Restoring the commons: optimizing the restoration of natural assets

Jarmo Jääskeläinen () and Pauli Lappi ()
Additional contact information
Jarmo Jääskeläinen: University of Helsinki
Pauli Lappi: University of Helsinki

Economic Theory, 2025, vol. 80, issue 4, No 2, 989-1039

Abstract: Abstract This paper analyzes the optimal restoration of natural assets, including, for example, degraded ecosystems and biodiversity, contaminated sites, and lost carbon stocks. The focus is on dynamic allocation of a fixed budget, where the decision maker chooses the timing and level of restoration investments for each stock. The decision maker is able to rely on both costly restoration investments and on natural regeneration processes in restoration planning. We characterize the properties of any optimal solution to the dynamic allocation problem, including related waiting and investment rules, and derive conditions for when it is optimal to rely on both natural restoration processes and active, but costly, restoration. We also illustrate the model by applying it to the allocation of biodiversity restoration funds in Europe.

Keywords: Biodiversity; Climate change; Conservation; Envelope theorem; Hazardous waste; Optimal timing; Restoration (search for similar items in EconPapers)
JEL-codes: C61 H50 Q54 Q57 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00199-025-01649-1 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joecth:v:80:y:2025:i:4:d:10.1007_s00199-025-01649-1

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

DOI: 10.1007/s00199-025-01649-1

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().