Tropical Forests, Tipping Points, and the Social Cost of Deforestation
Name
Pndyck_Tropical Forests, Tipping Points, and the Social Cost of Deforestation.pdf
Description
Submitted version
Size
258.57 KB
Format
Adobe PDF
Checksum (MD5)
2cefe9ac835fc47483af61123cb2222f
Author(s)
Franklin, Sergio L.
Pindyck, Robert S
Date Issued
November 2018
Journal
Ecological Economics
Publisher
Elsevier BV
Citation
Franklin, Sergio L., Jr. and Robert S. Pindyck. "Tropical Forests, Tipping Points, and the Social Cost of Deforestation." Ecological Economics 153 (November 2018): 161-171 © 2018 Elsevier B.V.
Version
Original manuscript
Abstract
Recent work has suggested that tropical forest and savanna represent alternative stable states, which are subject to drastic switches at tipping points, in response to changes in rainfall patterns and other drivers. Deforestation cost studies have ignored the likelihood and possible economic impact of a forest-savanna critical transition, therefore underestimating the true social cost of deforestation. We explore the implications of a forest-savanna critical transition and propose an alternative framework for calculating the economic value of a standing tropical forest. Our framework is based on an average cost method, as opposed to currently used marginal cost methods, for the design of optimal land-use policy or payments for ecosystem services. We apply this framework to the calculation of the social cost of deforestation of the Amazon rainforest.
MIT Department
Sloan School of Management
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Creative Commons Attribution-NonCommercial-NoDerivs License
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1016/j.ecolecon.2018.06.003
