Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands

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 and developers purchase offsets from long-lived producers who restore wetlands over time. We find that offsets led to substantial private gains from trade, creating $2.2 billion of net surplus from 1995??"2018 relative to direct conservation. Offset trading also generated new hydrological externalities. A locally differentiated Pigouvian tax would have prevented $1.3 billion of new flood damage while preserving more than two-thirds of the private gains from trade.

Speaker: Will Rafey, UC Los Angeles

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