Mark Buckley, Environmental Incentives Sacramento River Conference Mark Buckley Environmental Incentives April 9, 2007 Negative Offsite Impacts of Ecological

Mark Buckley, Environmental Incentives

Sacramento River ConferenceSacramento River Conference

Mark BuckleyMark Buckley

Environmental IncentivesEnvironmental Incentives

April 9, 2007April 9, 2007

Negative Offsite Impacts of Negative Offsite Impacts of Ecological Restoration:Ecological Restoration:

Understanding and Avoiding Understanding and Avoiding ConflictConflict

Fricker


How do we conserve and restore large/landscape scale natural processes?

• Conservation is limited to areas unwanted by other land uses.

• Area characteristics that promote natural processes are often beneficial to other land uses as well.

• Conversion of land use is often the only way to improve natural processes for valuable landscapes.

TNC


Land use

• Inner River Zone and Conservation Area (pre-restoration)

Agriculture, 76%

Other, 1%

Riparian Vegetation, 14%

Upland Vegetation, 8%

Urban, 1%


Impacts of Riparian Restoration on Agriculture

• Weeds and pests (vertebrate and invertebrate)

• Disturbances– fires– out of channel flood flows

• Endangered species• Trespassing• Pollinators and pest control• Cultural • Financial

– tax revenues– economies of scale for

production

Buckley

Buckley

SF Chronicle


Impacts of Farmers on SRCA Restoration and Conservation

• Increased usage of chemicals• Removal of endangered

species• Increased fencing, riparian

vegetation removal, and rip-rapping

• Political activity to reduce the full project area from 217,000 acres to 80,000 acres (2002)

• 4 of 7 counties have opted out of outer zone participation

• Colusa enacted more stringent limitations on restoration projects

Buckley

Buckley


U.S. Census of Agriculture 1987-2002

• Farmers in SRCA are doing worse than others:– % decrease in total acreage greater than CA as a whole– Avg. farm size has dropped 10 % faster than CA– Total sales went up 55% faster in CA

• Farmers in SRCA are doing better than others:– Number of farms has gone down in CA, but up in SRCA– All size categories lost farms for CA, all size categories

EXCEPT over 1000 acres went up in SRCA– Avg. total farm production expenses grew 17% faster for

CA– Avg market value of farms in SRCA increased faster than

CA– Orchard acreage increased 33% for CA, 54% for SRCA


Markets: Function and Failure

Excludable Non-Excludable

Rival Private Goods (only case where markets function)

•Land parcels•Agricultural Crops

Common-Property Resources (potential govt. regulation)

•Atmosphere•Rivers

Non-Rival

Toll Goods•Bridges•River Access

Public Goods (potential govt. provision)

•Flood protection•Natural Air/Water Purification

•Externalities caused by consumption exist for rival goods only

•Externalities caused by degradation exist for all goods


Interdependence of Restored and Developed Areas

+

+

-weeds, pests, fires, endangered species

ecosystem services (air and water quality, wildlife)

pollution, edge effects, barriers-

habitat, migratory routes, nutrition

Restored

Natural Areas

Socially Developed Areas


Ecological and Social Compatibility of Restoration Effects by Land Type Pairing

Socially Compatible

Socially Incompatible

Ecologically Compatible

Mutually Beneficial•Pest predation (Agriculture)•Bird pops. (Suburban/Urban)•Pollination (Residential, Ag)

Direct Conflict•Endangered species (Forestry)•Large predators (Ranching)•Natural flood regimes (Residential)

Ecologically Incompatible

Inefficient/Infeasible•Fish populations (Urban)•Native vegetation (Brownfields)•Bald Eagles (Suburban)

Mutually Undesirable•Intense fires (All)•Nonnative species (Agriculture)•Ecological disequilibria (Forestry, Ag)

•Positive externalities are generated under social compatibility

•Negative externalities are generated under social incompatibility


Negative Offsite Impacts (Externalities) of Restoration

• Mutually Undesirable– Indirect effect– Technical or cost problem– Generated because costly to control or

effective control options do not exist

• Direct Conflict– Direct effect– Tradeoffs occur– Bargaining potentially necessary/beneficialLack of bargaining resolution success can lead

to government intervention


Cooperative Outcome• Use Nash Bargaining Solution as a target

max ∏(ui – di)

• Universally individually-rational– Most stable = most individual gains = most equitable – Gains measured from non-cooperative outcome, NOT

from prior case • Non-cooperative outcome is a function of pre-existing state

• Net welfare gains possible when non-zero sumPresent State

Fully Restored Fully Developed

Possible Outcomes


Basic Restoration and Defense Decisions

Restoration with defense

Restoration only

No Restoration

Restorationist

Farmer

restore

nothing

nothing

defend


Restoration Decisions with Mitigation

Restorationist

Farmer

restore

nothing

nothing

defend

defend

nothing

restore with mitigation


Restoration only

Restoration with mitigation and defense

Restoration with mitigation

No Restoration


1 year 10 years 20 years

% more restoration with mitigation option

11% 10% 7%

% less defense with mitigation option

19% 17% 20%

0%

10%

20%

30%

40%

50%

60%

70%

1 year 1 year w/ mitigation

0%

10%

20%

30%

40%

50%

60%

70%

20 years 20 years w/ mitigation

0%

10%

20%

30%

40%

50%

60%

70%

10 years 10 years w/ mitigation

0%

10%

20%

30%

40%

50%

60%

70%

20 years 20 yearsw/ mitigation

No restoration


Restoration with mitigation

Restoration only

Weeds


10 Year, 1 Farmer Weed Simulations

ecological effects (+)

agricultural effects (-)

A

B C


Conclusions

• Compatibility of other land uses can influence restoration success

• Ecological and social compatibility both influence existence of externalities, negative externality resolution options, and necessary tradeoffs

• Beliefs and expectations of all parties influence outcomes and potential cooperative gains

• Mitigation and cooperation can lead to mutual gains


Acknowledgements

• National Science Foundation (Biocomplexity and Economics programs)

• STEPS Institute for Innovation in Environmental Research

• USDA CSREES NRI Managed Ecosystems Program


Parameter Value (for 100 acres) Source

discount rate 5 percent

Farmers

weed control costs (chemicals and labor)

1 yr - $9150 10 yrs - $74,000 20 yrs - $120,000

UC Ag Extension guidance, 2003

vertebrate pest control costs

1 yr - $41,500 10 yrs - $105,000 20 yrs - $150,000

Pierce and Wiggers, 1997; UC, 2003

walnut prices $0.47 to $0.77 per pound UC Ag Ext., 2003

walnut yields 2400 to 8400 lbs./acre UC Ag Ext., 2003

expected damage 0 to 50 percent of yield Falta, 2003

restoration mitigation effect

80 percent

neighboring farmer externality

25 percent

Revenues 1 yr - Y=-808.8-(O*0.078)+P*O net returns above operating costs: $13,000 to $500,000

10, 20 yrs - Y=-2038.8-(O*0.078)+P*Onet returns above total costs: 10 yrs: -$890,000 to $3,000,000 20 yrs: -$1,400,000 to $4,900,000

UC Ag Ext., 2003

Restorationist

cost of land $10,000/acre UC Ag Ext., 2003, Efseaff, 2005

cost of restoration $4500/acre, over 3 years=$429,000 Efseaff, 2005

cost of weed control 1 yr - $40,000 10 yrs - $324,000 20 yrs - $523,000

Efseaff, 2005

cost of vertebrate pest control

1 yr - $40,500 10 yrs - $97,000 20 yrs - $137,000

Pierce and Wiggers, 1997; UC Ag Ext., 2003

ecological benefit 1 yr - $23,700 to $160,000 10 yrs - $193,000 to $13,000,000 20 yrs - $295,000 to $19,000,000

Loomis et al., 2000

loss from defense 0 to 100 percent

loss from 2nd defense additional 75% of first damage

Documents

Mark Buckley, Environmental Incentives Sacramento River Conference Mark Buckley Environmental Incentives April 9, 2007 Negative Offsite Impacts of Ecological