Habitat Conversion, Information Acquisition, and the Conservation of Biodiversity

23 Pages Posted: 24 Aug 2000

See all articles by Amitrajeet A. Batabyal

Amitrajeet A. Batabyal

Rochester Institute of Technology (RIT) - Department of Economics

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Abstract

This paper studies two questions relating to the conservation of biodiversity in an intertemporal 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 connection 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 (1/e) fraction of all utility packets. The social planner should then terminate 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 (1/e)=0.37. Second, because the proportion of time for which it is optimal to wait before acting is fixed, longer planning horizons lead to the conservation of relatively larger stocks of biodiversity. Stopping

Keywords: Biodiversity, Information, Natural Habitat, Optimal

JEL Classification: D81, Q20

Suggested Citation

Batabyal, Amitrajeet A., Habitat Conversion, Information Acquisition, and the Conservation of Biodiversity. Available at SSRN: https://ssrn.com/abstract=237799 or http://dx.doi.org/10.2139/ssrn.237799

Amitrajeet A. Batabyal (Contact Author)

Rochester Institute of Technology (RIT) - Department of Economics ( email )

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