Marian%20L.%20Weber

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Assessing Economic and Ecological Tradeoffs from
Tradable Landuse Rights Application to Canadas
Boreal Mixedwood Forest
Marian L. Weber Alberta Research
Council Sustainable Forest Management Network,
University of Alberta
4th BioEcon Workshop on the Economics of
Biodiversity Conservation Venice, Italy August
28, 2003
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Sustainable Forest Management Network Boreal
Ecology and Economics Synthesis Team Fiona
Schmiegelow, Vic Adamowicz, Glen Armstrong, Steve
Cumming, Grant Hauer, Lee Foote, Marian
Weber "Research focusing on the development of a
suite of models of natural forest dynamics and
human activities that facilitates evaluation of
management scenarios in terms of ecological and
socioeconomic outcomes, for use in an adaptive
management framework."
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Natural Reserve Design

• Article 8 of Rio Convention on Biodiversity 1992
• establish, regulate and manage networks of
  protected areas to promote the protection of
  ecosystems, natural habitats and maintenance of
  viable populations of species in natural
  surroundings
• Coarse Filter Approach
• Objectives Representation and
  Persistence (dynamic)

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Reserve Design Approaches

• B. Budget Constrained

• A. Maximal Coverage

Min Land Cost s.t. Biodiversity Constraint Ando,
et al., Science (2001)
Max Species Metric s.t. Reserve Area
Constraint Camm et al. Biological Conservation
(1996)
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Implementation Problems
1. Methods for selecting ecological criteria ad
hoc

• Choice of biodiversity metric
• Species Weights
• Ethical Issues (implicit vs. explicit)
• Data Issues
• Classification Incomplete
• Surrogacy not promising (e.g. Jaarsvald et al.
  1998)
• Presence-Absence versus Demographic Data
• Conflicting Species Requirements

Process Based Higher Level Surrogates such as
Ecosystems (e.g. Margules and Pressey 2000)
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1. Political Feasibility

Institutional Context for Forest Management in
Canada 1. Forest Lands are Publicly
Owned Overlapping Tenures and Uncoordinated
Access Skewed and missing price signals on public
lands. 2. No Legal Framework for Integrated
Land Management What land uses are of highest
value? No mechanism for addressing biodiversity
concerns or cumulative effects at disposition
stage. Currently addressed under Canadian
Environmental Assessment Act and Albertas
Environmental Protection and Enhancement Act
incumbency protects low value land use
unlisted activities can derail plans for CE
management
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Tradable Landuse Rights (TLR) Approach ...

• Parallels between Land Management and Air and
  Water Quality Management
• Require a mechanism for coordinating the
  activities of multiple agents on the landscape
• Tradable permit systems organize users of the
  public good in order to
• - Meet environmental objectives
• - Efficiently allocate resources

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Tradable Landuse Rights (TLR) Approach ...

• Government sets a cap or threshold on habitat
  loss.
• Rights to develop remaining land are traded.
• Firms self select the best sites for
  development.
• Minimizes Cost of Landuse Constraint (see
  paper)

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• KEY ASSUMPTIONS
• Biodiversity can be conserved indirectly by
  setting aside representative habitat types
  (Coarse Filter Approach)
• Requires homogeneous habitat types
• Assumes configuration less important than total
  amount of habitat.

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CASE STUDY Albertas (Canadas) Mixedwood Boreal
Forest
Q1 What are the ecological and economic
tradeoffs of alternative spatial and temporal
arrangements of industrial activities on regional
landscapes? Q2 What are the implications of
alternative policy and regulatory structures for
achieving specific environmental objectives.
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Boreal Mixedwood Region in Alberta
Boreal Mixedwood Forest Age and species
composition driven by a Natural Disturbance Regime
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• Land Management in Albertas Boreal Mixedwood
• 1. Oil and Gas Sector
• Surface Leases for oil and gas exploration and
  development
• Auctions (bi-weekly)
• Forestry
• Forest Management Agreements (hardwood)
• rights to hardwood fiber over a fixed landbase
• responsibilities for land management
• Quotas (softwood) in Forest Management Units
• rights to a fixed percentage of the AAC
• 3. Landuse Conflict
• FMU and FMA areas overlap
• Surface and Subsurface Leases Overlap
• Surface rights protected by Tort (Timber Damage
  Assessment)

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Data and Study Area

• 1. BIODIVERSITY
• Detection probabilities for 27 bird species over
  1137 Townships in NE Alberta (FAN)
• 2. LAND VALUES
• A. Surface Rights
• (i)Value of timber obtained from 2000-01 Timber
  Damage Assessment
• (ii)Crown timber dues.
• B. Subsurface Rights
• (i) Value of oil and gas leases obtained from
  1996-2001 bonus sales for oil and gas lease
  rights.
• (ii) Expected Royalties for underlying reserves.

LAND VALUES Per TWP Per ha. Average
23,218,242 2322 Minimum 1,435,152
142 Maximum 1,027,664,204 102,766
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Comparing Cost and Biodiversity Outcomes Under
Alternative Approaches
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243 increase in area protected
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Z expected detection over study area
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Implementation Issues
1. Defn of Environmental Objective - habitat
definition is connected to structural forest
characteristics (Stelfox 1995) - separate
markets with land use constraints varying by
cover type and age class in order to achieve
appropriate representation of naturally occurring
stand characteristics. - Young Deciduous, Old
Deciduous, White Spruce, Mixedwood (Cumming and
Vernier 2002).
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Implementation Issues

• 2. Temporal Dimension of Right
• Habitat protection in a stochastic environment
• Adaptive Management Approach
• Allocate Rights to a fixed percentage of
  allowable disturbance per period
• Long Term versus Short Term (spot market) rights

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Implementation Issues
3. Spatial Heterogeneity and QUALITY of Reserve
network

• Concern that choice of low value sites for
  reserves will lead to systematic bias against
  valuable habitat.
• Within a region the type of habitat(s) is
  constant.
• Within a region habitat quality depends on
• - total quantity of habitat
• - spatial configuration of habitat.
• Tradeoff between quantity and configuration of
  habitat
• - Literature suggests that total amount of
  habitat conserved may be of greater ecological
  importance than configuration/configuration
  important when very little habitat left.

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Relative Impacts of Configuration versus Habitat
Loss on Predicted Abundance
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Implementation Issues
4. Economic Efficiency and Competitiveness -
Transactions costs and complexity of trading
system - Market power and hold-out
problems - Network and spatial spillover
costs - Competitive advantage/disadvantage
5. Compatibility with Existing Institutions
Resource Rights allocated through spatial
repeated auctions/sales.
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Conclusions
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Conclusions

• Benefits of TLRs for Biodiversity Protection on
  Public Lands
• Management to Thresholds
• Stratified by ecosystem types and habitat
  characteristics.
• Eg. Stand age and type.
• - Information Revealing.
• Rights go to highest bidder/Minimize Opportunity
  Costs.
• Prices reflect the relative scarcity value of
  each habitat type.
• - Flexible
• Can change the threshold in response to natural
  disturbance or changing preferences.
• - Mechanism for Integrated Resource Management
• The expected values of all resources are
  capitalized in permit prices.