This study
uses the Simplified International Model of agricultural
Prices, Land use and the Environment, on a Grid (SIMPLE-G), a
partial equilibrium model of agricultural production, to explore how the scale
and scope of environmental quality markets influence farm-level production
decisions and market performance. I simulate how permit trading affects
producers’ input use decisions, and ultimately pollution emissions, by
modifying the supply nest structure of the model to include water quality
permits as an additional output from agricultural production. Conservation
practices improving water quality may also result in ecosystem co-benefits
(e.g., reduced greenhouse gas emissions and habitat provision). Hence, I extend
SIMPLE-G to quantify these co-benefits and simulate the effects of allowing
conservationist producers to “stack” permits (i.e., to supply multiple permit
types for each co-benefit). I find that, overall, permit production increases
with the scale and scope of the markets. <a>At the smallest
market size</a>—which allows trading only within 8-digit hydrological unit code watersheds—unintended
policy implications arise as the stacked markets cause one conservation
practice to crowd out the other. Meanwhile, the largest market—which allows
trading across the Chesapeake Bay Watershed—produces nitrogen permits more
efficiently which may lead to less of the secondary permits in comparison to other
market configurations. The results of this study support the Environmental
Protection Agency’s urging of the expansion of the scale and scope of ecosystem
markets.
| Identifer | oai:union.ndltd.org:purdue.edu/oai:figshare.com:article/12697460 |
| Date | 29 July 2020 |
| Creators | Natalie R Loduca (9155501) |
| Source Sets | Purdue University |
| Detected Language | English |
| Type | Text, Thesis |
| Rights | CC BY-NC-SA 4.0 |
| Relation | https://figshare.com/articles/thesis/How_Scale_and_Scope_of_Ecosystem_Markets_Impact_Permit_Trading_Evidence_from_Partial_Equilibrium_Modeling_in_the_Chesapeake_Bay_Watershed/12697460 |
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