Economic Land Use, Ecosystem Services and Microfounded Species Dynamics

38 Pages Posted: 6 Oct 2004

See all articles by Rudiger Pethig

Rudiger Pethig

University of Siegen - School of Economic Disciplines; CESifo (Center for Economic Studies and Ifo Institute)

Thomas Eichner

University of Siegen - School of Economic Disciplines

Date Written: September 2004

Abstract

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.

Keywords: land use, ecosystem dynamics, biodiversity, ecosystem services

JEL Classification: Q24, Q57

Suggested Citation

Pethig, Rudiger and Eichner, Thomas, Economic Land Use, Ecosystem Services and Microfounded Species Dynamics (September 2004). CESifo Working Paper Series No. 1269. Available at SSRN: https://ssrn.com/abstract=601322

Rudiger Pethig (Contact Author)

University of Siegen - School of Economic Disciplines ( email )

Hoelderlinstrasse 3
57068 Siegen
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Thomas Eichner

University of Siegen - School of Economic Disciplines ( email )

Hoelderlinstrasse 3
57068 Siegen
Germany

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