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Grassland easement evaluation and acquisition with uncertain conversion and conservation returns

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  • Ruiqing Miao
  • David A. Hennessy
  • Hongli Feng

Abstract

We develop an analytical framework to examine an agency's optimal grassland easement acquisition while accounting for landowners’ optimal decisions under uncertainty in both conversion and conservation returns. We derive the value of “wait and see” (i.e., neither convert nor ease grassland) for landowners and find that grassland‐to‐cropland conversion probability and easement value vary in opposing directions when “wait and see” is preferred, indicating that a larger conversion probability does not necessarily imply a higher easement value. Our analysis shows that when conservation funds can be flexibly allocated across periods then the agency's optimal acquisition can be readily achieved by sorting land tracts according to their owners’ optimal choices. When funds cannot be flexibly allocated across periods, we examine both a rational agency's and a myopic agency's decision problems. An acquisition index is developed to facilitate optimal easement acquisition. Nous développons un cadre analytique pour examiner l'acquisition optimale de servitude pour des prairies par une agence tout en tenant compte des décisions optimales des propriétaires fonciers dans des conditions d'incertitude concernant les rendements de conversion et de conservation. Nous dérivons la valeur de « attendre et voir » (c.‐à‐d., ni convertir ni laisser‐aller les prairies) pour les propriétaires fonciers et nous trouvons que la probabilité de conversion des prairies en terres cultivées et la valeur de la servitude varient dans des directions opposées lorsque « attendre et voir » est préféré, ce qui indique qu'une plus grande probabilité de conversion n'implique pas nécessairement une valeur de servitude plus élevée. Notre analyse montre que lorsque les fonds de conservation peuvent être alloués de manière flexible sur plusieurs périodes, l'acquisition optimale de l'agence peut être facilement réalisée en triant les parcelles de terrain en fonction des choix optimaux de leurs propriétaires. Lorsque les fonds ne peuvent pas être alloués de manière flexible sur plusieurs périodes, nous examinons à la fois les problèmes de décision d'une agence rationnelle et d'une agence myope. Un index d'acquisition est développé pour faciliter l'acquisition optimale des servitudes.

Suggested Citation

  • Ruiqing Miao & David A. Hennessy & Hongli Feng, 2022. "Grassland easement evaluation and acquisition with uncertain conversion and conservation returns," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 70(1), pages 41-61, March.
    • Handle: RePEc:bla:canjag:v:70:y:2022:i:1:p:41-61
    DOI: 10.1111/cjag.12302
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    1. Ruiqing Miao & Hongli Feng & David A. Hennessy & Gaurav Arora & Charles R. Loesch, 2023. "Grassland easement acquisition: Conversion hazard rate, additionality, spatial spillover, and heuristics," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 928-946, June.

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