Natural vs. financial insurances in the management of public good ecosystems
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Lüneburg: Institut für Volkswirtschaftslehre der Universität Lüneburg, 2006. (Working paper series in economics; No. 34).
Research output: Working paper › Working papers
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TY - UNPB
T1 - Natural vs. financial insurances in the management of public good ecosystems
AU - Quaas, Martin
AU - Baumgärtner, Stefan
N1 - Literaturverz. S. 16 - 19
PY - 2006
Y1 - 2006
N2 - In the face of uncertainty, ecosystems can provide natural insurance to risk averse users of ecosystem services. We employ a conceptual ecological-economic model to analyze the allocation of (endogenous) risk and ecosystem quality by risk averse ecosystem managers who have access to financial insurances, and study the implications for individually and socially optimal ecosystem management, and policy design. We show that while an improved access to financial insurance leads to lower ecosystem quality, the effect on the free-rider problem and on welfare is determined by ecosystem properties. We derive conditions on ecosystem functioning under which, if financial insurance becomes more accessible, (i) the extent of optimal regulation increases or decreases; and (ii) welfare, in the absence of environmental regulation, increases or decreases.
AB - In the face of uncertainty, ecosystems can provide natural insurance to risk averse users of ecosystem services. We employ a conceptual ecological-economic model to analyze the allocation of (endogenous) risk and ecosystem quality by risk averse ecosystem managers who have access to financial insurances, and study the implications for individually and socially optimal ecosystem management, and policy design. We show that while an improved access to financial insurance leads to lower ecosystem quality, the effect on the free-rider problem and on welfare is determined by ecosystem properties. We derive conditions on ecosystem functioning under which, if financial insurance becomes more accessible, (i) the extent of optimal regulation increases or decreases; and (ii) welfare, in the absence of environmental regulation, increases or decreases.
KW - Sustainability sciences, Management & Economics
KW - ecosystem quality
KW - ecosystem services
KW - ecosystem management
KW - Endogenous environmental risk
KW - insurance
KW - risk-aversion
KW - uncertainty
M3 - Working papers
T3 - Working paper series in economics
BT - Natural vs. financial insurances in the management of public good ecosystems
PB - Institut für Volkswirtschaftslehre der Universität Lüneburg
CY - Lüneburg
ER -