The downstream country can further invest in water provision before the negotiations. We compare three types of outcomes: the first-best outcomes where an “ex-ante social planner” choses both the water investment and the water and leverage goods exchanged in the negotiations; the outcome when an “ex-post social planner” only enters at the negotiation stage; and the outcome of bilateral negotiations. We argue that all three cases can be empirically realistic; show that the outcome with the ex-post social planner can distort the downstream country’s investment incentive; and that the bilateral negotiation outcome can lead to water investment either below or above the efficient/ex-ante planner’s preferred choice.
In recent years, concern about the destruction of tropical forests has led to increased interest in the role of the international timber trade in promoting deforestation in the tropics, and in ways to restrict or reform the trade as a means to protect and preserve tropical forests. This chapter assesses the strength of the link between the trade and deforestation and the likely effectiveness of policy interventions in slowing or halting deforestation. Tropical Asia and Oceania dominate the tropical forest products trade – accounting for half of the industrial roundwood, sawnwood and wood-based panels produced by tropical countries and representing over 85 per cent of total exports of tropical forest products. In order to discuss trade policy options there is a need to understand the market conditions for tropical timber products and consumers' response to price changes.
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