International Review of Environmental and Resource Economics > Vol 8 > Issue 2

Land-Use Patterns and Spatially Dependent Ecosystem Services: Some Microeconomic Foundations

David J. Lewis, Department of Applied Economics, Oregon State University, USA, lewisda@oregonstate.edu JunJie Wu, Department of Applied Economics, Oregon State University, USA, junjie.wu@oregonstate.edu
 
Suggested Citation
David J. Lewis and JunJie Wu (2015), "Land-Use Patterns and Spatially Dependent Ecosystem Services: Some Microeconomic Foundations", International Review of Environmental and Resource Economics: Vol. 8: No. 2, pp 191-223. http://dx.doi.org/10.1561/101.00000069

Published: 07 Jul 2015
© 2015 D. J. Lewis and J. J. Wu
 
Subjects
Environmental Economics,  Environmental Economics: Market-based Policy Instruments
 
Keywords
Q24Q50Q57
Ecosystem servicesLand use patternsPayments for ecosystem servicesSpatial dependencyAsymmetric information
 

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In this article:
1. Introduction
2. The Role of Scope and Pattern in Defining Spatially-Dependent Ecosystem Services
3. The Demand for Ecosystem Services
4. Land-Use Patterns and the Supply of Ecosystem Services
5. Policy for Ecosystem Service Provision
6. Conclusions
References

Abstract

This paper develops and reviews some microeconomic foundations for the provision of spatially-dependent ecosystem services from land. We focus on ecosystem services described by a production function with spatial dependencies in the primary input — the amount and pattern of land in particular uses and management. Many ecosystem service production functions are affected by spatial dependences, particularly those involving fish, wildlife, and water quality. We illustrate the various sources of demand for ecosystem services and then provide a novel development of the effects of alternative spatial dependencies on the shape of the supply curve for ecosystem services. Our analysis emphasizes that the optimal supply curve requires a mechanism to coordinate landowners' decisions and internalize the input externalities that arise from production functions being spatially dependent. Finally, we use our framework to illustrate and review some key implications for linking demand and supply for policy design.

DOI:10.1561/101.00000069