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Conservation Payments under Risk: A Stochastic Dominance Approach

Pablo Benítez, Timo Kuosmanen (), Roland Olschewski () and Gerrit van Kooten

No 2005-14, Working Papers from University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group

Abstract: Conservation payments can be used to preserve forest and agroforest systems. To explain landowners’ land-use decisions and determine appropriate conservation payments, it is necessary to focus on revenue risk. Marginal conditional stochastic dominance rules are used to derive conditions for determining the conservation payments required to guarantee that the environmentally-preferred land use dominates. An empirical application to shaded-coffee protection in the biologically important Chocó region of West-Ecuador shows that conservation payments required for preserving shaded-coffee areas are much higher than those calculated under risk-neutral assumptions. Further, the extant distribution of land has strong impacts on the required payments.

Keywords: agroforest systems; conservation payments; land allocation; portfolio diversification; risk; stochastic dominance (search for similar items in EconPapers)
JEL-codes: C73 O54 Q23 Q57 R14 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2005-11
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https://web.uvic.ca/~repa/publications/REPA%20work ... kingPaper2005-14.pdf Final version, 2005 (application/pdf)

Related works:
Journal Article: Conservation Payments under Risk: A Stochastic Dominance Approach (2006) Downloads
Working Paper: Conservation Payments under Risk: A Stochastic Dominance Approach (2005) Downloads
Working Paper: CONSERVATION PAYMENTS UNDER RISK: A STOCHASTIC DOMINANCE APPROACH (2004) Downloads
Working Paper: Conservation Payments under Risk: A Stochastic Dominance Approach (2004) Downloads
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