BIO, SOS 494 Ecosystem Services: People and Nature

Problem set #2

Due date: Oct 1, 2014


2.1. Suppose that there are two communities have an interest in conserving the land lying between them, and that one of the communities is more affluent than the other. The more affluent community would be willing to protect y1 acres at a cost per acre of p according to the relation:

y1 = 3500 - p

The less affluent community would be willing to protect y2 acres according to:

y2 = 2000 - p

a. What would be the optimal area protected if it could be acquired at a marginal cost of $1000 per acre?
b. Suppose that the marginal cost of conservation doubled to $2000 per acre, what then would be the optimal area protected?
c. If supply of conservation effort were left to the market, and the marginal cost of conservation was still $2000 per acre, how much land would be protected?

2.2. Draw a graph showing your answers to a., b. and c. Using your graph explain the significance of the fact that demand curves for public goods sum vertically.

2.3. Can you think of a way to increase the level of conservation effort by the less affluent community? Justify your answer.

2.4. Take one ecosystem service from the area you have chosen to study for your term paper that you think is a public good. Explain what makes it non-rival and/or non-exclusive.


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