Land Values and CBA Flashcards
What conflict does CBA address?
Biodiversity and habitat conservation vs development and land conversion
What is CBA?
Simple decision rule which is based on values and commensurability
What is a discount rate?
Returns in the future are worth less than cash in hand
The higher the discount rate?
The less future returns are valued
What is the typical discount rate used?
6-10%
What is a discount factor?
Used to makes costs and benefits comparable as a net present value
What is total economic value made up from?
Direct Use value, Indirect Use value, Option value, Quasi Option value, Benefit value, Existence value
What is Voodoo economics?
Economic benefits/growth based on estimated future indirect benefits
What are the environmental values of a forest?
Drought and flood regulation Control of soil erosion and sedimentation Protection against weather damage Purification of air and water Conservation of genetic resources Carbon sequestration Habitat Groundwater recharge Recreational and spiritual benefits
What are the costs of forest land use conversion?
Foregone timber revenue Foregone other forest products Foregone direct use for tourism Loss of protection from forest cover Loss of biological diversity Loss of carbon sequestration
What are market failures?
When market prices fails to reflect the full value of a commodity to society
What are policy failures?
Where the policy interventions necessary to correct market failures are not taken
What is the environmentalist’s view on discount factors?
There is no discount. The value of the environment in the future is the same as it is now
What are the economic instruments for land use?
Cap and trade Floor and trade Offsets Conservation banking Contracts for services Reverse auctions Stacking
What is land sparing?
Where increases in yield releases agricultural land from production
What is the benefit of land sparing?
Spare land contributes to biodiversity targets, PES can provide income to farmers
What are the ways to increase yield?
Fertilisers, pesticides, planting and breeding GMOs
What is the Jevons Paradox?
Technological progress/government policy increases efficiency in use of a resource, but due to increase demand the rate of use continues to increase
How much of Earths ice and desert free area is agriculture?
40%
How much of world’s freshwater withdrawal does agriculture represent?
2/3rds
Impact of land sparing on biodiversity?
Potential to limit the impact of human activity on biodiversity
What are the environmental costs of agriculture?
GHG and ammonia emission
Eutrophication
Dispersal of harmful pesticides
Freshwater depletion
What is the counter argument for land sparing?
Argues that although it limits the amount of land impacted, the other environmental impacts still persist or are worsened e.g. fertiliser, pesticide use
Therefore what should we do to limit the impact of our agriculture?
Combine higher yield practices with efforts to reduce the rebound effects e.g. strict land zoning, strategic deployment of yield enhancing loans and restricted rural subsidies
