Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands

Daniel Aronoff and Will Rafey

American Economic Review, 2026, vol. 116, issue 5, 1723-64

Abstract: We introduce an empirical framework for valuing markets in environmental offsets. Using newly collected data on wetland conservation and offsets, we apply this framework to evaluate a set of decentralized markets in Florida, where land developers purchase offsets from long-lived producers who restore wetlands over time. We find offsets led to substantial private gains from trade, creating $2.4 billion of net surplus from 1995 to 2020 relative to direct conservation. Offset trading also generated new hydrological externalities. A locally differentiated Pigouvian tax would have prevented $1.6 billion of new flood damage while preserving more than two-thirds of the private gains from trade.

JEL-codes: D47 D62 H23 Q24 Q57 R14 (search for similar items in EconPapers)
Date: 2026
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Working Paper: Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands (2023)
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DOI: 10.1257/aer.20231016

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