Sustainability, limited substitutability, and non-constant social discount rates

The paper shows how limited substitutability in consumption between different classes of goods affects the magnitude and time development of social discount rates. It decomposes the discount rates into an absolute growth and a relative growth or substitutability effect. The paper relates between-good and intertemporal substitutability to the notions of weak and strong sustainability. It analyzes under which circumstances low as opposed to high between-good substitutability increases the weights given to long-run environmental services.     

Valuation of natural capital under uncertain substitutability

Natural capital is complex to value notably because of the high uncertainties surrounding the substitutability of its future ecosystem services. We examine a Lucas economy in which a consumption good is produced by combining different inputs, one of them being an ecosystem service that is partially substitutable with other inputs. The growth rate of these inputs and the elasticity of substitution evolve in a stochastic way. We characterize the socially efficient ecological discount rates that should be used to value future ecosystem services at different time horizons. We show that the inverse of the elasticity of substitution can be interpreted as the CCAPM beta of natural capital. We also show that any increase in risk of this beta reduces the ecological discount rate. If our collective beliefs about the elasticity of substitution of ecosystem services are Gaussian, the ecological discount rates go to minus infinity for finite maturities. In that case, a marginal increase in natural capital has an infinite value. We provide a realistic calibration of the model that is coherent with observed asset prices by using the model of extreme events of Barro (2006). The bliss maturity for infinite discount factors is less than 100 years in this calibration.     

Discounting,inequality and economic convergence

The aim of this paper is to examine the impact of inequalities and economic convergence on the efficient discount rate when international credit and risk-sharing markets are inefficient. We consider an economy in which initial consumption levels and growth expectations are heterogeneous. In the benchmark case in which relative inequalities are permanent and relative risk aversion is constant, inequalities do not affect the discount rate. We derive necessary and sufficient conditions under which permanent inequalities reduce the discount rate. We also show that the anticipation of economic convergence raises the efficient discount rate when relative prudence is larger than unity.     

The endowment effect,discounting and the environment

There is a considerable body of evidence showing that our preferences exhibit both reference dependence and loss aversion, a.k.a. the endowment effect. In this paper, we consider the implications of the endowment effect for discounting, with a special focus on discounting future improvements in the environment. We show that the endowment effect modifies the discount rate via (i) an instantaneous endowment effect and (ii) a reference-updating effect. Moreover we show that these two effects often combine to dampen the preference to smooth consumption over time. What this implies for discounting future environmental benefits may then depend critically on whether environmental quality is merely a factor of production of material consumption, or whether it is an amenity. On an increasing path of material consumption, dampened consumption smoothing implies a lower discount rate. But on a declining path of environmental quality and where we derive utility directly from environmental quality, it implies a higher discount rate. On non-monotonic paths, loss aversion specifically can give rise to substantial discontinuities in the discount rate.     

Discounting and relative consumption

We analyze optimal social discount rates when people derive utility from relative consumption, i.e. their own consumption level relative to the consumption level of others. We compare the social, private, and conventional Ramsey rates. Assuming a positive growth rate, we find that (1) the social discount rate exceeds the private discount rate if the importance of relative consumption increases with consumption, and that (2) the social discount rate is lower than the Ramsey rate given quasi-concavity in own and others’ consumption and risk aversion with respect to others’ consumption. Numerical calculations demonstrate that the latter difference may be substantial and have important implications for long run environmental issues such as global warming.     

Minimax regret discounting

The paper considers an environmental policy decision in which the appropriate approach for discounting future costs and benefits is unknown. Uncertainty about the discount rate is formulated as a decision under Knightian uncertainty. To solve this, we employ minimax regret, a decision criterion that is much less conservative then the related criterion maximin—in particular, it can be shown to implement a “proportional response” in that it equally balances concern about the mistake of doing too little with that of doing too much. Despite the criterion's balanced nature, the minimax regret solution mimics a policy that maximizes the present discounted value of future net benefits with an effective (certainty-equivalent) discount rate that declines over time to the lowest possible rate. In addition to reinforcing Weitzman's (1998) original limiting result, the approach generates concrete policy advice when decision makers are unable to specify a prior over possible discount rates. We apply it to the Stern–Nordhaus discounting debate and find that the effective discount rate converges to the Stern rate in just under 200 years.     

Minimax regret discounting

The paper considers an environmental policy decision in which the appropriate approach for discounting future costs and benefits is unknown. Uncertainty about the discount rate is formulated as a decision under Knightian uncertainty. To solve this, we employ minimax regret, a decision criterion that is much less conservative then the related criterion maximin—in particular, it can be shown to implement a “proportional response” in that it equally balances concern about the mistake of doing too little with that of doing too much. Despite the criterion's balanced nature, the minimax regret solution mimics a policy that maximizes the present discounted value of future net benefits with an effective (certainty-equivalent) discount rate that declines over time to the lowest possible rate. In addition to reinforcing Weitzman's (1998) original limiting result, the approach generates concrete policy advice when decision makers are unable to specify a prior over possible discount rates. We apply it to the Stern–Nordhaus discounting debate and find that the effective discount rate converges to the Stern rate in just under 200 years.     

The Role of Prices in Conserving Critical Natural Capital

Abstract: Until recent decades, economic decision makers have largely ignored the nonmarket benefits provided by nature, resulting in unprecedented threats to ecological life‐support functions. The economic challenge today is to decide how much ecosystem structure can be converted to economic production and how much must be conserved to provide essential ecosystem services. Many economists and a growing number of life scientists hope to address this challenge by estimating the marginal value of environmental benefits and then using this information to make economic decisions. I assessed this approach first by examining the role and effectiveness of the price mechanism in a well‐functioning market economy, second by identifying the issues that prevent markets from pricing many ecological benefits, and third by focusing on problems inherent to valuing services generated by complex and poorly understood ecosystems subject to irreversible change. I then focus on critical natural capital (CNC), which generates benefits that are essential to human welfare and have few if any substitutes. When imminent ecological thresholds threaten CNC, conservation is essential and marginal valuation becomes inappropriate. Once conservation needs have been met, remaining ecosystem structure is potentially available for economic production. Demand for this available supply will determine prices. In other words, conservation needs should be price determining, not price determined. Conservation science must help identify CNC and the quantity and quality of ecosystem structure required to ensure its sustained provision.     

湿地生态系统服务价值评价去重复性研究的思考

重复计算一直是困扰湿地生态系统服务价值评价的一个难点问题。湿地生态系统服务的复杂性及其组成分的非线性容易导致在计算湿地生态系统服务价值时容易导致重复计算,如果不能正确的去除湿地生态系统服务价值评价中重复计算的部分,会使评估结果的可信度降低。湿地生态系统服务价值评价的重复性计算主要体现在两个方面,总服务价值评价中的重复计算和部分服务之间的重复计算。湿地生态系统服务由湿地生态系统和生物多样性产生,并为人类福祉做出贡献,在这一过程中,湿地生态系统功能与服务的复杂的关系及服务之间的因果关系容易导致在计算生态系统总的服务价值时重复计算的产生,也就是分类时存在重复计算。部分服务之间的重复计算则主要是由于指标的模糊不清、参数的重复和评价方法的选择导致的。通过分析湿地生态系统服务价值评价重复性计算产生的原因,文章提出了一个具体的解决框架,包括最终服务的确定、指标的明确、模型的构建以及评估方法的选择等。首先,将湿地生态系统服务分成中间服务和最终服务,以最终服务作为最终要评价的服务;其次,针对部分服务中可能存在的重复计算,从指标和参数的明确、评价方法的选择和数学模型的构建等方面进行解决;最后,构建一个优化的湿地生态系统服务价值评价体系。希望通过这些解决办法来降低湿地生态系统服务价值评价中重复计算的可能性,以期更加准确的评估湿地生态系统服务。     

城市生态系统服务功能的价值结构分析

本文从城市生态系统价值体系出发,探讨城市自然资本,经济资本和社会资本综合测算的理论与方法,结果表明：示范区的自然总资本以年均４％的速度递减,其真实总资本年均增长率为４．５％而不是国内生产总值的１２．６％,自然资本的增减应成为衡量一个城市或区域是否实现可持续发展的核心指标。城市生态系统中自然资本由持续递减变为递增,是实现人类共同追求的可持续发展目标必由之路。     

Prioritization of Ecosystem Services Research: Tampa Bay Demonstration Project

The Tampa Bay Ecosystem Services Demonstration Project (TBESDP) is part of the U.S. Environmental Protection Agency’s Ecosystem Services Research Program. The principal objectives of TBESDP are to (1) quantify the ecosystem services of the Tampa Bay watershed, (2) determine the value of ecosystem services to society, (3) predict the supply of ecosystem services under future scenarios of population growth and climate change, and (4) apply this knowledge through models and tools that will support the best informed environmental decisions possible. The scope and complexity of this project required intensive effort to establish which services can be quantified by applying existing models, data, and scientific literature and which services will require supporting research. Research priorities were assessed by: (1) developing and refining conceptual models of major ecosystems in the Tampa Bay region, (2) gathering input from stakeholders about the relative importance and values of various ecosystem services, (3) preparing and reviewing a bibliometric analysis of the volume of scientific literature relevant to the ecosystems and services of interest, and (4) evaluating an integrated analysis of importance, value, and availability of scientific information. This analysis led us to focus on two research priorities, seagrass-habitat functions as support for fishery production, and wetlands as regulators of water quality.     

Mapping ecosystem service value in Germany

Currently, a national TEEB study is being conducted in Germany. However, it lacks an overall estimation of ecosystem service value (ESV) at the national level. In this paper, we estimate the ESV in Germany based on the national land cover data and the unit value transfer method and examine the relationships between ESV and gross domestic product (GDP). The results indicate that the total ESV amounts to 248,895 million US$/yr, accounting for 7.91% of the sum of ESV and GDP. Cropland with 111,704 million US$/yr makes the largest contribution to the total ESV, and the second largest state, Lower Saxony, has the greatest ESV of 60,346 million US$/yr. In addition, a spatial pattern that distinguishes four regions in terms of the relationship between ESV and GDP at the district level is identified. This study illustrates the overall status of ecosystem services at the current point of time in Germany, raises public awareness about the magnitude of these services relative to other services captured in GDP, and implies suggestions for future research and ecological policy.     

Threshold management in a coupled economic–ecological system

Economic analysis of optimal ecosystem management in the presence of a threshold has typically ignored the potential for induced behavioral responses. This paper contributes to the literature on non-convex ecosystem management by considering the implications of a particular behavioral response in a regional economy – that of amenity-led growth – to changes in ecosystem services generated by a lake ecosystem subject to a eutrophication threshold. The essential policy challenge is to achieve optimal levels of lake nutrients and urbanization given that improvements to water quality will induce additional migration and urbanization in the region with attendant ecological impacts. We show that policies that ignore the recursive relationship between urbanization and water quality unintentionally exacerbate boom-bust cycles of regional growth and decline and risk pushing the system towards long-run economic decline. In contrast, the optimal policy accounts for the behavioral feedbacks to improved ecosystem services, and balances regional growth and ecological degradation.     

Threshold management in a coupled economic–ecological system

Economic analysis of optimal ecosystem management in the presence of a threshold has typically ignored the potential for induced behavioral responses. This paper contributes to the literature on non-convex ecosystem management by considering the implications of a particular behavioral response in a regional economy – that of amenity-led growth – to changes in ecosystem services generated by a lake ecosystem subject to a eutrophication threshold. The essential policy challenge is to achieve optimal levels of lake nutrients and urbanization given that improvements to water quality will induce additional migration and urbanization in the region with attendant ecological impacts. We show that policies that ignore the recursive relationship between urbanization and water quality unintentionally exacerbate boom-bust cycles of regional growth and decline and risk pushing the system towards long-run economic decline. In contrast, the optimal policy accounts for the behavioral feedbacks to improved ecosystem services, and balances regional growth and ecological degradation.     

Conserving the abundance of nonthreatened species

Human modification of the environment is driving declines in population size and distributional extent of much of the world's biota. These declines extend to many of the most abundant and widespread species, for which proportionally small declines can result in the loss of vast numbers of individuals, biomass, and interactions. These losses could have major localized effects on ecological and cultural processes and services without elevating a species’ global extinction risk. Although most conservation effort is directed at species threatened with extinction in the very near term, the value of retaining abundance regardless of global extinction risk is justifiable based on many biodiversity or ecosystem service metrics, including cultural services, at scales from local to global. The challenges of identifying conservation priorities for widespread and abundant species include quantifying the effects of species’ abundance on services and understanding how these effects are realized as populations decline. Negative effects of population declines may be disconnected from the threat processes driving declines because of species movements and environment flows (e.g., hydrology). Conservation prioritization for these species shares greater similarity with invasive species risk assessments than extinction risk assessments because of the importance of local context and per capita effects of abundance on other species. Because conservation priorities usually focus on preventing the extinction of threatened species, the rationale and objectives for incorporating declines of nonthreatened species must be clearly articulated, going beyond extinction risk to encompass the range of likely harmful effects (e.g., secondary extinctions, loss of ecosystem services) if declines persist or are not reversed. Research should focus on characterizing the effects of local declines in species that are not threatened globally across a range of ecosystem services and quantifying the spatial distribution of these effects through the distribution of abundance. The case for conserving abundance in nonthreatened species can be made most powerfully when the costs of losing this abundance are better understood.     

池州森林生态系统服务价值评估

基于LY/T1721-2008《森林生态系统生态服务价值评估规范》,采用实证研究、意愿调查、文献研究等方法,估算了池州市森林生态系统生态服务价值,结果表明:2009年,池州市森林生态系统生态服务价值为423.25亿元,林果等实物产品价值为168.97亿元,生态服务价值是实物生产价值的2.50倍.各项生态服务功能价值大小...     

Economic Valuation of Subsistence Harvest of Wildlife in Madagascar

Wildlife consumption can be viewed as an ecosystem provisioning service (the production of a material good through ecological functioning) because of wildlife's ability to persist under sustainable levels of harvest. We used the case of wildlife harvest and consumption in northeastern Madagascar to identify the distribution of these services to local households and communities to further our understanding of local reliance on natural resources. We inferred these benefits from demand curves built with data on wildlife sales transactions. On average, the value of wildlife provisioning represented 57% of annual household cash income in local communities from the Makira Natural Park and Masoala National Park, and harvested areas produced an economic return of U.S.$0.42 ha^?1· year^?1. Variability in value of harvested wildlife was high among communities and households with an approximate 2 orders of magnitude difference in the proportional value of wildlife to household income. The imputed price of harvested wildlife and its consumption were strongly associated (p< 0.001), and increases in price led to reduced harvest for consumption. Heightened monitoring and enforcement of hunting could increase the costs of harvesting and thus elevate the price and reduce consumption of wildlife. Increased enforcement would therefore be beneficial to biodiversity conservation but could limit local people's food supply. Specifically, our results provide an estimate of the cost of offsetting economic losses to local populations from the enforcement of conservation policies. By explicitly estimating the welfare effects of consumed wildlife, our results may inform targeted interventions by public health and development specialists as they allocate sparse funds to support regions, households, or individuals most vulnerable to changes in access to wildlife. Valoración Económica de la Caza de Subsistencia de Vida Silvestre en Madagascar     

Meta-analysis of ecosystem services associated with oyster restoration

Restoration of foundation species promises to reverse environmental degradation and return lost ecosystem services, but a lack of standardized evaluation across projects limits understanding of recovery, especially in marine systems. Oyster reefs are restored to reverse massive global declines and reclaim valuable ecosystem services, but the success of these projects has not been systematically and comprehensively quantified. We synthesized data on ecosystem services associated with oyster restoration from 245 pairs of restored and degraded reefs and 136 pairs of restored and reference reefs across 3500 km of U.S. Gulf of Mexico and Atlantic coastlines. On average, restoration was associated with a 21-fold increase in oyster production (mean log response ratio = 3.08 [95% confidence interval: 2.58–3.58]), 34–97% enhancement of habitat provisioning (mean community abundance = 0.51 [0.41–0.61], mean richness = 0.29 [0.19–0.39], and mean biomass = 0.69 [0.39–0.99]), 54% more nitrogen removal (mean = 0.43 [0.13–0.73]), and 89–95% greater sediment nutrients (mean = 0.67 [0.27–1.07]) and organic matter (mean = 0.64 [0.44–0.84]) relative to degraded habitats. Moreover, restored reefs matched reference reefs for these ecosystem services. Our results support the continued and expanded use of oyster restoration to enhance ecosystem services of degraded coastal systems and match many functions provided by reference reefs.     

生态系统服务价值评估的研究进展

生态系统服务价值评估是当前生态经济学和环境经济学的研究焦点。首先回顾了国内外关于生态系统服务功能的概念和分类的研究;其次根据发展历程分析了国外生态系统服务价值的评估研究;然后从全国、区域以及单个生态系统等方面探讨国内生态系统服务价值评估的研究。最后指出现有生态系统服务价值评估研究中的不足及今后发展方向,以期丰富生态系统服务价值评估理论。     

How certain are we about the certainty-equivalent long term social discount rate?

Theoretical arguments for using a term structure of social discount rates (SDR) that declines with the time horizon have influenced government guidelines in the US and Europe. The certainty equivalent discount rate that often underpins this guidance embodies uncertainty in the primitives of the SDR, such as growth. For distant time horizons the probability distributions of these primitives are ambiguous and the certainty equivalent itself is uncertain. Yet, if a limited set of characteristics of the unknown probability distributions can be agreed upon, ‘sharp’ upper and lower bounds can be defined for the certainty-equivalent SDR. Unfortunately, even with considerable agreement on these features, these bounds are widely spread for horizons beyond 75 years. So while estimates of the present value of intergenerational impacts, including the social cost of carbon, can be bounded in the presence of this ambiguity, they typically remain so imprecise as to provide little practical guidance.