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Optimal land conversion and growth with uncertain biodiversity costs

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  • Leroux, Anke D.
  • Creedy, John
Abstract
An important characteristic defining the threat of environmental crises is the uncertainty about their consequences for future welfare. Random processes governing ecosystem dynamics and adaptation to anthropogenic change are important sources of prevailing ecological uncertainty and contribute to the problem of how to balance economic development against natural resource conservation. The aim of this study is to examine optimal growth subject to non-linear dynamic environmental constraints. In a two-sector exogenous growth framework we model a stochastic environmental good, exhibiting uncertain ecological responses to environmental change, and describe the economic and environmental trade-offs that ensue for a risk-averse social planner. Allowing for ecological risk tends to slow economic growth if environmental impacts are assumed to increase exponentially as the rate of disturbance increases. Taken in isolation the effects of ecosystem resilience and ecological uncertainty on the rate of natural resource development are ambiguous and depend on normative parameters such as the social planner’s attitude to risk and rate of time preference.
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  • Leroux, Anke D. & Creedy, John, 2007. "Optimal land conversion and growth with uncertain biodiversity costs," Ecological Economics, Elsevier, vol. 61(2-3), pages 542-549, March.
    • Handle: RePEc:eee:ecolec:v:61:y:2007:i:2-3:p:542-549
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    1. Lijing Tang & Dongyan Wang, 2018. "Optimization of County-Level Land Resource Allocation through the Improvement of Allocation Efficiency from the Perspective of Sustainable Development," IJERPH, MDPI, vol. 15(12), pages 1-19, November.
    2. Xiao, Wu & Fu, Yanhua & Wang, Tao & Lv, Xuejiao, 2018. "Effects of land use transitions due to underground coal mining on ecosystem services in high groundwater table areas: A case study in the Yanzhou coalfield," Land Use Policy, Elsevier, vol. 71(C), pages 213-221.
    3. Zhang, Jianjun & Fu, Meichen & Zhang, Zhongya & Tao, Jin & Fu, Wei, 2014. "A trade-off approach of optimal land allocation between socio-economic development and ecological stability," Ecological Modelling, Elsevier, vol. 272(C), pages 175-187.
    4. Zhang, Jianjun & Fu, Meichen & Tao, Jin & Huang, Ying & Hassani, Ferri P. & Bai, Zhongke, 2010. "Response of ecological storage and conservation to land use transformation: A case study of a mining town in China," Ecological Modelling, Elsevier, vol. 221(10), pages 1427-1439.

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