Forest Conservation in Costa Rica when Nonuse Benefits are Uncertain but Rising
Gerrit van Kooten and
Robert A. Schipper
American Journal of Agricultural Economics, 2002, vol. 84, issue 1, 150-160
Stochastic dynamic programming is used to investigate optimal holding of primary tropical forest in humid Costa Rica when future nonuse benefits of forest conservation are uncertain and increasing. The quasi-option value of maintaining primary forests is included as a component of investment in natural capital. Although the impact of uncertainty on conservation incentives is substantial, our results indicate that a rising trend in future benefits and compensation by the international community for beneficial spillovers are more important factors in determining optimal holdings of forest stocks. Without compensatory payments, however, further deforestation may be warranted. Copyright 2002, Oxford University Press.
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:84:y:2002:i:1:p:150-160
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