Combining Supply and Demand Estimates for Ecosystem Services from Cropland

Shan Ma, Scott Swinton and Frank Lupi

No 103501, 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania from Agricultural and Applied Economics Association

Abstract: Payment-for-Ecosystem-Services (PES) programs are gaining appeal as flexible approaches to inducing the voluntary provision of ecosystem services (ES). Farmers, who manage agricultural ecosystems, provide important nonmarket ecosystem services to the public by their choice of production inputs and management practices. Although there exist various PES programs in the United States and Europe, we are aware of none that was designed based on a comprehensive understanding of the underlying supply and demand of ecosystem services. Taking advantage of unique, coupled datasets of stated preferences, this paper combines a supply-side cost function of farmers’ willingness to adopt practices that provide increased ES with a demand-side social benefit function of residents’ willingness to pay (WTP) for these ES. The result is an empirically based, welfare-maximizing price and quantity of ES that can inform the design of future PES programs.

Keywords: Agricultural and Food Policy; Environmental Economics and Policy (search for similar items in EconPapers)
Pages: 2
Date: 2011
New Economics Papers: this item is included in nep-agr and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea11:103501

DOI: 10.22004/ag.econ.103501

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