empathy conditioned conservation walking in the shoes of others as a conservation farmer conservation tillage on farms can improve downstream water quality using a dual interests theoretical framework guided by the metaeconomics approach this paper examines the role of self interest and shared other interest in the conservation tillage adoption decision the data is from a 2007 survey of farmers in the blue river tuttle creek watershed of nebraska and kansas logit models show that farmers who temper their pursuit of self interest with shared other interest reflecting empathy sympathy are more likely to adopt conservation tillage habit and control also play a role farmers pursue a joint and interdependent own interest and not only self interest as presumed in microeconomics

how should we incentivize private landowners to produce more biodiversity globally much biodiversity is found on private land acting to conserve such biodiversity thus requires the design of policies which influence the decision making of farmers and foresters in this paper we outline the economic characteristics of this problem before reviewing a number of policy options such as conservation auctions and conservation easements we then discuss a number of policy design problems such as the need for spatial coordination and the choice between paying for outcomes rather than actions before summarizing what the evidence and theory developed to date tell us about those aspects of biodiversity policy design which need careful attention from policy makers and environmental regulators

habit formation in consumer preferences evidence from panel data this paper tests for the presence of habit formation using household data a simple model of habit formation implies a condition relating the strength of habits to the evolution of consumption over time when the condition is estimated with food consumption data from the panel study on income dynamics the results yield no evidence of habit formation at the annual frequency this finding is robust to a number of changes in the specification it also holds for several proxies for nondurables and services consumption created by combining psid variables with weights estimated from consumer expenditure survey data

incentive based policy design for pollution control and biodiversity conservation a review this paper provides a succinct review of the main developments in the literature on incentive based policy mechanisms in the contexts of pollution control and biodiversity conservation dating from the early beginnings of the science in the 1960s a focal point in the review is on the design features of these policy mechanisms key developments in policy design were originally established in controlling externalities arising from pollution and have since been extended to policy design tailored towards biodiversity conservation special emphasis is given to the spatial characteristics of the environmental problems underlying both pollution control and biodiversity conservation the paper concludes by drawing some lessons and setting out elements of a future research agenda in both policy domains

consumption and saving with habit formation and durability abstract this paper develops a model of precautionary saving with habit formation and durability durability offsets the effects of habit formation on both consumption growth and the precautionary premium empirical tests of habit formation and durability on consumption growth might exploit their parallel effects on the precautionary premium

transaction costs communication and spatial coordination in payment for ecosystem services schemes agricultural producer participation and spatial coordination of land use decisions are key components for enhancing the effective delivery of ecosystem services from private land however inducing participation in payment for ecosystem services schemes for coordinating land management choices is challenging from a policy design perspective owing to transaction costs associated with participation this paper employs a laboratory experiment to investigate the impact of such costs on participation and land use in the context of an agglomeration bonus ab scheme the ab creates a coordination game with multiple nash equilibria related to alternative spatially coordinated land use patterns the experiment varies transaction costs between two levels high and low which affects the risks and payoffs of coordinating on the different equilibria additionally an option to communicate is implemented between neighbors arranged on a local network to facilitate spatial coordination results indicate a significant difference in participation and performance under high and low transaction costs with lower uptake and performance when transaction costs are high these effects are however impacted by transaction costs faced in the past communication improves both ab participation rates and performance with the effect being greater for participants facing high transaction costs

incorporating discontinuous preferences into the analysis of discrete choice experiments data from a discrete choice experiment on improvements of rural landscape attributes are used to investigate the implications of discontinuous preferences on willingness to pay estimates using a multinomial error component logit model we explore differences in scale and unexplained variance between respondents with discontinuous and continuous preferences and condition taste intensities on whether or not each attribute was considered by the respondent during the evaluation of alternatives results suggest that significant improvements in model performance can be achieved when discontinuous preferences are accommodated in the econometric specification and that the magnitude and robustness of the willingness to pay estimates are sensitive to discontinuous preferences

pay the farmer or buy the land cost effectiveness of payments for ecosystem services versus land purchases or easements in central kenya abstract payments for ecosystem services pes have emerged as a popular conservation tool yet evaluation alongside other direct conservation strategies remains piecemeal we prospectively compared cost effectiveness of pes to land purchases or easements lpe in central kenya we spatially predicted opportunity costs and land prices using household survey and literature data and sampled conservation management costs from four regional conservation organizations we simulated a fixed budget spatial ecological economic site selection process for conservation intervention pes or lpe over 30 years we included effects of land markets property value fluctuations rising agricultural productivity and climate change depending on the scenario the lpe strategy led to larger reserves by 26 610 better representation of mammal species ranges by 47 112 and lower unit costs by 26 48 adding a yearly egalitarian social development payment to the lpe strategy did not increase costs beyond the basic pes model our findings were robust to discount rate choice but cost savings of lpe only materialized after about a decade furthermore kenyan law restricts foreign land ownership and the use of land easements thus simpler institutional requirements make pes a more immediate if less effective property based tool

forest owners participation in voluntary biodiversity conservation what does it take to forgo forestry for eternity we analyze what motivates norwegian nonindustrial private forest owners to participate in a national voluntary conservation program our empirical study provides new insights since the program requires participants to relinquish all rights to forestry for eternity including future generations to achieve an efficient conservation strategy it is important to understand what drives motivations sufficiently strong to participate on such terms our econometric analyses suggest that forest owners expectation of sustainable nontimber income enhanced by the program positive attitude toward stricter conservation regulations and lower share of mature forest have strong positive effects on the likelihood of participation

when does public information undermine the efficiency of reverse auctions for the purchase of ecosystem services abstract government agencies that conduct reverse auctions related to the payment of ecosystem services pes traditionally provide a significant amount of public information about past auction results this information includes not only the amount of money spent by the government but also can include various information about the accepted bids this research uses induced value experiments to evaluate the effect of past auction information on seller landholder rent seeking results suggest that sellers use this public information and learn how to secure higher rents however when sellers are given information only about the buyer s government agency s budget they secure lower rents results also suggest that relative budget size affects rents and that budget stochastic variability in the presence of market information diminishes the effect thus in the presence of public information and equivalent total outlays variable budgets are more likely than stationary budgets to achieve auction fiscal efficiency the measure of whether the auction achieves the greatest pes benefits given its limited budget finally this research finds that auctions with greater heterogeneity in seller opportunity costs are likely to be less fiscally efficient than when the distribution is more homogeneous

the determinants of import demand in trinidad and tobago 1967 84 1988 the determinants of import demand in trinidad and tobago 1967 84 applied economics vol 20 no 3 pp 303 313

earnings uncertainty and aggregate wealth accumulation comment there are many motives for saving until recently little attention had been paid to the role which earnings uncertainty might play in determining aggregate savings and the associated stock of wealth in a steady state economy of identical individuals jonathan skinner 1988 stephen zeldes 1989 and more recently in this review ricardo caballero 1991 have developed models which seek to address this in each case the authors have argued that income uncertainty is capable of explaining a substanitial proportion of aggregate wealth perhaps as much as half of the actual stock zeldes obtained his results by using numerical methods skinner by approximating the euler equation resulting from a constant relative risk aversion crra utility function and caballero by choosing a specific utility function and income generation process which result in closed form solutions the present paper reexamines and generalizes caballero s 1991 findings it also corrects some presentational errors in his paper generalizing a model that focuses upon a single motive for wealth accumulation is important in particular we show that by introducing an intertemporal substitution motive for savings aggregate wealth stocks emerge which can be considerably different from those presented by caballero 1991 and skinner 1988 this relatively simple result is important because many authors have proposed models which focus upon a single savings motive and claim that their model is able to explain a large component of the wealth stock franco modigliani s life cycle work e g modigliani 1988 or the work of lawrence kotlikoff and lawrence summers 1981 on intergenerational transfers are examples if we were to sum the explanatory power of all such models we could explain the wealth stock several times over therefore building richer behavioral models is necessary this paper enriches the uncertainty model the second purpose of our paper is to argue that any model of wealth accumulation should be validated not simply by referring to the aggregate stock of wealth it can generate but also by examining its associated wealth distribution

assessing the performance of conservation auctions an experimental study this work uses controlled laboratory experiments to investigate the budgetary and the economic performance of competitive tenders for allocating conservation contracts to landholders experiments have been replicated in two different countries to check for robustness of results we find that auctions outperform the more traditional fixed price programs only in the one shot setting with repetition the auctions quickly lose their edge the budget constrained auction performs similarly to the target constrained in the one shot setting but appears more robust to repetition our results suggest that previous estimates of conservation auction performance are too optimistic and we propose a method for improving such estimates

price and income elasticities of disaggregated import demand results from uecms and an application this paper presents an empirical analysis of the demand for maize milk powder butter and rice imports in cyprus using annual time series data covering the period 1975 1994 none of these products is produced in cyprus and all the necessary quantities are imported to meet domestic demand the primary objective of the paper is to derive long run price and income elasticities of import demand that can be used to analyse the impact of various policies such as the adoption of the common agricultural policy cap when and if the republic of cyprus joins the european union eu in so doing the paper takes on board some recent developments in time series econometrics the cointegration test used the bounds test is a recent test and is based on the estimation of an unrestricted error correction model uecm parsimonious models were derived using hendry s general to specific approach the estimated elasticities were subsequently used to quantify some of the implications for cyprus had the cap been ope

determinants of international trade flows the case of developing countries abstract the question of magnitude and the time path of the trade flows to changes in the exchange rates and to changes in the price level is of emitent practical importance to assess the above proposition a distributed lag structure is imposed on the relative prices and on the effective exchange rate as the determinants of trade flows then import and export demand functions are estimated for a sample of developing countries using the almon procedure the empirical findings appeared to sustain orcutt s early conjecture that trade flows adjust differently to different price stimuli more precisely it was found that imports and exports reactions were quicker and the total response time was shorter when an exchange rate rather than relative prices caused a change in international prices

principles for the provision of public goods from agriculture modeling moorland conservation in scotland this paper is concerned with policies for the supply of public environmental goods from the farm sector in particular we characterize the buying of these goods by the public from farmers using the provider gets principle this principle is well established in oecd countries as we demonstrate results from ecological economic modeling of the conservation of heather moorland in northern scotland using this principle are described this model enables us to identify spatially differentiated ecological targets and to calculate the minimum necessary payments needed to achieve these targets

tradable set aside requirements tsars conserving spatially dependent environmental amenities land conversion patterns can conflict with endangered species protection by fragmenting the landscape incentive mechanisms can help mitigate the threat of habitat fragmentation by aggregating landowner conservation decisions across the landscape the optimal conservation strategy for endangered species can target the most connected habitat cluster as an initial starting point and then expand the conservation patch to maximize connectivity herein we present an incentive mechanism the tradable set aside requirements tsars designed to target the low cost contiguous conservation landscape and share the burden of conservation among landowners in the lab we examine the performance of two land use conservation policies tsars and the tsars combined with an agglomeration bonus evaluated by economic and biological measures of efficiency we find that tsars relative to a command and control policy increases patch size and habitat connectivity within the landscape additionally combining tsars with the agglomeration bonus increases biological efficiency habitat connectivity and patch size within the landscape but at a price higher opportunity cost tsars with the agglomeration bonus can be more cost effective than a tsars only policy for species sensitive to large core habitat requirements and landscape connectivity

estimates of a traditional aggregate import demand model for five countries abstract in this paper we show for five advanced economics that if the variables in the aggregate import demand relationship are best described as non stationary integrated process then the traditional estimates of the income and price elasticity will be subject to substantial upward bias

a laboratory study of auctions for reducing non point source pollution abstract non point source pollution such as nutrient runoff to waterways from agricultural production is an environmental problem that typically involves asymmetric information land use changes to reduce pollution incur opportunity costs that are privately known to landholders but these changes provide environmental benefits that may be more accurately estimated by regulators this paper reports a testbed laboratory experiment in which landholder sellers in sealed offer auctions compete to obtain part of a fixed budget allocated by the regulator to subsidize abatement in one treatment the regulator reveals to landholders the environmental benefits estimated for their projects and in another treatment the regulator conceals the potential projects environmental quality the results show that sellers offers misrepresent their costs more for high quality projects when quality is revealed so total abatement is lower and seller profits are higher when landholders know their projects environmental benefits this suggests that concealing this information may improve regulatory efficiency

a uniform price auction for conservation easements in the canadian prairies this paper describes the application of a uniform price auction with a hidden reserve price in a field project aimed at discovering canadian landowners willingness to accept compensation for placing conservation easements on their lands this is the only project of this kind in canada to date and one of the few worldwide the paper discusses the design of the auction describes its implementation and presents its results the bids received in the auction conformed with known factors affecting opportunity costs and willingness to accept the information from this auction was successful in guiding a long term easement procurement program

a laboratory comparison of uniform and discriminative price auctions for reducing non point source pollution auctions allow regulators to identify land management changes with substantial environmental benefit and low opportunity cost this paper reports an experiment in which seller subjects compete in sealed offer auctions to obtain part of a fixed budget allocated by the experimenter regulator to subsidize pollution abatement one treatment employs uniform price auction rules whereas another treatment employs discriminative price auction rules we find that most offers in the uniform price auction are within 2 of cost whereas most offers in the discriminative price auction are at least 8 greater than cost nevertheless the discriminativeprice auction has superior overall market performance

incentive contracts for natura 2000 implementation in forest areas the implementation of nature conservation policy is often based on contracts between public authorities and landowners in this article we model incentive contracts in forest areas in the presence of adverse selection and moral hazard when the conservation outcome is uncertain ex ante but observable ex post the results show that agents who are likely to achieve a higher level of conservation should be offered a contract where transfers depend on the final outcome with a bonus for a high ecological level of the forest when conservation measures are correlated with forest management we show that the contractual measures involve distorted transfers we analyse the payment mechanisms used in france and denmark in the context of the natura 2000 policy these mechanisms result in overcompensation and under performance since they do not take the problem of moral hazard and natural variability into account

environmental policies and agricultural land values evidence from the dutch nutrient quota system the paper analyzes the impact of the phosphate based animal production rights on agricultural land values in the netherlands we claim that the existence of mandatory production control program with regional restriction on trading causes a disproportional increase in land prices in the surplus region where the quota is binding relative to the deficit region where the quota is not binding and that the increase in the cost of environmental compliance should generate an eroding effect on the existing gap in land prices the parameters of an inverse land demand model estimated with panel data support both hypotheses

the economic analysis of biodiversity an assessment biodiversity is complex difficult to define difficult to measure and often involves international and intergenerational considerations biodiversity loss presents significant economic challenges a great deal of economics is required to understand the issues but a simple and important observation is that most species and ecosystems are not traded in markets so prices are often absent and biodiversity is under provided despite the formidable obstacles to high quality economic analysis economics has plenty to offer to biodiversity policy first economic valuation techniques can be employed to roughly estimate the value of the benefits provided by biodiversity and ecosystems second assessing the optimum amount of biodiversity involves recognizing that the conversion of natural capital into manufactured and human capital has so far generated vast amounts of wealth while there may have been too much biodiversity in the past economic analysis suggests that this is a difficult position to hold now third econometric techniques and carefully designed policy studies can assist in determining what policies are most suited to different contexts to cost effectively reduce biodiversity loss fourth political economy is helpful because international coordination is often required ecosystems do not respect national borders and many biodiverse ecosystems are in poorer countries this paper synthesizes the issues and proposes a research agenda which includes improving the measurement and accounting of natural capital improving valuation techniques and theory to provide greater guidance as to the optimum biodiversity and developing our understanding of the merits of different alternatives for government intervention to reduce biodiversity loss

public transaction costs of agri environmental schemes and their determinants analysing stakeholders involvement and perceptions despite an overall budget increase for rural development in the new programming period 2007 2013 most older member states in the now expanded european union are facing a substantial reduction in their budget for rural development and thus for agri environmental schemes aess it can be assumed that in most countries none or at best only part of this loss can be offset by national funds therefore the design of more efficient national governance structures for aess which decrease public transaction costs tcs would be an appropriate solution to this problem the objective of this paper is to define the factors that influence these public tcs so that appropriate action can then be taken to reduce them a statistical analysis with a proxy for public tcs is combined with an analysis of stakeholder perceptions excluding farmers concerning public tc influencing factors the research showed that it is mainly scheme related factors that are perceived to be important although the governance structure institutional environment and level of trust also play a role finally the analysis of perceptions concerning tcs also showed that aes related actors have a limited knowledge of tcs

determinants of the demand for imports of venezuela abstract in this study we use disaggregated annual data to estimate real income and relative price elasticities of demand for imports of venezuela after comparing our estimates with those of previous studies we conclude that 1 venezuela has made progress in developing domestic substitutes for imports and 2 the degree of openness in venezuela increased after 1961 we also find evidence that during the period 1974 1979 the increase in the market value of venezuela s oil reserves led to an increase in all categories of imports

should we pay for ecosystem service outputs inputs or both payments for ecosystem service outputs have recently become a popular policy prescription for a range of agri environmental schemes the focus of this paper is on the choice of contract instruments to incentivise the provision of ecosystem service outputs from farms the farmer is better informed than the regulator in terms of hidden information about costs and hidden actions relating to effort the results show that with perfect information the regulator can contract equivalently on inputs or outputs with hidden information input based contracts are more cost effective at reducing the informational rent related to adverse selection than output based contracts mixed contracts are also cost effective especially where one input is not observable such contracts allow the regulator to target variables that are costly to fake as opposed to those prone to moral hazard such as effort further results are given for fixed price contracts and input based contracts with moral hazard the model is extended to include a discussion of repeated contracting and the scope that exists for the regulator to benefit from information revealed by the initial choice of contract the models are applied to a case study of contracting with farmers to protect high biodiversity native vegetation that also provides socially valuable ecosystem services

consumption puzzles and precautionary savings abstract when marginal utility is convex agents accumulate savings as a precautionary measure against labor income eventualities this paper shows that precautionary savings can go a long way in making the excess growth excess smoothness and excess sensitivity features of consumption consistent with the stochastic processes of labor income observed in the u s at the microeconomic level

conservation when landowners have bargaining power continuous conservation investments and cost uncertainty spatially heterogeneous costs of securing conservation agreements should be accounted for when prioritizing properties for conservation investment most researchers incorporating conservation costs into analyses have relied on estimates of landowners opportunity costs of accepting a conservation agreement implicitly assumed in such studies is therefore that those who produce biodiversity landowners receive none of the surplus available from trade instead landowners could use their bargaining power to gain profits from conservation investments we employ game theory to determine the surplus landowners could obtain in negotiations over conservation agreements and the consequent effects on conservation outcomes when enrolment decisions are governed by continuous variables e g the proportion of a property to enrol in addition we consider how landowner uncertainty regarding the opportunity costs of other landowners affects these outcomes landowners ability to gain surplus is highly variable and reflects variation in the substitutability of different properties for achieving a specified conservation objective the ability of landowners to obtain profits from conservation agreements results in conservation outcomes that are substantially diminished relative to when landowners accept investment at opportunity costs uncertainty increases landowner profits leading to a greater diminution in conservation benefits

time inconsistent resource conservation contracts abstract are certain types of commonly observed resource conservation contracts inefficient in this paper we construct a model embodying realistic characteristics of resource contracts we find that resource contracts that share these characteristics are economically inefficient this inefficiency stems from a time inconsistency inherent in the contracts there are two possible ways to overcome this time inconsistency the first is to employ a sufficiently large penalty for early termination of the contract the second and possibly easier method is to offer an upward sloping conservation payment schedule so far overlooked by policy makers under this payment schedule the agent s ex ante and ex post contract choices coincide social externalities are fully internalized and the contractual outcome is economically efficient even in the absence of a penalty for early termination

will farmers trade profits for stewardship heterogeneous motivations for farm practice selection we investigate the trade off agricultural producers face between profits and stewardly activities when selecting farm practices instead of the profit maximization framework we model producer behavior in an expanded utility framework built on production technology and including two utility components self and social interests the framework introduces inherent heterogeneity and social environmental motivations into farmer behavior based on this model we hypothesize that there are farmers that are willing to forego some profit to engage in stewardly farm practices with an empirical study we provide evidence that some farmers are willing to make this sacrifice results are consistent with the multi utility hypothesis

the impact of information provision on agglomeration bonus performance an experimental study on local networks the agglomeration bonus is an incentive mechanism to induce adjacent landowners to spatially coordinate their land use for the delivery of ecosystem services from farmland this paper uses laboratory experiments to explore the performance of the agglomeration bonus in achieving the socially optimal land management configuration in a local network environment where the information available to subjects varies and the strategic setting is unfavorable for efficient coordination the experiments indicate that if subjects are informed about both their direct and indirect neighbors actions they are more likely to produce the socially optimal configuration thus effectiveness of the policy can be improved by implementing information dissemination exercises among landowners however given the adverse strategic setting increased game experience leads to coordination failure and optimal land choices only at the localized level independent of the information available to subjects thus success of the agglomeration bonus scheme on real landscapes will have to take account of the roles of both information and experience on participant behavior

the permanent income hypothesis and consumption durability analysis based on japanese panel data the permanent income hypothesis with durability of commodities is tested on a panel of about 2 000 japanese households for several commodity groups under static expectations about real interest rates and for some class of utility functions consumption which is a distributed lag function of current and past expenditure follows a martingale main empirical results are i the durability of commodities usually classified as services is substantial ii the hypothesis applies to about 85 percent of the population consisting of wage earners and iii income changes explain only a small fraction of the movements in expenditure

adapting auctions for the provision of ecosystem services at the landscape scale abstract auctions or competitive tenders can overcome information asymmetries to efficiently allocate limited funding for ecosystem services most auctions focus on ecosystem services on individual properties to maximise the total amount provided however for many services it is not just the total quantity but their location in the landscape relative to other sites that matters for example biodiversity conservation may be much more effective if conserved sites are connected adapting auctions to address ecosystem services at the landscape scale requires an auction mechanism which can promote coordination while maintaining competition multi round auctions in which bidding is spread over a number of rounds with information provided between rounds on the location of other bids in the landscape offer an approach to cost effectively deliver landscape scale ecosystem services experimental economic testing shows these auctions deliver the most cost effective environmental outcomes when the number of rounds is unknown in advance which minimises rent seeking behaviour it also shows that a form of bid improvement rule facilitates coordination and reduces rent seeking where the biophysical science is well developed such auctions should be relatively straightforward to implement and participate in and have the potential to provide significantly better outcomes than standard one shot tenders