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28 janvier2013

Bard Harstad (Northwestern University)
The Market for Conservation and other Hostages

Abstract : This paper introduces the notion of "conservation goods" and shows how they differ fundamentally from traditional goods in dynamic settings. A conservation good (such as a tropical forest) is owned by a seller who is tempted to consume (or cut) it, but a buyer benefits more if the good is conserved. The buyer is unwilling to pay as long as the seller conserves, but the seller conserves only if the buyer is expected to buy. This contradiction implies that the market for conservation cannot be efficient, and conservation ends at a positive rate. Conservation is less likely if many buyers would benefit from it or if consumption has a low value. A rental market is similarly inefficient, and it dominates a sales market only if the value of conservation is low, the consumption value high, and if remote protection is costly. The theory explains why optimal conservation often fails and why conservation abroad is rented, while domestic conservation is bought

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