Forest conservation in Costa Rica when nonuse benefits are uncertain but rising

Forest conservation in Costa Rica when nonuse benefits are uncertain but rising

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Article ID: iaor2004220
Country: United States
Volume: 84
Issue: 1
Start Page Number: 150
End Page Number: 160
Publication Date: Feb 2002
Journal: American Journal of Agricultural Economics
Authors: , , ,
Keywords: developing countries, investment, geography & environment
Abstract:

Stochastic dynamic programming is used to investigate optimal holding of primary tropical forest in humid Costa Rica when future nonuse benefits of forest conservation are uncertain and increasing. The quasi-option value of maintaining primary forests is included as a component of investment in natural capital. Although the impact of uncertainty on conservation incentives is substantial, our results indicate that a rising trend in future benefits and compensation by the international community for beneficial spillovers are more important factors in determining optimal holdings of forest stocks. Without compensatory payments, however, further deforestation may be warranted.

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