John V. Krutilla

Resource Conservation, Environmental Preservation, and the Rate of Discount

I. Discounting and conservation, 359. — II. A model for natural environmental resource allocation: the concept of effective discount rates, 362. — III. Concluding remarks, 370.

Valuing long run ecological consequences and irreversibilities

Abstract In this paper we consider the special nature and implications, for economic theory and policy, of resource uses that involve adverse effects on the physical environment that are difficult or impossible to reverse. Distinctions are drawn between reversible and irreversible activities, between replaceable and irreplaceable resources. The existence of an “irreversibility premium” is demonstrated under certain plausible conditions, including uncertainty and shifting time perspective.

Chapter 4 Economics of nature preservation

Publisher Summary This chapter develops some of the economic theory relevant to decisions about nature preservation. The theory is motivated by a discussion of current issues: the disposition of wilderness lands and the protection of endangered species. It discusses two key concepts: uncertainty and irreversibility. Uncertainty is pervasive economic life, of course. But more than the usual degree of uncertainty surrounds the potential future benefits from conserving ecosystems. Irreversibility is clearly central to thinking about endangered species or ecosystems because extinction or loss of wildlands is indeed irreversible. The chapter develops a model of decision-making under uncertainty and irreversibility. The model proves that the optimal use of a natural environment is more likely to be continued preservation where the passage of time brings information about potential future benefits of preservation than where it does not. A related result is that the fraction of the area optimally preserved is larger. Finally, it presents applications of the concepts and models developed for terrestrial ecosystems. It has relevance to hydrospheric and atmospheric environments as well.

Public versus private ownership: The federal lands case

“Privatization” of public lands has been urged on the grounds that it will provide a more efficient allocation of the nations resources. However, there are some public policy objectives which private ownership and free markets are not equipped to achieve. Historically, these objectives have motivated legislation authorizing retention of some land in public ownership. Indeed, land in both forms of ownership is required to achieve a full range of both public and private goods and services. However, since inefficiencies in the allocation of resources will occur under either form of ownership, careful monitoring of economic activities in both sectors is more likely to achieve improvements than arguing for exclusive reliance on only one system of property rights.

The economics of natural resource scarcity: An interpretative introduction

Current views on resource availability are examined, along with the original Barnett-Morse thesis of resource supply. Originally published in 1979

Activation of the association of environmental and resource economists

Following discussions between Larry E. Ruff, then a member of the Ford Foundation staff, and Terry Ferrar, then Director of the Environmental Policy Center at the Pennsylvania State University, a decision was made to solicit the opinions of professional economists actively involved in environmental economic analysis regarding the advisability of founding a formal association to promote the field and the effectiveness of such analysis for programs and policies. Under the leadership of Terry Ferrar, a group of economists 1 involved in environmental economic analysis attending the annual meetings of the Allied Social Sciences Association in Dallas in December of 1975 met to explore this question and concluded that the proposal had sufficient merit to pursue the issue further. It was agreed that “there was need for better communication among environmental economists, between economists and those in other disciplines involved in environmental policy, and between academics and policy makers.” 2 Accordingly, a study committee was appointed to further explore the proposal. It consisted of Terry Ferrar, John Cumberland, Alan Carlin, and V. Kerry Smith; John Cumberland was elected chairman, Two other decisions were made at the first meeting. One was to explore with Academic Press the feasibility and advisability of adopting the Journal of Environmental Ecorwmics and Management as the official journal in the event the proposed association were activated. The second was to arrange with the American Economic Association program chairman two joint sessions for the next AEA program. Will Baumol agreed to organize one session and John Krutilla and Tony Fisher accepted responsibility for the second. The informal association held its second meeting during the annual meetings of the Allied Social Sciences Association in Atlantic City on September 17, 197(X3 The Cumberland committee report led to a judgment that a viable association was a justifiable presumption. Two substantive issues surfaced; one dealt with