Natural vs. financial insurance in the management of public-good ecosystems
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Chronological data
Date of first publication2006-11-22
Date of publication in PubData 2024-08-23
Language of the resource
English
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Abstract
In the face of uncertainty, ecosystems can provide natural insurance to risk averse users of ecosystem services. We employ a conceptual ecological-economic model to analyze the allocation of (endogenous) risk and ecosystem quality by risk averse ecosystem managers who have access to financial insurance, and study the implications for individually and socially optimal ecosystem management, and policy design. We show that while an improved access to financial insurance leads to lower ecosystem quality, the effect on the free-rider problem and on welfare is determined by ecosystem properties. We derive conditions on ecosystem functioning under which, if financial insurance becomes more accessible, (i) the extent of optimal regulation increases or decreases; and (ii) welfare, in the absence of environmental regulation, increases or decreases.
Keywords
Ecosystem; Risk; Insurance; Ökosystem; Versicherung; Haftpflichtrisiko
Series title
Number of the series contribution
34