Environmental and Resource Economics

, Volume 64, Issue 2, pp 255–273 | Cite as

The Opportunity Costs of Conservation with Deterministic and Probabilistic Degradation Externalities

  • Esther Blanco
  • Maria Claudia Lopez
  • James M. Walker
Article

Abstract

This experimental study examines variations in the opportunity cost of conservation in two linear appropriation games that include symmetric and asymmetric subject payoffs. In the first game, appropriation leads to deterministic degradation in the value of a shared resource. In the second game, appropriation leads to both deterministic and probabilistic degradation, introducing endogenous uncertainty in the value of the opportunity cost of conserving the shared resource. The results show that subjects systematically decrease appropriation the lower the opportunity cost of conservation, and the addition of probabilistic degradation leads to further decreases in group appropriation. As conjectured, the response of individual subjects to the addition of probabilistic degradation is conditional on their expected marginal net benefits to appropriate, which depend in turn on their first order beliefs of others’ appropriation. The overall decreases in appropriation due to probabilistic degradation, however, are not large enough to offset decreases in expected efficiency due to expected losses in the value of the shared resource.

Keywords

Asymmetry Social dilemma Cooperation Laboratory experiment 

JEL Classfication

D7 H4 C90 

Supplementary material

10640_2014_9868_MOESM1_ESM.docx (25 kb)
Supplementary material 1 (docx 25 KB)

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Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  • Esther Blanco
    • 1
    • 4
  • Maria Claudia Lopez
    • 2
    • 4
  • James M. Walker
    • 3
    • 4
  1. 1.Department of Public FinanceUniversity of InnsbruckInnsbruckAustria
  2. 2.Department of Community SustainabilityMichigan State UniversityEast LansingUSA
  3. 3.Department of EconomicsIndiana UniversityBloomingtonUSA
  4. 4.The Vincent and Elinor Ostrom Workshop in Political Theory and Policy AnalysisIndiana UniversityBloomingtonUSA

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