Working Paper: NBER ID: w15844
Authors: Jared C. Carbone; V. Kerry Smith
Abstract: We explore the consequences of treating the multiple, non-market benefits associated with improvements in ecosystem health and the market economy from which damage to these ecosystems stems as an integrated system. We find that willingness to pay measures of use-based ecosystem services are impacted by the changes in demand for complementary market goods. Demand for these goods shifts due to the introduction of pollution regulations that deliver improvements in ecosystem services. As a result, partial equilibrium estimates of these use values may be measured with substantial error if they fail to account for the general equilibrium adjustments caused by the regulation. We also find that the basic physical/biological connections between the resources underlying use and non-use values for ecosystems may have important implications for the measurement of these values.
Keywords: Ecosystem Services; General Equilibrium; Environmental Economics
JEL Codes: D58; H23; Q51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pollution regulations (Q52) | improvements in ecosystem health (Q57) |
| improvements in ecosystem health (Q57) | changes in demand for market goods (D12) |
| pollution regulations (Q52) | changes in demand for market goods (D12) |
| improvements in ecosystem health (Q57) | demand for market goods (R22) |