Economics Research Institute Study Paper
Utah State University Department of Economics
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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.
Batabyal, Amitrajeet A., "Habitat Conversion, Information Acquisition, and the Conservation of Biodiversity" (2000). Economic Research Institute Study Papers. Paper 202.