Applied economics of resource conservation
This thesis addresses two important topics in environmental and resource economics: social discount rates for the far-distant future and biodiversity conservation and deforestation. In Part 1 social discount rates which decline with time horizon (Declining Discount Rates or DDRs), and their importance for analysing long term projects are discussed. Chapter 1 summarises the recent theoretical and applied literature and highlights some remaining gaps which are the focus of chapters 2 and 3. Chapter 2 solves a puzzle concerning one of the rationales for DDRs set by Gollier 2004a and provides some simple rules for incorporating intergenerational equity into Cost Benefit Analysis (CBA). Chapter 3 discusses the empirical issues surrounding determining a usable schedule of DDRs for CBA. The importance of time series model selection for the interest rate is highlighted. In Part 2 I focus in international agreements for biodiversity conservation and national policies for reforestation. Chapter 4 models global biodiversity conservation as a North-South bargaining game and shows that current international agreements may provide perverse strategic incentives in their attempt to solve this game and distribute the surplus. One conclusion of this analysis is that the incremental cost compensation for land use changes in the biodiverse south, offered by the Global Environment Facility under the Convention on Biodiversity, may not be sufficient to preclude strategic behaviour and further losses of biodiversity. Following on from this, chapter 5 looks at the household level impact of another important land use compensation policy: the Sloping Lands Conversion Programme (SLCP) of the Peoples Republic of China. We use programme evaluation methods to gauge the impact of the temporary compensation packages offered to participants in the SLCP on the level and source of rural household income, income distribution and poverty alleviation. This allows an analysis of the sustainability of this programme in reaching its objectives.