 Optimal investment in ecological rehabilitation under climate changeAnke Leroux and Stuart Whitten () Ecological Economics, 2014, vol. 107, issue C, 133-144 Abstract: Ecological rehabilitation is subject to a variety of risks affecting the likely return on investment. We propose an options approach to allocating scarce conservation funds that explicitly allows for the irreversibility of investment and risks to investment payoffs. The approach captures ecosystem dynamics from extinction debt, as well as ecological and climatic risks at the project scale. Climatic risks are introduced through three channels: the effects of climate change on species loss, future rehabilitation benefits and frequency of catastrophic events. Our results suggest that allocating voluntary rehabilitation contracts on the basis of real options criteria increases cost-efficiency and delivers greater value for money for the Government when compared with the conventional cost-effectiveness criterion as it is illustrated for the case of Box Gum Grassy Woodland rehabilitation in Australia. Keywords: Bid ranking; Cost-efficiency; Real options; Conservation; Risk; Extinction debt; Box Gum Grassy Woodlands (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:107:y:2014:i:c:p:133-144 DOI: 10.1016/j.ecolecon.2014.07.012 Access Statistics for this article Ecological Economics is currently edited by C. J. Cleveland More articles in Ecological Economics from Elsevier |
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