Economics of Evironmental Conservation,

Second Edition

Economics of

Environmental

Conservation, Second

Edition

Clement A. Tisdell

Professor of Economics, School of Economics, The University of Queensland, Australia

Edward Elgar

Cheltenham, UK • Northampton, MA, USA

© Clement A. Tisdell 2005

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher.

Published by

Edward Elgar Publishing Limited

Glensanda House

Montpellier Parade

Cheltenham

Glos GL50 1UA

UK

Edward Elgar Publishing, Inc.

136 West Street

Suite 202

Northampton

Massachusetts 01060

USA

A catalogue record for this book

is available from the British Library

ISBN 1 84376 614 0 (cased)

Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall

Contents

List of figures		x
List of tables		xv
Preface to the second edition		xvi
Preface to the first edition		xviii
1. Economics and the living environment		1
1.1	Introduction	1
1.2	Welfare economics, environment and the biosphere	2

1.3Ethics, values and environmental economics:

alternative views

7

1.4Economic growth, dynamics, uncertainty and the

	environment: di ering views	12
1.5	Uncertainty, welfare and environmental issues	19
1.6	Conclusion	20
2. Global conservation strategies and concerns		25
2.1	Introduction	25
2.2	A classification of conservation policies	26

2.3The World Conservation Strategy and Caring for the

Earth: origins, aims and basic principles

30

2.4Ecological processes and life-support systems:

	agriculture, forests, marine and freshwater systems	33
2.5	Preservation of genetic diversity	38
2.6	Sustainable utilisation of species and ecosystems	41

2.7Significant di erences between Caring for the Earth

	and the World Conservation Strategy	44
2.8	International conservation concerns and priorities	47
2.9	Concluding comments	49

3.Markets and government intervention in environmental

conservation

52

3.1Introduction – choices about resource use and

	conservation	52
3.2	Market e ciency and externalities	56
3.3	Government policies ‘to correct’ for externalities	65

v

vi	Economics of environmental conservation

3.4Public or collective good characteristics associated

with the conservation of nature

70

3.5Option demands, transaction costs, more on existence

	values, bequest, irreversibility and uncertainty	73
3.6	Discount rates as grounds for government intervention	75
3.7	Monopolies and conservation	76
3.8	Common-property and intervention	78

3.9Failure of political and administrative mechanisms in

	relation to conservation	79
3.10	Concluding comment	81
4. Environmental conservation in developing countries		84
4.1	Introduction	84
4.2	Basic conservation problems in the Third World: origin	85
4.3	Population growth and income aspirations	86
4.4	Expansion of the market system	88
4.5	New technology	89
4.6	Problems illustrated by some cases	90
4.7	High e ective rates of discount	93

4.8Di culties in enforcing conservation measures and

questions of social structure

94

4.9Policies for influencing and improving conservation

practices in the Third World	95
4.10 Provision of information and education	96

4.11Appropriating greater gains nationally from

conservation

96

4.12Tourism as a means of appropriating gains from

conservation

98

4.13Improving the distribution of gains from conservation

	within LDCs	99
4.14	International aid and assistance, loans and trade	101
4.15	Global public good/externality considerations	103
4.16	Concluding observations on conservation in LDCs	105
5. Preservation of wildlife and genetic diversity		109
5.1	Introduction	109

5.2Total economic value and the valuation of wildlife and

	biodiversity	110
5.3	Managing wildlife as a mixed good: simple analytics	113

5.4Some economic consequences of interdependence

	between species	118
5.5	Criteria for deciding on species to save from extinction	121

Contents

vii

5.6Property rights in genetic material, GMOs, and the

conservation of biodiversity

126

5.7Globalisation, market extension and genetic diversity

	of domesticated animals and plants	128
5.8	Concluding comments	129

6.Open-access, common-property and natural resource

management		132
6.1	Types of property and general consequences	132
6.2	Open-access: economic failures and their consequences	135
6.3	Policies for managing open-access resources	140

6.4Further discussion of features of open-access to

resources and its regulation

143

6.5Ranching and farming as means to overcome open-

	access problems and conserve species	146
6.6	Concluding comment	150
7. Economics of conserving natural areas and valuation techniques		153
7.1	Introduction: nature and availability of natural areas	153
7.2	Benefits and uses of natural protected areas	155
7.3	An overview of approaches to estimating the
	economic value of non-marketed commodities	156

7.4Travel cost method of estimating the value of a

	natural area	158
7.5	Contingent valuation of natural areas	163
7.6	Hedonic price valuation of natural areas	167
7.7	Some additional economic valuation techniques	169

7.8Using total economic values for social choices about

	resource use	169
7.9	Back to some fundamentals of economic valuation	171

7.10Government versus non-government provision of

	natural areas	173
7.11	Concluding comments	175
8. Forestry, trees and conservation		179
8.1	Introduction: forest cover and uses	179
8.2	Commercial forestry for timber production	181
8.3	Multiple purpose management of forests	186
8.4	Forests and trees in less developed countries	188
8.5	Economic policies, pollution, forests and trees	192
8.6	Forest plantations versus natural forests: a discussion	195
8.7	Concluding remarks	196

viii	Economics of environmental conservation
9. Agriculture and the environment		199
9.1	Introduction	199
9.2	Externalities and agriculture	200
	9.2.1 Agricultural externalities on agriculture	200
	9.2.2 Agricultural spillovers on non-agricultural
	sectors and interests	206
	9.2.3 Spillovers from other sectors on agriculture	207
9.3	Sustainability of agricultural systems	208

9.4The Green Revolution, organic agriculture,

	permaculture	211
9.5	Pest and disease control in agriculture	216

9.6Agriculture, biodiversity, trees and wildlife

conservation

218

9.7Genetically modified organisms in agriculture:

	economic and biodiversity issues	220
9.8	Concluding observations	222
10. Tourism, outdoor recreation and the natural environment		225

10.1Introductory issues, dependence of tourism on the

natural environment		225
10.2 Tourism destroys tourism and tourist assets		226
10.2.1	Congestion or crowding and tourism	227
10.2.2	Destruction of tourism resources by visitors	229

10.3Tourism area cycle and more on the dynamics of

tourism

231

10.4Impact of pollution and environmental damage on

tourism and benefits from pollution control

234

10.5Tourism, conservation and the total economic value

of a natural area and economic impact analysis	237
10.6 Sustainability, ecotourism and economics	239

10.7Conflicts between tourists, variety in tourist areas,

	public finance issues and national gains	240
10.8	Concluding observations	241
11. Sustainable development and conservation		243
11.1	Background	243
11.2	Sustaining intergenerational economic welfare	244

11.3Capital, natural resource conversion and human

welfare: further considerations	248
11.4 Survival of the human species for as long as possible	251

11.5Issues raised by the views of Daly and Georgescu-

Roegen about sustainability

253

Contents

ix

11.6Resilience of production and economic systems and

	stationarity of their attributes	256
11.7	Cost–benefit analysis and sustainability	258
11.8	Sustainability of community	260
11.9	Sustaining biodiversity	261
11.10	Concluding remarks	263
12. Population, economic growth, globalisation and conservation: a
concluding perspective		267
12.1	Introduction	267

12.2Global population levels: characteristics and

projections

268

12.3Environmental consequences of population growth

and economic demands

269

12.4Environmental Kuznets curves: do they provide

grounds for environmental optimism?

270

12.5Is economic globalisation favourable or unfavourable

to environmental conservation?	273
12.6 Concluding observations	274
Index	277