Academic journal article Agricultural and Resource Economics Review

Using Sciences to Improve the Economic Efficiency of Conservation Policies

Academic journal article Agricultural and Resource Economics Review

Using Sciences to Improve the Economic Efficiency of Conservation Policies

Article excerpt

In the last 20 years, both public and private expenditures on resource conservation and environmental protection have increased dramatically. However, there are numerous technical and political barriers to the efficient use of conservation funds. This paper discusses some of these barriers and approaches to overcoming them. It argues that ecosystem complexities such as threshold effects, ecosystem linkages, and spatial connections often mitigate against politically palatable criteria for resource allocation. Ignoring these complexities is likely to result in substantial efficiency losses. While challenges are daunting for the efficient management of conservation investments, payoff is potentially high for the use of sciences.

Key Words: conservation policies, distributional effects, ecosystem linkages, spatial connections, targeted policies, threshold effects

In the last 20 years, federal expenditures on agricultural conservation programs have increased significantly in the United States, from about $750 million in the early 1980s to over $2.5 billion in recent years (Claassen et al., 2001). This trend of increasing conservation expenditures continued with the 2002 Farm Bill, which not only reauthorized some of the most important conservation programs in U.S. history (e.g., Conservation Reserve Program, Environmental Quality Incentive Program, and Wetlands Reserve Program), but also included provisions for new conservation programs (e.g., Conservation Security Program, Grassland Reserve Program).

With the increasing expenditures on conservation, a number of important issues have been raised, including: How should conservation funds be allocated among geographic areas? Should funds be concentrated in fewer watersheds or distributed over a wider geographic area? Should funding priorities be given to areas with the worst environmental problems, or to areas that have made some environmental improvements? What criteria should be used to target resources for conservation? Should conservation programs target least expensive resources or resources that are most vulnerable to environmental damage? If farmers are paid for conservation, what should payments be based on?-i.e., should payments be based on the adopted conservation practices or the amount of environmental benefits provided? What are the economic, environmental, and distributional implications of alternative target- ing criteria? These issues are not only intellectually challenging, but also policy relevant.

In this paper, I review some of the recent work addressing these issues. I argue that ecosystem complexities such as threshold effects, ecosystem linkages, and spatial connections often mitigate against politically palatable criteria for resource allocation. Ignoring these complexities is likely to result in substantial losses in economic efficiency.

While challenges are daunting to incorporate these complexities into the design of conservation policies, payoffs are potentially high. I propose a two-stage procedure for the design of conservation programs and argue that such a two-stage procedure can reduce the information requirement for the efficient targeting of conservation efforts.

The remainder of this paper is organized as follows. First, a discussion is presented to highlight several strategies for conservation targeting and their economic, environmental, and distributional implications. I then explain why it is so challenging to design and implement an efficient conservation program in the presence of threshold effects, ecosystem linkages, and spatial connections between ecosystems. case studies are then reviewed, examining the extent to which conservation funds would be misallocated when these ecosystem complexities are ignored, and exploring how sciences can be used to improve the economic efficiency of conservation programs. The presentation ends with a few concluding remarks.

Conservation Targeting Strategies

Consider the problem of a conservation program manager who wants to target some resources (e. …

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