Week 4 Flashcards
The economics of land conservation
Profitable practices more attractive to farmers, but non-financial factors ___ important
also
Resources conservation practices often inhibited by
___
risk and uncertainty
impact on other enterprises
delayed benefits
Resources conservation practices often inhibited by
delayed benefits
___
impact on other enterprises
risk and uncertainty
Resources conservation practices often inhibited by
delayed benefits
risk and uncertainty
___
impact on other enterprises
Costs and benefits of a resource conservation project ___ over time
vary
Benefits and costs of resource conservation over time
Cost high early on - net benefit is ___
negative
Benefits and costs of resource conservation over time
Cost high early on - net benefit is negative
This is ___ for conservation practices on farms
typical
Interest means that time is ___
money
When benefits and costs occur at different times, allow for ___ to compare them validly
interest payments
One approach: imagine a bank account for project; interest paid or charged depending on the ___ each year
balance
One approach: imagine a bank account for project; interest paid or charged depending on the balance each year
If account balance ___ at the end of the planning period, investment is worthwhile
positive
Discounting determins the ___ of a future benefit or cost
present value
To calculate the Net Present Value (NPV) we
— We calculate the net benefit for each year, ___ it, and sum the net discounted benefits
— Or, discount and sum benefits and costs separately and take difference - gives same result
discount
To calculate the Net Present Value (NPV) we
— We calculate the net benefit for each year, discount it, and sum the net discounted benefits
— Or, ___ and sum benefits and costs separately and take difference - gives same result
discount
Discounting means that future benefits have to be ___ than current costs to break even
bigger
