lupi - lupi glans v2 - glc.org · frank lupi natural resource and environmental economics dept of...

Frank LupiNatural Resource and Environmental Economics

Dept of Agricultural, Food and Resource EconomicsDept of Fisheries and Wildlife

Recent research areas:

Demand and valuation of ecosystem services

Recreational fishing and beach use in Great Lakes

Conservation adoption

Incentive-based environmental policy

Agricultural Economics

Show importance?

Make decisions?

$11.5 billion in spending$1.5 billion in taxes117,000 jobs

What’s the purpose of Economic Info?

Types of Economic Measures

Economic Impacts/Contributions

Economic Value (Change in “Welfare”)

• Spending & how it contributes to economy“ripple effects,” tax revenues, jobs, etc.

• Economic value TO people/firms, above what they spendi.e., Benefits net of costs

Linking ANS to People and Economy

How do changes in ANS management link to changes in ecosystem services & link to changes in economy & people’s well‐being?

1. Requires knowledge of linkages

2. Focusses on changes

Change in ANS policy or mgmt. action

Changes in ecosystem services

Changes in economy

&people’s well‐being






Changes in economy



To: Economy“Impacts”

• Money flows• Jobs, taxes

To: People“Value”

• Willingness to pay• Changes in profits

Purpose?

Shows importance

Make decisions• BCA• NRDA






Changes in economy


To: Economy“Impacts”

• Money flows• Jobs, taxes

To: People“Value”

• Willingness to pay• Changes in profits


Expenditure

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Why care about demand & supply?Gives us info on behaviors

Supply Function

Demand Function

Expenditure

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Supply Function

Demand Function

Supply Function with higher costs

Supply Function

Why else care about demand?Gives us info on benefits and costs

Expenditure

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$10

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ConsumersBenefit

Demand Function

Why else care about supply?Gives us info on benefits and costs

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Demand Function

Supply Function

Producer costs

Profits

ConsumersBenefit


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Demand Function

Supply FunctionWelfare measure

So with higher supply costs,welfare change is change in area

0 6

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Quantity

$10

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Demand Function

Supply Function

Supply Function with higher costs

Types of Economic Measures

Economic Impacts/Contributions

Economic Value (Change in “Welfare”)

• Spending & how it contributes to economy– Other peoples income, tax revenues, jobs, etc.

• Economic value TO people/firms, above what they spend– I.E., Benefits net of costs

Economic Impact

Net changes in new economic activity associated with an industry, event, or policy in a regional economy

Economic Benefit

A net increase in total social welfare. Economic benefits can be both market and nonmarket values.

Cost‐Benefit Analysis

Cost‐Effectiveness

An economic efficiency analysis that measures net changes in social welfare associated with an industry, event, or policy; includes both market and non‐market values and accounts for opportunity costs.

Determining the least cost way of achieving a goal; a necessary step for economic efficiency

Types of Economic Analyses

Adapted From: Watson et al., 2007. Determining Economic Contributions and Impacts: What is the difference and why do we care? JRAP 37(2):1‐15.

What has Economic Value?

• Nonmarket valuation – Tools to infer these values – Put on par with market costs

• Things that people are willing to sacrifice resources for have economic value.– Economic values not just for market goods

Market Values Values for goods and services exchanged in markets

Non‐market values

Values for non‐marketed goods and services (e.g., many natural resources and ecosystem services)

‐ Use values

Market or non‐market values related to use of a good or service (e.g., drinking water, water‐based recreation)

‐ Non‐use values

Values for non‐market goods & services unrelated to use (e.g., values for others use, for existence or for future generations)

Types of Economic Values

Heal et al, NAS 2004

Economic valuation methodsMarket effects • Supply functions• Demand functions

Nonmarket values• Recreation demand• Hedonics (property values)• Avoided costs

– Mitigation/avoidance– Treatment/control/prevention

• Non‐use values– Referendum– Contingent valuation (stated preferences)

• Benefit Transfer– Not a valuation method per se– Need data & studies for

transferring

Collecting data & building model:

Can’t we just get this from literature?

• Not much $ goes into these original research studies

• Challenging to get the behavioral responses

• Reliability relies on replication in other areas/cases

Some past & current nonmarket valuation research

Spatially & temporally explicit economic demand models

– Great Lakes fishing linked to sea lamprey control

– Great Lakes & inland fishing (ongoing)

– Great Lakes beaches (ongoing)

Most trips

Fewest

Trips per site:

Forecasting biological and economic impacts of aquatic invasive species in Lake Michiganwith David Finnoff, Hongyan Zhang, Ed Rutherford, Doran Mason

GLFT, 2015‐2017

The good news…

• Some studies show:

– Economic benefits of preventing and controlling ANS can be substantial

The bad news..

• Just because impacts can be large, does not mean each dollar invested is worth it.

• The “Is it worth it?” thought experiment: – If invested $100 in ANS management, could you get enough people or companies to pay for it so you collect more than $100?

lupi - lupi glans v2 - glc.org · frank lupi natural resource and environmental economics dept of...

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