Conservation Payments Under Risk: A Stochastic Dominance Approach

P.C. Benitez, T.K. Kuosmanen, R. Olschewski, G.C. VanKooten

Research output: Contribution to journalArticleAcademicpeer-review

52 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)1-15
JournalAmerican Journal of Agricultural Economics
Volume88
Issue number1
DOIs
Publication statusPublished - 2006

Keywords

  • expected utility
  • carbon sequestration
  • land
  • uncertainty
  • biodiversity
  • mexico
  • costs

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