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Understanding how opportunity cost affects multi-objective conservation investment in the Central and Southern Appalachian Region (USA)

Published online by Cambridge University Press:  04 June 2021

Seong-Hoon Cho Open the ORCID record for Seong-Hoon Cho [Opens in a new window] ,
Young Gwan Lee  and
Gengping Zhu
Seong-Hoon Cho*
Affiliation:
Department of Agricultural and Resource Economics, The University of Tennessee, 2621 Morgan Circle Drive, 314D Morgan Hall, Knoxville, TN37996-4518, USA
Young Gwan Lee
Affiliation:
Division of Resource Economics and Management, West Virginia University, Morgantown, WV26506, USA
Gengping Zhu
Affiliation:
Department of Entomology, Washington State University, Pullman, WA99164, USA
*
Corresponding author: Professor Seong-Hoon Cho, Email: scho9@utk.edu
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Summary

Consensus does not exist for which cost forms (i.e., one accounting solely for explicit cost and the other for both explicit and opportunity costs as in relative opportunity cost) are used in calculating return on investment (ROI) for conservation-related decisions. This research examines how the cost of conservation investment with and without inclusion of the opportunity cost of the protected area results in different solutions in a multi-objective optimization framework at the county level in the Central and Southern Appalachian Region of the USA. We maximize rates of ROI of both forest-dependent biodiversity and economic impact generated by forest-based payments for ecosystem services. We find that the conservation budget is optimally distributed more narrowly among counties that are more likely to be rural when the investment cost measure is relative opportunity cost than when it is explicit cost. We also find that the sacrifice in forest-dependent biodiversity per unit increase in economic impact is higher when investment cost is measured by relative opportunity cost rather than when measured by explicit cost. By understanding the consequences of using one cost measure over the other, a conservation agency can decide on which cost measure is more appropriate for informing the agency’s decision-making process.

Keywords

conservation investmenteconomic impactforest-dependent biodiversitymulti-objective optimizationopportunity cost
Type
Research Paper
Information
Environmental Conservation , Volume 48 , Issue 3 , September 2021 , pp. 192 - 199
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of Foundation for Environmental Conservation

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