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Report, 2010

An Equilibrium Model of Habitat Conservation under Uncertainty and Irreversibility

Di, Corato Luca; Moretto, Michele; Vergalli, Sergio


In this paper stochastic dynamic programming is used to investigate habitat conservation by a multitude of landholders under uncertainty about the value of environmental services and irreversible development. We study land conversion under competition on the market for agricultural products when voluntary and mandatory measures are combined by the Government to induce adequate participation in a conservation plan. We analytically determine the impact of uncertainty and optimal policy conversion dynamics and discuss different policy scenarios on the basis of the relative long-run expected rate of deforestation. Finally, some numerical simulations are provided to illustrate our findings


optimal stopping; deforestation; payments for environmental services; natural resources management

Published in

Note di lavoro della Fondazione ENI Enrico Mattei
2010, number: 160.2010
Publisher: Fondazione ENI Enrico Mattei

Authors' information

Di Corato, Luca
Swedish University of Agricultural Sciences, Department of Economics
Moretto, Michele
University of Padova
Vergalli, Sergio
University of Brescia

UKÄ Subject classification

Economics and Business
Social Sciences
Environmental Sciences related to Agriculture and Land-use
Forest Science

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