Environmental ServicesCategories of Environmental Services (ES)Environmental Services & Land UseThe Multidimensionality of ESThe Dimensions of Wetland ServicesPublic &Private Sectors &Wetland ManagementMechanism to Obtain ESInstitutional Setup to Create ESManagement of Purchasing FundAlternative Forms of TargetingImplication of Targeting SchemesScale EffectsDifficulties of Trading in ESDistribution of ES EarningsPrivate Sector Regulations and ESInstitutional Setup for Various ESDivision of Responsibilities in a Federalist SystemRegions with Vulnerable Isolated Wetlands (Duck Unlimited study)Wetlands in Agricultural LandsAlternative Approaches to Wetland ProtectionConservation Reserve Program: BackgroundCRP-Basic FeaturesCRP RentsCRP Historical BackgroundThe Wetland Reserve ProgramRetirement Program and WetlandsWorking LandThe Environmental Quality Incentives Program EQIPConservation Security Fund & The Wildlife Habitat Incentives ProgramSwampbuster Established 1985Permitting vs. Voluntary ProgramsActivities of Private GroupsConservation PartnershipsPrivate vs. Public ApproachesEnvironmental Services David ZilbermanUniversity of California BerkeleyCategories of Environmental Services (ES)Pollution Prevention. Farmers may be paid to modify environmental damaging activities and engage in sustainable practices(farmers may have implicit historical rights to pollute that have to be bought). Conservation. of natural resources, life styles, ecosystems etc. Including forest resources and wetland, agricultural communities ( slow urban sprawl), traditional varieties and species, etc.Amenity creation-restoration and built up of natural resources Include clean up activities, planting of forests, restoration of wetlands etc.Environmental Services & Land Use Most ES are embodied in land use and managementIn situ conservation of crop bio-diversitySoil carbon sequestration through no tillageProvision of habitat in wetlands ES can be attained byWorking land programs-promoting green practices Transition to IPMConversion of lands to “greener” useFrom farming to forest prevention of land use conversionsControlling developmentThe Multidimensionality of ESThe same land may provide a multitude of ES No tillage sequesters carbon and reduced soil erosion A wetland may purify water and support wild lifeES may be complementary or substitutesGrowing Wetland acreage may areas with native plantsReduction in runoff may be accompanied in less wind erosion ES may provide regional, national & global benefitsBenefits of ES vary across individuals &groupsBird watchers & hunters benefit from better bird habitatAll citizens gain from flood control-but the risk reduction vary by locationThe Dimensions of Wetland ServicesLocal National InternationalWildlife habitat PublicPrivatePublic PublicFlood control Public Private Public Private Public PrivateWater purification PrivatePublicPublic PrivateAesthetic value Public Private Public PublicRecreation Private Private PrivateExistence Public Public PublicPublic &Private Sectors &Wetland ManagementResponsibility and finance of wetland should correspond to nature of their benefitsGovernment should concentrate on providing public good aspects- utilized by manyNo exclusion - e.g Existence valuePrivate agencies have important role in financing wetland aspects that benefit their members-wildlife habitat.Private action is indication of willingness to pay for wetland services- it may be understated because of public good aspectsThere is a role for public-private cooperationMatching fund  Tax creditMechanism to Obtain ESAggregate targets of ES with Tradable permitsNo reduction target led to wetlands banking in U.S.Kyoto targets may be attained by CO2 SequestrationPurchasing Funds-target & buy assets or pay for ESNature conservancy buys lands & development rightUSCRP pays for farmland use modification for a periodUtilities pay for carbon sequestration in Costa Rica &Iowa Incentives-payments for ES, penalties for damagesDirect controlsZoning: restricting land use to certain activitiesPermitting:conditional approval of development activitiesInstitutional Setup to Create ES Private parties may invest in excludable amenity creating ES (habitat to birds or fish,recreation area)NGO’s may finance and control specialized ES National & Local governments may Pay directly for or subsidize private provision of amenity creating ES  Establish legal framework to require generation of resource conserving or pollution preventing ES Global ES may be generated & controlled byInternational agreements (Kyoto, Debt for nature)Voluntary agreements initiated by NGO’sManagement of Purchasing Fund Heterogeneity -ES benefit &cost per acre varyConsider first the case with the No Scale effects-Suppose there are N locations, identified by n=1,N . An= Land of location n,  Bn = Benefits per acre of location n. Cn = Costs per acre( value of land in alternative use) Targeting criteriaAcreage maximization Buy the lands with the lowest Cn (regardless of benefits) given the budgetBenefits targeting Purchase the highest quality lands (lands with highest Bn) within budget Benefit /cost Targeting Purchase lands with the highest Bn/Cn (highest benefit cost ratio) given the budgetAlternative Forms of TargetingBenefit per acreCost per acreImplication of Targeting SchemesBenefit cost targeting are optima,Maximizing ES for budgetCost targeting maximize acreage &preferred by land owners. Benefit maximizing result in lowest acreage reductionThe importance of correlation when low cost lands has high ES (negative correlation of Bn and Cn) the welfare loss of cost targeting is small. It is big in case of positive correlation.The Importance of variability Benefit targeting is optimal when benefits are positively correlated to costs &variability of benefit is much larger than of costsCn 1 2 3 4 5 6 7 8 9 10 11 Budget = 21Bn1 1 3 5 7 9 12 15 18 20 24 28 Optimal policy-Buy Highest QBn2 1 2 2 3 3 3 3 3 3 4 4 Optimum -Maximize Acreage (in particular n ≤ 6 )Scale EffectsWhen ES/acre increases with size targeting may radically change with budget Unit type number of unitsSize Benefits/unit total cost1 6 2 2 22 3 4 6 43 1 12 24 12When Budget is 8 Buy 2