Publication Details

Category Text Publication
Reference Category Journals
DOI 10.1016/j.ecolecon.2006.02.018
Title (Primary) The optimal dynamic allocation of conservation funds under financial uncertainty
Author Drechsler, M.; Wätzold, F.
Source Titel Ecological Economics
Year 2007
Department OEKON; OESA
Volume 61
Issue 2-3
Page From 255
Page To 266
Language englisch
Keywords biodiversity conservation; ecological-economic modelling; stochastic dynamic programming; uncertainty; precautionary saving
Abstract This paper analyses a situation where the survival of an endangered species depends on certain types of conservation measures being carried out regularly, yet there is financial uncertainty in the future periodical availability of a budget to finance the conservation measures. One option to insure against future budget uncertainty is to save money. To maximise the long-term survival of the endangered species, it has to be decided in each period whether to spend the available money now or to allocate it to future use. The paper provides an ecological-economic model for this stochastic dynamic optimisation problem. The findings include that the available money should be allocated as evenly as possible among periods, which may require some precautionary saving in early periods to take uncertainty into account. Under certain conditions, however, increasing uncertainty may at least temporarily increase the optimal payment. Among other parameters, the amount of precautionary actions depends on the magnitude of natural variation in the species population.
Persistent UFZ Identifier
Drechsler, M., Wätzold, F. (2007):
The optimal dynamic allocation of conservation funds under financial uncertainty
Ecol. Econ. 61 (2-3), 255 - 266 10.1016/j.ecolecon.2006.02.018