In this dissertation, I investigate the impact of economic incentives to provide ecosystem services, and discuss potential policies and research methods to increase the net value of ecosystem services. The first two chapters evaluate the impact of economic incentives on deforestation rates and resulting tradeoffs between agricultural production and carbon sequestration in the Brazilian Amazon. I found that the opening of a port facility in Santarém in the Brazilian Amazon resulted in an immediate increase in the deforestation rate, 5.48% increase in 2003, and 11.70% in 2004. The value of carbon released was over $100 million, which exceeds the value of agricultural production within the deforested area. Deforestation rates decreased starting in 2005 with the beginning of the Responsible Soy Project, a joint collaboration between agricultural multinational, Cargill, and an environmental NGO, The Nature Conservancy (TNC). It is less clear whether the decline in the deforestation rate in 2005 and thereafter was due to the project or a reversion to more normal rates of deforestation after the initial burst of land clearing with the port opening. These results emphasize the importance of timing. To be effective, environmental conservation projects should be in place prior to economic development activities that encourage deforestation. The third chapter discusses the importance of including agricultural production cost to calculate economic rent and constructs a globally consistent agricultural production cost data set. Omitting production cost results in overestimates of value from agricultural production and a failure to correctly identify areas with negative profit. Using the correct measure of economic rent is important in making land-use decisions and arriving at efficient land-use patterns. In summary, this dissertation shows that we can use land more efficiently and maximize net value of ecosystem services if we plan in advance and consider the correct value of multiple ecosystem services.
University of Minnesota Ph.D. dissertation. December 2015. Major: Applied Economics. Advisor: Stephen Polasky. 1 computer file (PDF); vi, 123 pages.
Toward Efficient Land-Use Decisions: Impact of Economic Incentives on Ecosystem Services.
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