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Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands

Daniel Aronoff¹; Will Rafey²

¹ MIT Department of Economics and MIT Laboratory for Economic Analysis and Design () · ² UCLA Department of Economics and NBER ()

We introduce an empirical framework for valuing markets in environmental offsets. Using newly-collected data on wetland conservation and offsets, we apply this framework to evaluate a set of decentralized markets in Florida, where land developers purchase offsets from long-lived producers who restore wetlands over time. We find that offsets led to substantial private gains from trade, creating $2.4 billion of net surplus from 1995–2020 relative to direct conservation. Offset trading also generated new hydrological externalities. A locally differentiated Pigouvian tax would have prevented $1.6 billion of new flood damage while preserving more than two-thirds of the private gains from trade.

DOI

10.1257/aer.20231016

Volume

116 (5)

Pages

1723-1764

Language

en

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BibTeX

Sources

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