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This is a central chapter of the book, providing an overview on approaches to link ecology and economics in models, again using examples from the literature. The first sections focus on links between the ecological and economic system components that can lead to coupled ecological-economic dynamics. In the following sections it is argued that the consideration of these dynamics only focuses on the supply side of biodiversity which, among other things, addresses the question of how biodiversity can be conserved cost-effectively. Of equal importance, however, is the demand side that concerns the values humans attach to biodiversity. Two different approaches for the integration of supply and demand sides are outlined, which allow for an analysis of the efficiency of biodiversity conservation policies and strategies.
This is the first of five chapters on ecological modelling and presents basic homogenous (absence of spatial structure and variability among individuals) and deterministic (absence of stochasticity and randomness) population models. The first model describes unlimited exponential growth, which is followed by the introduction of intra-specific competition and density dependent growth. Two types of dynamics are considered: continuous in time and discrete in time. It is demonstrated that the time-discrete formulation can lead to chaotic population dynamics which in ecological models can be caused by scramble competiton where individuals share limited resources rather evenly so that all individuals suffer from the lack of resources. Opposed to this is contest competition where the share of the resources is uneven, so a few winners reproduce and/or survive, and the emerging population dynamics are not chaotic.
In this chapter two examples are presented that demonstrate the added value of integrated ecological-economic modelling. Both examples consider market-based conservation instruments, the first analysing the impact of the agglomeration bonus on the coexistence of two competing species, and the second analysing the dynamics and cost-effectiveness of output-based payments that reward the presence of a species on the land. The second example involves a feedback loop between ecological and economic system components that is analysed in detail. It is shown that the feedback loop increases the uncertainty in the system, which implies that the performance of the payment scheme is uncertain. This uncertainty is then addressed by a co-viability analysis to derive trade-off curves between the certainty of achieving a desired ecological outcome (keeping the population size above a specified target) and the certainty of achieving a desired economic outcome (keeping scheme costs below a specified limit).
Individuals differ in many characteristics such as sex and age, which implies that they usually have different chances of reproducing and surviving. Even stronger differences are usually observed if individuals belong to different species. This chapter presents two types of model for the consideration of individual variability. The first is equation-based models that differ from the models of Chapter 4 by the fact that several equations (one for each age class or each species, etc.) are needed. If the dimensions along which individuals differ are too numerous, or if additional features such as adaptive behaviour are included, individual-based models are more appropriate. An example demonstrates that equation-based models and individual-based models, when considering the same features of the modeled population, lead to the same results. It is argued that individual-based models are generally more complex than equation-based models but also more flexible and able to consider more details.
This chapter opens Part IV on ecological-economic modelling. It starts with a brief synopsis of the history of economic thought that leads on to an outline of the subdisciplines of environmental economics and ecological economics. Major achievements highlighted include, among others, the development of market-based instruments to protect the environment, the consideration of the dynamic complexity of coupled ecological-economic systems, and the development of the concepts of resilience and sustainability. The chapter concludes with recommendations for ecological-economic modelling, which include the consideration of uncertainties, non-linearities, feed-back loops, evolution and adaptation and the use of adeqate models of human behaviour.
This introductory chapter presents a definition of a formal scientific model. The definition is by Baumgärtner et al. (2008) in ecological economics and includes three properties: abstracting from reality, being designed for a certain purpose and being formulated within the concepts of the respective scientific discipline. These three criteria are explained and discussed along everyday examples, in particular a street map.
Like Chapter 8, this chapter combines the concepts and approaches of Chapters 9–12 to analyse the aggomeration bonus (AB) introduced in Chapter 11. After an introductory section about the economics of habitat fragmentation, the use of the AB is presented in the context of conservation payments, auctions and conservation offsets, which is followed by a variant of the AB: the aglomeration payment. The following sections discuss the role of side payments among human agents and outline further variants of the AB, such as spatially targeted auctions and the agglomeration malus. A lot of research on the AB is of an experimental nature where subjects are placed in a fictitious decision context and their decisions observed and evaluated statistically. Although the present book is on modelling, these experiments are so relevant to the field of biodiversity economics and ecological-economic modelling that a section is devoted to this literature.
An important component in the analysis of policy instruments is the modelling of human behaviour. In the previous chapters, humans are (usually) considered as rational and perfectly informed profit-maximisers. This assumption is gradually relaxed in the present chapter. The first section addresses the issues of decreasing marginal utility, multiple objectives and time preference. The following section adds the problem of risk and uncertainty and presents a standard economic model for decision making under risk. The assumption of selfish profit maximisation is relaxed subsequently by introducing a model of fairness and inequity aversion. The following sections present approaches for modelling situations of imperfect information and limited cognitive abilities, as well as learning and behavioural change. The concluding section discusses and provides some linkages to Chapter 7 on individual-based models and provides some references from the literature on agent-based modelling.
Next to its purpose, a model may be characterised by the features it possesses. The features of a model are determined by the features of the system modelled as well as the model purpose. Five features are highlighted in this chapter. The first is spatial structure, where three types are distinguished: spatially differentiated, spatially explicit, and spatially differentiated and explicit. The second is dynamics, which can be considered in different ways. The third model feature is stochasticity or randomness. The fourth is variability among individuals (plants or animals in the ecological models, and human agents in the economic models), and the last is feedback loops, such that model components affect each other in a mutual way. As in Chapter 2, various model studies from the literature are used, and the relevance of each of the five model features is demonstrated by way of example.
This chapter combines the modelling approaches of Chapters 4 – 7 to investigate how and why species can coexist. For this the chapter presents main arguments and concepts that have been presented in the literature over the past few decades, which include, among others, niche separation, the competition-colonisation trade-off and the intermediate disturbance hypothesis. Modelling examples from the literature that introduce and investigate these concepts are outlined. Some of the models are stochastic, most of them contain spatial structure and all of them, of course, consider individual variability, either through equation-based models or individual-based models. Various models, expecially the more recent ones contain all three features. Species coexistence is one of, or may be even the most, important question analysed in the research fields of (meta) community ecology.
This is the first of five chapters about economic modelling. The first section recaps basic environmental economics which typically starts with the identification of biodiversity loss and biodiversity conservation as a social dilemma. In the context of policy, such a dilemma leads to market failure, implying an underprovision of biodiversity. Standard policy instruments that can help fix market failure are introduced subsequently, including regulation (land-use planning), conservation payments (also known as agri-environmental schemes or payments for environmental services) and tradable permits or conservation offsets (analogous, e.g., to emission trading schemes). Conservation payments and conservation offsets belong to the class of market-based instruments, providing financial incentives for the conservation of biodiversity. Pros and cons of the different instruments are discussed.
Having laid the foundation of economic policy analysis in Chapters 9 and 10, Chapter 11 presents literature examples of incentive design. The art of incentive design is to offer agents (land users) financial incentives so that it is in their own interest to carry out conservation measures with an effort, at those sites and at those times, so that biodiversity is conserved cost-effectively. This chapter starts with the problems of asymmetric information and moral hazard. The following sections discuss the difference between budget-effectiveness and cost-effectiveness, introducing conservation auctions as alternatives to conservation payments, addressing the problem of incentivising the creation of habitat heterogeneity in a landscape, and lastly outlining the functioning of the agglomeration bonus that incentivises the provision of spatially agglomerated habitat for species.