Leonard Shabman

Economic value of natural Coastal wetlands: A critique

Recent estimates by J. Gosselink, E. Odum, and R. Pope of the economic value of natural wetlands have had considerable impact on analyses and discussions of public policies concerning natural wetlands management. However, these economic value estimates are neither conceptually nor empirically correct. First, these workers failed to recognize the nature of the process by which economic values are determined and made an illegitimate marriage of the principles of systems ecology and economic theory. Second, where Gosselink et al. attempted to apply proper economic principles, their calculations resulted in economic value estimates that are most likely in error.

Paying for environmental services from agricultural lands: an example from the northern Everglades

There is growing interest in implementing market-like programs that would pay farmers and ranchers for producing environmental services (beyond those that generate food and fiber) from working agricultural lands. However, few examples exist of programs that pay directly for quantified services. Since 2005, a coalition of non-governmental environmental organizations, state and federal agencies, ranchers, and researchers has been developing a Pay-for-Environmental Services (PES) program that would compensate cattle ranchers in Floridas northern Everglades region for providing water storage and nutrient retention on private lands. We use our experience with this program to identify key challenges to PES program design, including identifying a buyer and defining the environmental services; agreeing upon credible, yet practical, approaches to quantifying the services provided; reducing programmatic costs in light of existing policies and complex regulatory issues; and maintaining an adaptive approach to progr...

Trading Programs for Environmental Management: Reflections on the Air and Water Experiences

Emission and effluent trading programs are increasingly being advocated for the nations air and water quality programs. However, important distinctions must be drawn between credit and allowance trading, based on how much decision-making authority is transferred from regulators to dischargers. Credit trading programs are extensions of command-and-control regulation. Allowance trading programs, like markets, decentralize decisions on the means to control discharges and the location of that control. A review of existing trading programs finds allowance trading programs stimulate more aggressive pollution prevention behavior and result in lower compliance costs than credit trading.

A Critique of the Self-Interested Voter Model: The Case of a Local Single Issue Referendum

In recent years, economists have sought to extend the logic of marginal analysis to topics not traditionally considered within the domain of the discipline. Among the areas to which this analysis has been expanded is political behavior under a research program widely known as public choice.1 The empirical tradition of public choice uses the utility maximization behavioral assumption of economic theory to construct and estimate models of voting behavior [Mueller 1989; Mitchell 1990]. At the conceptual level, this assumption permits inclusion of direct self-interest, altruism, and community duty in explanations of decisions on whether and how to vote. However, predictive empirical models of voter choice typically specify an individuals utility function solely in terms of direct self-interest [Feldman 1984, 229]. Within the empirical public choice literature, direct tests of the self-interested voter assumption have been hampered by two data problems. First, while hypotheses are about motivations and responses of individual voters, the data available is usually aggregate census data or voting precinct data. The problems of using aggregate data in testing hypotheses about individual voter decision making have been noted in several studies [Deacon and

Wetland credit sales as a strategy for achieving no-net-loss: The limitations of regulatory conditions

Wetland restoration and creation has been undertaken by the private sector, by public agencies, and by non-governmental organizations (NGOs) in order to create wetland credits for sale to wetland permit recipients. The permit recipients use credits purchased from these commercial sales ventures as compensation for activities permitted under Section 404 of the Clean Water Act of the United States and related state and local government programs. For commercial sales ventures to make a, positive contribution to achieving no-net-loss of wetlands, the credits sold must be ecologically successful, ventures must receive prices adequate to cover their credit production costs, and fill permit recipients must be willing and able to pay the resulting prices. From the perspective of the individual sales venture, costs and required prices are affected by 1) regulatory conditions governing when the wetland credits are sold, 2) the cost of gaining regulatory approval to sell credits, and 3) the future certainty of wetland credit demand. The consequences of these three factors for costs, prices, and availability of wetland credits are illustrated using a financial simulation of a hypothetical wetland restoration activity. A discussion of the results of the financial simulations and of barriers to competition among sales ventures leads to the conclusion that there are significant limits to achieving no net loss in the regulatory program through wetland credit sales.

Estimating the economic value of wetlands: Principles, methods, and limitations

Abstract Few conceptually valid estimates of the economic value of wetlands exist. This is due, in part, to the complexity of the procedures needed to obtain such estimates in conjunction with the extensive data requirements of such procedures. In most cases, such data are lacking. This paper describes basic principles which underlie conceptually valid estimates of nonmarket and market values of wetlands and data needs for such estimates. The implications for wetlands management are explored for situations where such data are not available.

Mitigating Damages From Coastal Wetlands Development: Policy, Economics and Financing

Public programs to reduce the rate of coastal wetlands losses are based upon an ambiguous policy framework. Also, scientific uncertainty about the services of wetlands make credible economic valuation difficult, thus reducing the utility of benefit-cost analysis within the wetlands regulation process. Reform of national wetlands programs can result in enhanced maintenance of wetlands stocks and accomodation of development pressures. The policy reforms proposed in this paper will result in achievement of these objectives in an economically efficient manner.

Distributional Constraints on Acceptance of Nonpoint Pollution Controls

An economically efficient, nonpoint pollution control strategy for a multijurisdictional 208 area may result in a benefit-cost distribution that will prohibit its acceptance. Vesting financial authorities in a regional water quality management agency would allow for implementation of a local compensation scheme designed to facilitate acceptance. Such a scheme would involve raising revenues from water quality beneficiaries that would, in turn, be paid as inducements for implementation of nonpoint control practices. These propositions are first defended with a theoretical argument. Then a linear programming model is applied for an empirical case analysis.

Simulation Modeling to Set Priorities for Research on Oyster Production

Private oyster production in Virginia has declined significantly because of factors including losses from MSX (Haplosporidium nelsoni). Increased state and federal funding is being proposed to support research to stimulate oyster productivity. A model of oyster production under uncertainty, including growth, disease, and economic components, is used to aid in setting research priorities. The model shows effects of different types of research information on returns to a representative oyster planting enterprise. Seed harvest technology and accurate knowledge of the salinity threshold at which MSX mortalities occur are found to have greatest promise for increasing profitability of oyster production.

The Decline of Private Sector Oyster Culture in Virginia: Causes and Remedial Policies

Oyster production from private grounds in Virginia has declined significantly since 1960. Restoring industry production requires a better understanding of the reasons for this decline. Currently, state fishery managers and the popular press attribute the decline to the oyster disease Haplosporidium nelsoni (MSX). In fact, private planters themselves consider MSX disease as the primary constraint on the future profitability of private oyster culture. This study analyzes potential causes of the decline using a simulation model of oyster production with data from the 1960s, 1970s, and 1980s. The analysis suggests that rising seed prices driven by economic and productivity changes are more important than MSX in reducing the economic incentives to private planting. Therefore, reducing oyster seed prices is an effective policy strategy. However, education of planters will also be needed to assure a better understanding of the profit potential in oyster planting.