nep-env New Economics Papers
on Environmental Economics
Issue of 2005‒01‒02
six papers chosen by
Francisco S.Ramos
Federal University of Pernambuco

  1. Conservation of wildlife. A bio-economic model of a wildlife reserve under the pressure of habitat destruction and harvesting outside the reserve. By Anders Skonhoft; Claire Armstrong
  2. Tourism, Poaching and Wildlife Conservation: What can Integrated Conservation and Development Projects accomplish? By Anders Skonhoft; Anne Borge Johannesen
  3. Franchise Bidding in the Water Industry – Auction Schemes and Investment Incentives By Urs Meister
  4. Enhancing Efficiency of Water Supply – Product Market Competition versus Trade By Reto Foellmi; Urs Meister
  5. Recreational Fishing and the Benefits of Oyster Reef Restoration in the Chesapeake Bay By Robert L. Hicks
  6. A Test of Benefits Transfer of Random Utility Models of Recreation Demand By Robert L. Hicks

  1. By: Anders Skonhoft (Department of Economics, Norwegian University of Science and Technology); Claire Armstrong (Norwegian College of Fishery Science, University of Tromsø)
    Abstract: Biodiversity is today threatened by many factors of which destruction and reduction of habitats are considered most important for terrestrial species. One way to counteract these threats is to establish reserves with restrictions on land-use and exploitation. However, very few reserves can be considered islands, wildlife species roam over large expanses, often via some density dependent dispersal process. As a consequence, habitat destruction, and exploitation, taking place outside will influence the species abundance inside the conservation area. The paper presents a theoretical model for analysing this type of management problem. The model presented allows for both the common symmetric dispersal as well as what is called asymmetric dispersal between reserve and outside area. The main finding is that habitat destruction outside may not necessarily have negative impact upon the species abundance in the reserve. As a consequence, economic forces working in the direction of reducing the surrounding habitat have unclear effects on the species abundance within the protected area. We also find that harvesting outside the reserve may have quite modest effect on the species abundance in the reserve. This underlines the attractiveness of reserves from a conservation viewpoint.
    Date: 2004–01–15
  2. By: Anders Skonhoft (Department of Economics, Norwegian University of Science and Technology); Anne Borge Johannesen (Department of Economics, Norwegian University of Science and Technology)
    Abstract: Integrated Conservation and Development Projects (ICDPs) have frequently been established in Africa to improve wildlife conservation and the welfare of local communities. However, their effectiveness so far has been hampered by conflicts and illegal harvesting activities. Within a Gordon-Schäfer-type model, this paper focuses on the strategic interaction between the manager of a protected area and a group of local people living near the park. The park manager benefits from wildlife through non-consumptive tourism and safari hunting. The local people benefit through hunting, although this is illegal according to existing laws, but they also bear costs as wildlife causes agricultural damage. Depending on the economic and ecological environment, we show that ICDPs relying on money transfers to the local people derived from the park manager’s activities may or may not promote wildlife conservation. In addition, we demonstrate that the effects on the welfare of the local people are ambiguous.
    Keywords: wildlife, conservation, conflicts, local welfare
    JEL: Q2 Q20
    Date: 2004–08–15
  3. By: Urs Meister
    Abstract: The periodical re-auction of a water monopoly concession causes the danger of underinvestment. If the life-time of specific assets such as water pipes exceeds the contract length and transferring the ownership of assets is difficult, the incumbent franchisee faces a hold-up problem. Using a simple auction model that considers the specifics of the piped water sector this paper shows that investment incentives may vary depending on the applied auction scheme. The model is designed as a two stage game, where the franchisee decides about investment on the first and competes with a potential market entrant on the second stage. Investment tends to be higher in sealed bid auctions than in an English auction, since the incumbent benefits from an information advantage. Additionally investment may vary in a first- and a second-price sealed bid auction depending on several factors such as costs or effectiveness of investment. The analysis is extended by a vertical separation.
    Keywords: Water, Networks, Franchise Bidding, Investment
    JEL: L95 L43 D21 Q25
    Date: 2004–12–20
  4. By: Reto Foellmi (Massachusetts Institute of Technology); Urs Meister (University of Zurich)
    Abstract: This paper analyses and compares potential efficiency gains induced by the introduction of product market competition and cross boarder trade in the piped water market. We argue that due to the specific circumstances in the water sector product market competition, i.e. competition by common carriage is not expected to be very intensive. The connection of networks could alternatively be used for cross boarder trade between neighboured water utilities. We show that competition by common carriage leads to production incentives for the inefficient supplier. This implies that the retail prices tend to be lower than with cross border trade. However, the efficiency effect dominates and resulting welfare is higher in case of trade.
    Keywords: Water, Networks, Product-Market Competition, Trade, Bargaining
    JEL: L95 L43 D21 Q25
    Date: 2004–12–21
  5. By: Robert L. Hicks (Department of Economics, College of William and Mary)
    Abstract: In this paper, I use a travel cost model of recreation demand to analyze the economic benefits to the Bay's recreational fishermen from proposed oyster reef restoration programs. The model explicitly links historical oyster bottom conditions to recreational fishing catch to capture ecosystem and habitat benefits. I find that observed catch is indeed higher in areas associated with higher quality reef areas. This relationship enables the estimation of recreational fishing values for improved Bay habitat since fishermen value higher catches and restoration of oyster bottom will lead to higher quality reef areas hence higher catch. It should be noted that our model provides a reduced form relationship between catch, the underlying fish population, and habitat quality; however, recent work show that oyster bottom provide good foraging habitat for a number of species and may therefore act as attractors and perhaps may lead to larger numbers of striped bass in the future. We find that benefits from oyster reef restoration are measurable and can account for a substantial portion of the costs of restoration.
    Keywords: Recreational demand, Random utility modeling, Ecosystem restoration
    JEL: Q26 Q28 Q22 Q51
    Date: 2004–05–15
  6. By: Robert L. Hicks (Department of Economics, College of William and Mary)
    Abstract: In this paper, I examine the performance of function transfer of random utility models (RUM) and show that the usual notions of reliability and validity need careful examination in the RUM context. Because in RUM models, estimated behavioral parameters are not identifiable independently of the scale parameter, a function transfer carries with it information about preferences and the error structure at the study region. Using a Monte Carlo experiment, I investigate the viability of function transfer when behavioral parameters are assumed to be equal but differences in scale exist for the policy and study regions. The results show that properties of the error structure can impact the reliability and validity of the function transfer method in RUM's under the most ideal of situations- when the behavioral parameters of the two populations are equal.
    Keywords: Recreational demand, Random utility modeling, Ecosystem restoration
    JEL: Q26 Q28 Q22 Q51
    Date: 2004–07–15

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