Integrated Assessment of Biodiversity and Agriculture

Johan Gars, Daniel Spiro, Gustav Engström and Steven J. Lade

No 11814, CESifo Working Paper Series from CESifo

Abstract: This paper develops a tractable integrated assessment model of the two-way interaction between biodiversity and the economy. To capture the main causes of biodiversity loss and the economic harm from it, we focus on agriculture and its expansion at the expense of forest land. We answer the question: What are the effects of pricing policies for land use on biodiversity and agricultural output? We show that there exist multiple economic-ecological equilibria and that a single ”bad” policy maker can cause virtually irreversible harm – a ratchet effect of land-use change. We further find that a brown paradox may emerge in which, in anticipation of a future lenient policy maker, farmers halt current land-use change. We characterize the optimal mix and level of land-clearing fines and land-use taxes. Fines only have the effect of slowing down land-use change but cannot be used to restore biodiversity. For that land-use taxes, or other policies such as restoration subsidies, are necessary.

Keywords: biodiversity; policy; land-use; agriculture. (search for similar items in EconPapers)
JEL-codes: H23 O13 Q12 Q15 Q57 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11814

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