International Review of Environmental and Resource Economics > Vol 8 > Issue 3–4

The Economics of Conservation and Finance: A Review of the Literature

Amy W. Ando, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign and Resources for the Future, USA, amyando@illinois.edu Payal Shah, Okinawa Institute of Science and Technology Graduate University, Japan, payal.shah@oist.jp
 
Suggested Citation
Amy W. Ando and Payal Shah (2016), "The Economics of Conservation and Finance: A Review of the Literature", International Review of Environmental and Resource Economics: Vol. 8: No. 3–4, pp 321-357. http://dx.doi.org/10.1561/101.00000072

Published: 06 Jun 2016
© 2016 A. W. Ando and P. Shah
 
Subjects
Financial markets:Portfolio theory,  Environmental Economics,  Environmental Economics:Climate Change,  Environmental Economics:Market-based Policy Instruments,  Public Economics:Public Finance,  Public Economics:Public Goods,  Climate Change
 
Keywords
G11H4Q2Q5
ConservationFinanceFundingUncertaintyPortfoliosReal optionsEcosystem services
 

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In this article:
1. Introduction
2. How Can Conservation Be Financed?
3. Insights From Finance: Whether, When, and Where Should Conservation Happen?
4. Directions for Future Work
References

Abstract

This article summarizes key insights into conservation that come from the intersections of economics and finance: public finance, conservation finance, and financial theory applied to problems of conservation. We discuss some of what has been learned from the study of conservation and finance that helps us to understand when, where, and even whether conservation activities should occur; portfolio theory has been harnessed to help guide conservation planning under uncertainty, and real options theory helps us understand whether to commit to conservation or to wait. We distill some of the extant research on how resources can be gathered to support conservation through local referenda, payment for environmental service programs, private donations, user fees, and value capture through property taxes. The article concludes with suggestions for promising future directions in this area of work.

DOI:10.1561/101.00000072