Document Type

Article

Journal/Book Title/Conference

Economics Research Institute Study Paper

Volume

26

Publisher

Utah State University Department of Economics

Publication Date

2000

Rights

Copyright for this work is held by the author. Transmission or reproduction of materials protected by copyright beyond that allowed by fair use requires the written permission of the copyright owners. Works not in the public domain cannot be commercially exploited without permission of the copyright owner. Responsibility for any use rests exclusively with the user. For more information contact the Institutional Repository Librarian at digitalcommons@usu.edu.

First Page

1

Last Page

22

Abstract

We analyze two questions c.onceming the conservation of biodiversity in a dynamic and stochastic framework. First, given the link between natural habitats and biodiversity, when should a social planner stop the habitat conversion process? Second, what is the nexus between a social planner's optimal conservation policy (OCP) and the length of this individual's planning horizon? We obtain the following two results. First, the OCP calls for the social planner to wait a while, i.e., not act upon receipt of the first (lie) fraction of all utility packets. The social planner should then stop the habitat conversion process upon receipt of the first candidate packet. The probability that the use of this OCP will result in the conversion process being halted at the optimal point is (lle) z 0.37. Second, because the proportion of time for which it is optimal to wait before acting is fixed, longer planning horizons result in the conservation of relatively larger stocks of biodiversity.

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