Habitat Conversion, Information Acquisition, and the Conservation of Biodiversity
Posted: 16 Apr 2001
This study analyzes two issues pertaining to the conservation of biodiversity in an intertemporal and stochastic setting. First, given the nexus between natural habitats and biodiversity, when should a social planner stop the habitat conversion process? Second, what is the link between a social planner's optimal conservation policy (OCP) and the length of this person's planning horizon? Two results are obtained. First, the OCP calls for the social planner to 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. Second, because the fraction 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.
Keywords: Biodiversity, Information, Natural Habitat, Optimal Stopping
JEL Classification: D81, Q20
Suggested Citation: Suggested Citation