The climate adaptation problem in biodiversity conservation: the role of reversible conservation investments in optimal reserve design under climate change

Gerling, Charlotte and Schöttker, Oliver and Hearne, John (2022): The climate adaptation problem in biodiversity conservation: the role of reversible conservation investments in optimal reserve design under climate change.

Abstract

Climate change causes range shifts of species and habitats, thus making existing reserve networks less suitable in the future. Climate change hence changes the comparative advantage of some sites over others with respect to "producing" habitat. In order to maintain cost-effectiveness, reserve networks therefore have to be adapted. In principle, reserve networks may be adapted to climate change in two ways: by providing additional funds and/or allowing for the sale of sites to liquidate funds for new purchases. However, due to negative ecological consequences, selling is often regulated, thus rendering the optimal reserve design a problem of irreversible investment decisions. Respectively, allowing for sale may be interpreted as an investment with costly reversibility, as transaction costs do not allow for full recovery of the initial investment. Here, we assess the gains in terms of cost-effectiveness achieved when allowing for sale as well as the costs of this flexibility in terms of habitat turnover given climate change-induced changes in comparative advantages. To do so, we develop a conceptual climate-ecological-economic model to find the optimal time series for the reserve design problem under changing climatic conditions and different policy scenarios. These scenarios differ in the size of additional funds for climate adaptations and whether selling is allowed. Our results show that the advantage of selling is large when no additional funds are available and decreases as the amount of additional capital increases. Moreover, we find that due to climate change, habitat turnover occurs even in a static reserve network, but the loss in habitat permanence when allowing for sale is smallest for the most threatened habitat type. We hence identify a new trade-off in the evaluation of land purchase to adapt biodiversity conservation to climate change: while not allowing for sale mainly benefits the habitat permanence of the expanding habitat type, allowing for sale mainly benefits the outcome for the contracting habitat type.

• Item Type: MPRA Paper
• Language: English
• Keywords: Biodiversity; climate adaptation; climate-ecological-economic model; spatial flexibility; habitat permanence; irreversible investment; investment with costly reversibility; selling reserve sites
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C63 - Computational Techniques ; Simulation Modeling; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q57 - Ecological Economics: Ecosystem Services ; Biodiversity Conservation ; Bioeconomics ; Industrial Ecology; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy

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