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Negative Offsite Impacts of Ecological Restoration: Understanding and Avoiding Conflict Sacramento River Conference Mark Buckley Environmental Incentives April 9, 2007 Fricker Mark Buckley, Environmental Incentives How do we conserve and restore large/landscape scale natural processes? • Conservation is limited to areas unwanted by other land uses. • Area characteristics that promote natural processes are often beneficial to other land uses as well. • Conversion of land use is often the only way to improve natural processes for valuable landscapes. TNC Mark Buckley, Environmental Incentives Land use Urban, 1% Upland Vegetation, 8% Other, 1% Riparian Vegetation, 14% Agriculture, 76% • Inner River Zone and Conservation Area (pre-restoration) Mark Buckley, Environmental Incentives Impacts of Riparian Restoration on Agriculture • Weeds and pests (vertebrate and invertebrate) • Disturbances – fires – out of channel flood flows • • • • • Endangered species Trespassing Pollinators and pest control Cultural Financial Buckley Buckley – tax revenues – economies of scale for production SF Chronicle Mark Buckley, Environmental Incentives Impacts of Farmers on SRCA Restoration and Conservation • Increased usage of chemicals • Removal of endangered species • Increased fencing, riparian vegetation removal, and riprapping • Political activity to reduce the full project area from 217,000 acres to 80,000 acres (2002) • 4 of 7 counties have opted out of outer zone participation • Colusa enacted more stringent limitations on restoration projects Buckley Buckley Mark Buckley, Environmental Incentives U.S. Census of Agriculture 1987-2002 • Farmers in SRCA are doing worse than others: – % decrease in total acreage greater than CA as a whole – Avg. farm size has dropped 10 % faster than CA – Total sales went up 55% faster in CA • Farmers in SRCA are doing better than others: – Number of farms has gone down in CA, but up in SRCA – All size categories lost farms for CA, all size categories EXCEPT over 1000 acres went up in SRCA – Avg. total farm production expenses grew 17% faster for CA – Avg market value of farms in SRCA increased faster than CA – Orchard acreage increased 33% for CA, 54% for SRCA Mark Buckley, Environmental Incentives Markets: Function and Failure Rival Non-Rival Excludable Non-Excludable Private Goods (only case Common-Property Resources (potential govt. where markets function) •Land parcels •Agricultural Crops regulation) Toll Goods •Bridges •River Access Public Goods (potential govt. •Atmosphere •Rivers provision) •Flood protection •Natural Air/Water Purification •Externalities caused by consumption exist for rival goods only •Externalities caused by degradation exist for all goods Mark Buckley, Environmental Incentives Interdependence of Restored and Developed Areas pollution, edge effects, barriers habitat, migratory routes, nutrition + Restored Natural Areas Socially Developed Areas - weeds, pests, fires, endangered species + ecosystem services (air and water quality, wildlife) Mark Buckley, Environmental Incentives Ecological and Social Compatibility of Restoration Effects by Land Type Pairing Ecologically Compatible Socially Compatible Socially Incompatible Mutually Beneficial Direct Conflict •Pest predation (Agriculture) •Bird pops. (Suburban/Urban) •Pollination (Residential, Ag) •Endangered species (Forestry) •Large predators (Ranching) •Natural flood regimes (Residential) Ecologically Inefficient/Infeasible Incompatible •Fish populations (Urban) •Native vegetation (Brownfields) •Bald Eagles (Suburban) Mutually Undesirable •Intense fires (All) •Nonnative species (Agriculture) •Ecological disequilibria (Forestry, Ag) •Positive externalities are generated under social compatibility •Negative externalities are generated under social incompatibility Mark Buckley, Environmental Incentives Negative Offsite Impacts (Externalities) of Restoration • Mutually Undesirable – Indirect effect – Technical or cost problem – Generated because costly to control or effective control options do not exist • Direct Conflict – Direct effect – Tradeoffs occur – Bargaining potentially necessary/beneficial Lack of bargaining resolution success can lead to government intervention Mark Buckley, Environmental Incentives Cooperative Outcome • Use Nash Bargaining Solution as a target max ∏(ui – di) • Universally individually-rational – Most stable = most individual gains = most equitable – Gains measured from non-cooperative outcome, NOT from prior case • Non-cooperative outcome is a function of pre-existing state • Net welfare gains possible when non-zero sum Present State Fully Restored Fully Developed Possible Outcomes Mark Buckley, Environmental Incentives Basic Restoration and Defense Decisions Farmer Restorationist restore nothing Restoration with defense defend nothing Restoration only No Restoration Mark Buckley, Environmental Incentives Restoration Decisions with Mitigation Restoration with defense Farmer defend nothing Restorationist restore restore with mitigation nothing defend nothing Restoration only Restoration with mitigation and defense Restoration with mitigation No Restoration Mark Buckley, Environmental Incentives Weeds 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 1 year 1 year w/mitigation 10 years 10 years w/mitigation 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% No restoration Restoration with defense Restoration with mitigation Restoration only 10% 0% 20 years 0% 20 years w/mitigation 20 years 20 years w/mitigation 1 year 10 years 20 years % more restoration with mitigation option 11% 10% 7% % less defense with mitigation option 19% 17% 20% Mark Buckley, Environmental Incentives 10 Year, 1 Farmer Weed Simulations B C ecological effects (+) A agricultural effects (-) Mark Buckley, Environmental Incentives Conclusions • Compatibility of other land uses can influence restoration success • Ecological and social compatibility both influence existence of externalities, negative externality resolution options, and necessary tradeoffs • Beliefs and expectations of all parties influence outcomes and potential cooperative gains • Mitigation and cooperation can lead to mutual gains Mark Buckley, Environmental Incentives Acknowledgements • National Science Foundation (Biocomplexity and Economic programs) • STEPS Institute for Innovation in Environmental Research • USDA CSREES NRI Managed Ecosystems Program Mark Buckley, Environmental Incentives Parameter Value (for 100 acres) discount rate 5 percent Source Farmers weed control costs (chemicals and labor) 1 yr - vertebrate pest control costs 1 yr - walnut prices $0.47 to $0.77 per pound UC Ag Ext., 2003 walnut yields 2400 to 8400 lbs./acre UC Ag Ext., 2003 expected damage 0 to 50 percent of yield Falta, 2003 restoration mitigation effect 80 percent neighboring farmer externality 25 percent Revenues 1 yr - Y=-808.8-(O*0.078)+P*O net returns above operating costs: $13,000 to $500,000 10, 20 yrs - Y=-2038.8-(O*0.078)+P*O net returns above total costs: 10 yrs: -$890,000 to $3,000,000 20 yrs: -$1,400,000 to $4,900,000 UC Ag Ext., 2003 cost of land $10,000/acre UC Ag Ext., 2003, Efseaff, 2005 cost of restoration $4500/acre, over 3 years=$429,000 Efseaff, 2005 cost of weed control 1 yr - cost of vertebrate pest control 1 yr - $40,500 10 yrs - ecological benefit 1 yr $23,700 to $160,000 10 yrs - $193,000 to $13,000,000 20 yrs - $295,000 to $19,000,000 loss from defense 0 to 100 percent loss from 2nd defense additional 75% of first damage $9150 10 yrs - $74,000 20 yrs - $120,000 $41,500 10 yrs - $105,000 20 yrs - $150,000 UC Ag Extension guidance, 2003 Pierce and Wiggers, 1997; UC, 2003 Restorationist $40,000 10 yrs - $324,000 20 yrs - $523,000 $97,000 20 yrs - $137,000 Efseaff, 2005 Pierce and Wiggers, 1997; UC Ag Ext., 2003 Loomis et al., 2000 Mark Buckley, Environmental Incentives