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Ecological Thresholds

Funding: NSF

Participants: Lead by Tom Meixner (University of Arizona), UNM participants under the SILPE umbrella include Craig Broadbent, David Brookshire, and Don Coursey

Ecological ThresholdsOne of the fundamental properties of private goods is known as satiation or a situation where the increased benefit from the consumption of the good is no longer larger than the increased costs of the good. This principle has been studied intensely for private goods and has been found to hold true. While this research has been conducted very little attention has been paid to this principle in the context of a public good. That is are there threshold levels where individuals no longer desire more of the resource or is there a threshold where individuals will no longer donate to a public good as the extra benefit from donation is less than the costs of donation. In economics this principle is known as the marginal decision rule where individuals will purchase a good up until the extra benefit per dollar from that good is at least equal to the extra benefit from the purchase of another good. Transform this principle into donation plans for two different public goods and we can test if the marginal decision rule holds true in this context. In addition this will allow us to determine if there are threshold levels for these public goods.

To test if thresholds do exist in public goods as with private goods we are using two different river systems in southeastern Arizona, the San Pedro River and the Santa Cruz River. These two river systems have distinctive differences in water availability and vegetation composition. At the moment we are collaborating with a team of scientists to understand the biological differences between these two river systems. We will then use this information in an economic experimental setting to allow participants to make choices of how much to donate to the different river systems through time. For instance, one could choose to start donating to the San Pedro River system and after 10 years of donation to the system the individual may find the level of restoration or the composition of the system in the system to be at a level where the individual will now start donating to the Santa Cruz. If this occurs this demonstrates a threshold exists where participants may have hit a satiation point with the San Pedro.

This type of experimental setting will be carried out of a 50 year time horizon allowing participants to choose between the two different river systems. This type of experimental design will allow us to determine if the principles of consumer theory hold true for public goods where there is an incentive for individuals to free ride, or not report their true value for the good as there are external benefits that occur as others donate to protect or restore the good.

 

Copyright 2012