Allocating conservation resources between uncertain future states of nature

Neil Perry and Sriram Shankar

Ecological Economics, 2025, vol. 234, issue C

Abstract: When uncertainty prevails, conservation decision makers allocate funds, inputs and resources between future states of nature to hedge their bets. Decision makers explicitly or implicitly substitute biodiversity in one future state of nature for biodiversity in another. However, the decision making frameworks common in conservation biology do not model, explain or justify such behavior. Frameworks such as information gap analysis, expected benefit, stochastic dominance and minimizing the maximum loss result in resources being dedicated to one state of nature. Portfolio theory applied to conservation under uncertainty leads to resource allocations across states of nature but the framework we propose in this paper is more general and a better (more realistic) representation of conservation decision making. Utilizing a standard hypothetical example of maximizing the population size of the endangered orange-bellied parrot (Neophema chrysogaster), we develop the state-contingent approach and contrast it with standard decision-making frameworks. We explain that the state-contingent approach is unique because it is explicit about the relationship between actions and the states of nature that could arise. The extent to which any one action or future state of nature receives funding depends on three variables – the subjective probability that the state of nature will arise, society's risk preferences, and the conservation technology, or the effectiveness of the conservation action under different states of nature. We focus on the conservation technology and introduce three different classes – state general technologies, state allocable technologies, and state specific technologies. Each type of conservation technology leads to different allocation solutions and we provide examples from the conservation literature where each technology applies. Using a framework grounded in economic theory, the state-contingent approach improves the justification of precautionary conservation action, and we discuss the applicability of the approach to the conservation of the Tasmanian devil (Sarcophilus harrisii).

Keywords: Uncertainty; Resource Allocation; Risk Preferences; Conservation Technology (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:234:y:2025:i:c:s092180092500093x

DOI: 10.1016/j.ecolecon.2025.108610

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