Economic Land Use, Ecosystem Services and Microfounded Species Dynamics
University of Siegen - School of Economic Disciplines; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
University of Siegen - School of Economic Disciplines
CESifo Working Paper Series No. 1269
In an integrated economy-ecosystem model humans choose their land use and leave the residual land as habitat for three species forming a food chain. The size of habitat determines the diversity and abundance of species. That biodiversity generates, in turn, a flow of ecosystem services with public-good characteristics for human consumption. The ecosystem submodel yields (rather than assumes!) population growth functions with each species' growth depending on the size of habitat. First the relationship between habitat and species growth (sustenance, decline and extinction) is explored. The laissez-faire economy is shown to result in an underprovision of habitat, making the case for land use restrictions for nature protection. The optimal land use policy is characterized with full regard of ecosystem dynamics. Finally, labor-augmenting technical change is introduced to generate ever increasing pressure towards further habitat reductions. In the laissez-faire economy the habitat is consequently squeezed to zero in the long-run so that all species are doomed. Social optimality demands, however, to refrain from using all land for economic purposes despite ever-growing labor productivity.
Number of Pages in PDF File: 38
Keywords: land use, ecosystem dynamics, biodiversity, ecosystem services
JEL Classification: Q24, Q57working papers series
Date posted: October 6, 2004
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