Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands

Daniel Aronoff and Will Rafey

No 31495, NBER Working Papers from National Bureau of Economic Research, Inc

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 that offsets led to substantial private gains from trade, creating $2.4 billion of net surplus from 1995–2020 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: L0 (search for similar items in EconPapers)
Date: 2023-07
New Economics Papers: this item is included in nep-agr and nep-env
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