[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v117y2015icp73-85.html
   My bibliography  Save this article

Application of portfolio theory to asset-based biosecurity decision analysis

Author

Listed:
  • Akter, Sonia
  • Kompas, Tom
  • Ward, Michael B.
Abstract
A key challenge for biosecurity decision-making is how best to allocate scarce resources across multiple environmental assets. The allocation of funds for the best return from investment requires a careful assessment of expected return and uncertainty. In this paper, we applied a portfolio theory-based decision support tool that helps determine resource allocation in a way that maximizes expected return and minimizes uncertainty. Our framework offers three advancements to the literature. First, it helps in making resource allocation decisions across multiple pests that affect multiple environmental assets. Second, it incorporates multiple sources of uncertainty in the decision analysis including economic value uncertainty. Finally, it demonstrates a generic approach to design a choice experiment study to estimate monetary values of a broad group of environmental assets. We find that a portfolio-based framework applied in conjunction with a choice experiment study can be a useful tool to guide biosecurity resource allocation decisions. Our results show that disregarding value uncertainty may cause bias by underestimating true uncertainty in the opportunity set. The choice experiment study revealed substantial positive non-market values generated by environmental biosecurity in Australia. However, significant preference heterogeneity across respondents with regards to different biosecurity outcomes was observed.

Suggested Citation

  • Akter, Sonia & Kompas, Tom & Ward, Michael B., 2015. "Application of portfolio theory to asset-based biosecurity decision analysis," Ecological Economics, Elsevier, vol. 117(C), pages 73-85.
    • Handle: RePEc:eee:ecolec:v:117:y:2015:i:c:p:73-85
    DOI: 10.1016/j.ecolecon.2015.06.020
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800915002670
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecolecon.2015.06.020?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Brouwer, Roy & Martín-Ortega, Julia, 2012. "Modeling self-censoring of polluter pays protest votes in stated preference research to support resource damage estimations in environmental liability," Resource and Energy Economics, Elsevier, vol. 34(1), pages 151-166.
    2. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
    3. Beville, Stephen T. & Kerr, Geoffrey N. & Hughey, Kenneth F.D., 2012. "Valuing impacts of the invasive alga Didymosphenia geminata on recreational angling," Ecological Economics, Elsevier, vol. 82(C), pages 1-10.
    4. Meyerhoff, Jurgen & Liebe, Ulf, 2006. "Protest beliefs in contingent valuation: Explaining their motivation," Ecological Economics, Elsevier, vol. 57(4), pages 583-594, June.
    5. Mwebaze, Paul & Bennett, Jeffrey W. & Beebe, Nigel & Devine, Greg & Muller, Mike & DeBarro, Paul, 2014. "Economic analysis of the threat posed by the Asian Tiger Mosquito in Australia," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165863, Australian Agricultural and Resource Economics Society.
    6. McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November.
    7. Peter Boxall & Wiktor Adamowicz, 2002. "Understanding Heterogeneous Preferences in Random Utility Models: A Latent Class Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(4), pages 421-446, December.
    8. Richardson, Leslie & Loomis, John, 2009. "The total economic value of threatened, endangered and rare species: An updated meta-analysis," Ecological Economics, Elsevier, vol. 68(5), pages 1535-1548, March.
    9. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    10. Yemshanov, Denys & Koch, Frank H. & Lu, Bo & Lyons, D. Barry & Prestemon, Jeffrey P. & Scarr, Taylor & Koehler, Klaus, 2014. "There is no silver bullet: The value of diversification in planning invasive species surveillance," Ecological Economics, Elsevier, vol. 104(C), pages 61-72.
    11. Sonia Akter & Jeff Bennett, 2011. "Household perceptions of climate change and preferences for mitigation action: the case of the Carbon Pollution Reduction Scheme in Australia," Climatic Change, Springer, vol. 109(3), pages 417-436, December.
    12. van Bueren, Martin & Bennett, Jeffrey W., 2004. "Towards the development of a transferable set of value estimates for environmental attributes," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(1), pages 1-32.
    13. Christie, Mike & Hanley, Nick & Warren, John & Murphy, Kevin & Wright, Robert & Hyde, Tony, 2006. "Valuing the diversity of biodiversity," Ecological Economics, Elsevier, vol. 58(2), pages 304-317, June.
    14. Perrings, Charles, 2005. "Mitigation and adaptation strategies for the control of biological invasions," Ecological Economics, Elsevier, vol. 52(3), pages 315-325, February.
    15. Peter Caley & David S L Ramsey & Simon C Barry, 2015. "Inferring the Distribution and Demography of an Invasive Species from Sighting Data: The Red Fox Incursion into Tasmania," PLOS ONE, Public Library of Science, vol. 10(1), pages 1-18, January.
    16. Yao, Richard T. & Scarpa, Riccardo & Turner, James A. & Barnard, Tim D. & Rose, John M. & Palma, João H.N. & Harrison, Duncan R., 2014. "Valuing biodiversity enhancement in New Zealand's planted forests: Socioeconomic and spatial determinants of willingness-to-pay," Ecological Economics, Elsevier, vol. 98(C), pages 90-101.
    17. Carlsson, Fredrik & Frykblom, Peter & Liljenstolpe, Carolina, 2003. "Valuing wetland attributes: an application of choice experiments," Ecological Economics, Elsevier, vol. 47(1), pages 95-103, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paulino Martinez-Fernandez & Fernando deLlano-Paz & Anxo Calvo-Silvosa & Isabel Soares, 2019. "Assessing Renewable Energy Sources for Electricity (RES-E) Potential Using a CAPM-Analogous Multi-Stage Model," Energies, MDPI, vol. 12(19), pages 1-20, September.
    2. Yao, Richard T. & Wallace, Lisa, 2024. "A systematic review of non-market ecosystem service values for biosecurity protection," Ecosystem Services, Elsevier, vol. 67(C).
    3. Paul Mwebaze & Jeff Bennett & Nigel W. Beebe & Gregor J. Devine & Paul Barro, 2018. "Economic Valuation of the Threat Posed by the Establishment of the Asian Tiger Mosquito in Australia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(2), pages 357-379, October.
    4. Ando, Amy W. & Shah, Payal, 2016. "The Economics of Conservation and Finance: A Review of the Literature," International Review of Environmental and Resource Economics, now publishers, vol. 8(3-4), pages 321-357, June.
    5. Carina Fagefors & Björn Lantz, 2021. "Application of Portfolio Theory to Healthcare Capacity Management," IJERPH, MDPI, vol. 18(2), pages 1-9, January.
    6. Haden Chomphosy, William & Manning, Dale T. & Shwiff, Stephanie & Weiler, Stephan, 2023. "Optimal R&D investment in the management of invasive species," Ecological Economics, Elsevier, vol. 211(C).
    7. Kompas, Tom & Chu, Long & Ha, Pham Van & Spring, Daniel, 2019. "Budgeting and portfolio allocation for biosecurity measures," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(3), July.
    8. Kompas, Tom & Chu, Long & Nguyen, Hoa Thi Minh, 2016. "A practical optimal surveillance policy for invasive weeds: An application to Hawkweed in Australia," Ecological Economics, Elsevier, vol. 130(C), pages 156-165.
    9. Stoeckl, Natalie & Dodd, Aaron & Kompas, Tom, 2023. "The monetary value of 16 services protected by the Australian National Biosecurity System: Spatially explicit estimates and vulnerability to incursions," Ecosystem Services, Elsevier, vol. 60(C).
    10. Lewis, David J. & Polasky, Stephen, 2018. "An auction mechanism for the optimal provision of ecosystem services under climate change," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 20-34.
    11. Pérez Odeh, Rodrigo & Watts, David & Flores, Yarela, 2018. "Planning in a changing environment: Applications of portfolio optimisation to deal with risk in the electricity sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 3808-3823.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Szabó, Zoltán, 2011. "Reducing protest responses by deliberative monetary valuation: Improving the validity of biodiversity valuation," Ecological Economics, Elsevier, vol. 72(C), pages 37-44.
    2. Jette Jacobsen & John Boiesen & Bo Thorsen & Niels Strange, 2008. "What’s in a name? The use of quantitative measures versus ‘Iconised’ species when valuing biodiversity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(3), pages 247-263, March.
    3. Estifanos, Tafesse & Polyakov, Maksym & Pandit, Ram & Hailu, Atakelty & Burton, Michael, 2018. "Protection of the Ethiopian Wolf: What are tourists willing to pay for?," Working Papers 272805, University of Western Australia, School of Agricultural and Resource Economics.
    4. Ojea, Elena & Loureiro, Maria L., 2011. "Identifying the scope effect on a meta-analysis of biodiversity valuation studies," Resource and Energy Economics, Elsevier, vol. 33(3), pages 706-724, September.
    5. Birol, Ekin & Phoebe, Koundouri & Yiannis, Kountouris, 2008. "Using the Choice Experiment Method to Inform River Management in Poland: Flood Risk Reduction vs. Habitat Conservation in the Upper Silesia Region," MPRA Paper 41906, University Library of Munich, Germany.
    6. Jagoda Adamus, 2023. "How Much Are Public Spaces Worth? Non-Market Valuation Methods in Valuing Public Spaces," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 2, pages 66-89.
    7. Anastasio J. Villanueva & Klaus Glenk & Macario Rodríguez-Entrena, 2017. "Protest Responses and Willingness to Accept: Ecosystem Services Providers’ Preferences towards Incentive-Based Schemes," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(3), pages 801-821, September.
    8. Miguel Ángel Tobarra-González, 2015. "A new recoding method for treating protest responses in contingent valuation studies using travel cost data," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 58(8), pages 1479-1489, August.
    9. Wang, Haoluan & Swallow, Brent M., 2017. "Linking Agricultural Land Conservation and Provision of Ecosystem Services: A Choice Experiment Approach," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258537, Agricultural and Applied Economics Association.
    10. De Valck, Jeremy & Vlaeminck, Pieter & Liekens, Inge & Aertsens, Joris & Chen, Wendy & Vranken, Liesbet, 2012. "The sources of preference heterogeneity for nature restoration scenarios," Working Papers 146522, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    11. Vidale, E & Pettenella, D & Gatto, P & Secco, L, 23. "What can we sell behind timber production?," Scandinavian Forest Economics: Proceedings of the Biennial Meeting of the Scandinavian Society of Forest Economics, Scandinavian Society of Forest Economics, issue 44, May.
    12. Rai, Rajesh Kumar & Scarborough, Helen, 2012. "Estimating the public benefits of mitigating damages caused by invasive plant species in a subsistence economy," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124421, Australian Agricultural and Resource Economics Society.
    13. Kikulwe, Enoch M. & Birol, Ekin & Wesseler, Justus & Falck-Zepeda, Jose Benjamin, 2013. "Benefits, costs, and consumer perceptions of the potential introduction of a fungus-resistant banana in Uganda and policy implications," IFPRI book chapters, in: Falck-Zepeda, Jose Benjamin & Gruère, Guillaume P. & Sithole-Niang, Idah (ed.), Genetically modified crops in Africa: Economic and policy lessons from countries south of the Sahara, chapter 4, pages 99-141, International Food Policy Research Institute (IFPRI).
    14. Glenk, Klaus & Hall, Clare & Liebe, Ulf & Meyerhoff, Jürgen, 2012. "Preferences of Scotch malt whisky consumers for changes in pesticide use and origin of barley," Food Policy, Elsevier, vol. 37(6), pages 719-731.
    15. Marcucci, Edoardo & Gatta, Valerio & Le Pira, Michela, 2018. "Gamification design to foster stakeholder engagement and behavior change: An application to urban freight transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 119-132.
    16. Oliver Froer, 2003. "Using Stated Preference Methods for Biodiversity Valuation. A critical analysis," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 217/2003, Department of Economics, University of Hohenheim, Germany.
    17. Miwa Nakai & Tomonori Honda & Nariaki Nishino & Kenji Takeuchi, 2013. "An Experimental Study on Motivations for Socially Responsible Investment," Discussion Papers 1314, Graduate School of Economics, Kobe University.
    18. Aravindakshan, Sreejith & Krupnik, Timothy J. & Amjath-Babu, T.S. & Speelman, Stijn & Tur-Cardona, Juan & Tittonell, Pablo & Groot, Jeroen C.J., 2021. "Quantifying farmers' preferences for cropping systems intensification: A choice experiment approach applied in coastal Bangladesh's risk prone farming systems," Agricultural Systems, Elsevier, vol. 189(C).
    19. Liu, Shuang & Proctor, Wendy & Cook, David, 2010. "Using an integrated fuzzy set and deliberative multi-criteria evaluation approach to facilitate decision-making in invasive species management," Ecological Economics, Elsevier, vol. 69(12), pages 2374-2382, October.
    20. Khakdaman, Masoud & Rezaei, Jafar & Tavasszy, Lóránt A., 2020. "Shippers’ willingness to delegate modal control in freight transportation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:117:y:2015:i:c:p:73-85. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.