June 06, 2006

Myopic land use

Akiko Satake and Yoh Iwasa have recently published a paper in the journal Ecological Research (Coupled ecological and social dynamics in a forested landscape: the deviation of individual decisions from the social optimum) where they theoretically explore the effect of long-term ecological change and short-term monetary benefit on the behavior of landowners. They simulated a landscape with multiple landowners and three possible land states - agricultural crop, abandoned land and forest. The three states differ in the benefits they produce and in the time to develop and yield those benefits. Landowners attach more value to short- than to long-term benefits. The result is that too much land is allocated to agriculture and too little to forest.

If a land is initially forested, a decision of its landowner to eliminate the forest and cultivate the land has an immediate effect. However, if the land is initially cultivated and its landowner decides to let the forest grow, the change takes a long time; the land first becomes "abandoned", yielding no monetary benefits, and then experiences a lengthy succession to mature forest. As a result "the landscape which resulted from the decision of myopic landowners was dominated by agriculture even when the forested state generated the highest utility."

To remedy this situation, Satake and Iwasa suggest "implementing economic incentives that enhance the utility of abandoned land (e.g., a subsidy), or decrease the utility of agricultural land (e.g., taxing of crops or timber products)." It is a pity that they didn't go on to simulate the implementation of these policies under reasonable assumptions of human behavior. We will have to make do with what happens in the real world. Governments worldwide annually spend $300 billion in agricultural subsidies and $7 billion in nature reserves.

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