Discount Rates in Conservation

For my PhD work at the University of Tennessee in the Department of Ecology and Evolutionary Biology, I am using a combination of surveys with optimization models to explore and depict the importance of discount rates in conservation.

 

Chapter 1: How do traditional pastoralists weight future environmental benefits when managing natural resources?

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Natural resource management involves balancing benefits and costs that accrue through time. How individuals and local communities weight such tradeoffs can profoundly influence how they use and conserve resources. We surveyed >500 Fulani in Benin about their time preferences regarding financial, ecological, and agricultural goods, summarizing these in the form of discount rates. Individual discount rates were high, perhaps reflecting resource insecurity. These discount rates declined through time; people valued the future more than would be assumed based on constant discounting. Discount rates were higher for financial goods than environmental or agricultural goods. Using optimal control models, we illustrate how our estimates of discount rate change recommendations for optimal management of nonlethal and lethal harvesting of slow-growing, African mahogany, Khaya senegalensis (example of K. senegalensis with high levels of non-lethal harvest pictured on the right). While members of this traditional grazing community discount future benefits at a high rate, they do so in ways that contrast with conventional economic theory and favor long-term use of non-timber forest products. 

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Hyman, A.A., Gaoue, O., Tamou, C. and P.R. Armsworth. 2020. How do traditional pastoralists weight future environmental benefits when managing natural resources? Conservation Letters.  https://conbio.onlinelibrary.wiley.com/doi/pdf/10.1111/conl.12770

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Chapter 2: How discount rates affect land protection strategies? 

When seeking to protect the environment, should decision-makers favor actions that will make immediate differences or those promising long-term gains? The choice depends on how individuals weight benefits and costs experienced at different future times, something temporal discount rates can be used to represent. Despite the ubiquity of inter-temporal tradeoffs in environmental decision-making, little is known about time preferences of relevant policymakers and practitioners. Taking land protection decisions as an example, we use experimental-choice surveys to show that practitioners at environmental NGOs display high variability in how they evaluate benefits and costs through time. Survey participants had a median discount rate of 11.9%, significantly higher than values traditionally used in environmental policy. Moreover, discount rates ranged widely from much larger values to negative values. When asked to compare financial amounts through time, practitioners used constant discount rates. When asked about an environmental attribute (protected land), they used discount rates that declined through time. We illustrate how such differences in discounting influence conservation priorities today. Through applications to forest protection across the conterminous United States and species protection within the Appalachian Mountains, we show that differences in how practitioners value the future change today’s protection priorities. Specifically, we find that discount rate choices change priority locations for investment if threat drivers have spatio-temporal variation, as is the case for climate change impacts. As the global conservation community re-envisions protection goals, how we weight benefits and costs through time will determine the best paths forward.

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Hyman, A.A., Gengping Zhu, Diane Le Bouille, and Paul R. Armsworth. 2022 Disagreements about how to value the future among conservationists leads to conflicting recommendations about where to protect today. Biological Conservation. https://www.sciencedirect.com/science/article/abs/pii/S0006320722001380

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