Shadow prices and abatement cost of soil erosion in Shaanxi Province, China: Convex expectile regression approach

Xiaojie Wen, Shunbo Yao and Johannes Sauer

Ecological Economics, 2022, vol. 201, issue C

Abstract: Since 1999, the Sloping Land Conversion Program (SLCP) in China, regarded as one of the largest payments for ecosystem services (PES) programs worldwide, was carried out for the alleviation of soil erosion. The high economic cost of the SLCP has attracted considerable attention to its ecological and economic effects during the past decades. However, reliable evidence about abatement alternatives and abatement costs of soil erosion remains scant. Using panel data of 83 counties observed in Shaanxi Province from 2000 to 2015, the marginal abatement cost (MAC) of soil erosion is accurately evaluated by a directional distance function with convex expectile regression. Besides, we explore how external variables affect shadow prices and the choice of abatement solutions. Our main findings are the following: First, this novel data-driven approach could alleviate the bias from the interference of noise and inefficiency; second, incorporating the investment of the SLCP into the production process allows to find the most cost-efficient abatement solution from both the input side (i.e., increasing the SLCP investment) and the output side (i.e., downscaling the primary industry or downscaling the non-primary industries); third, the temporal-spatial distribution of abatement costs shows that the abatement potential from the SLCP has shrunk gradually, which implies that there might be cost-inefficiency in some counties if the SLCP continues; finally, we recognize that natural conditions, like wind speed and vegetation quality, could influence the input-side abatement cost and output-side abatement cost differently. These results have profound policy implications, asking for more cost-efficient abatement strategies in the future.

Keywords: Marginal abatement cost; Sloping Land Conversion Program; Convex expectile regression approach; Regional disparity; Contextual variables (search for similar items in EconPapers)
JEL-codes: O44 Q56 Q58 R15 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:201:y:2022:i:c:s0921800922002312

DOI: 10.1016/j.ecolecon.2022.107569

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