Sacramento River Conference Mark Buckley Environmental Incentives April 9, 2007

1. Negative Offsite Impacts of Ecological Restoration: Understanding and Avoiding Conflict Sacramento River Conference Mark Buckley Environmental Incentives April 9, 2007 Fricker Mark Buckley, Environmental Incentives

2. How do we conserve and restore large/landscape scale natural processes? • Conservation is limited to areas unwanted by other land uses. • Area characteristics that promote natural processes are often beneficial to other land uses as well. • Conversion of land use is often the only way to improve natural processes for valuable landscapes. TNC Mark Buckley, Environmental Incentives

3. Land use • Inner River Zone and Conservation Area (pre-restoration) Mark Buckley, Environmental Incentives

4. Impacts of Riparian Restoration on Agriculture • Weeds and pests (vertebrate and invertebrate) • Disturbances • fires • out of channel flood flows • Endangered species • Trespassing • Pollinators and pest control • Cultural • Financial • tax revenues • economies of scale for production Buckley Buckley SF Chronicle Mark Buckley, Environmental Incentives

5. Impacts of Farmers on SRCA Restoration and Conservation • Increased usage of chemicals • Removal of endangered species • Increased fencing, riparian vegetation removal, and rip-rapping • Political activity to reduce the full project area from 217,000 acres to 80,000 acres (2002) • 4 of 7 counties have opted out of outer zone participation • Colusa enacted more stringent limitations on restoration projects Buckley Buckley Mark Buckley, Environmental Incentives

6. U.S. Census of Agriculture 1987-2002 • Farmers in SRCA are doing worse than others: • % decrease in total acreage greater than CA as a whole • Avg. farm size has dropped 10 % faster than CA • Total sales went up 55% faster in CA • Farmers in SRCA are doing better than others: • Number of farms has gone down in CA, but up in SRCA • All size categories lost farms for CA, all size categories EXCEPT over 1000 acres went up in SRCA • Avg. total farm production expenses grew 17% faster for CA • Avg market value of farms in SRCA increased faster than CA • Orchard acreage increased 33% for CA, 54% for SRCA Mark Buckley, Environmental Incentives

7. Markets: Function and Failure • Externalities caused by consumption exist for rival goods only • Externalities caused by degradation exist for all goods Mark Buckley, Environmental Incentives

8. Interdependence of Restored and Developed Areas pollution, edge effects, barriers - habitat, migratory routes, nutrition + Restored Natural Areas Socially Developed Areas - weeds, pests, fires, endangered species + ecosystem services (air and water quality, wildlife) Mark Buckley, Environmental Incentives

9. Ecological and Social Compatibility of Restoration Effects by Land Type Pairing • Positive externalities are generated under social compatibility • Negative externalities are generated under social incompatibility Mark Buckley, Environmental Incentives

10. Negative Offsite Impacts (Externalities) of Restoration • Mutually Undesirable • Indirect effect • Technical or cost problem • Generated because costly to control or effective control options do not exist • Direct Conflict • Direct effect • Tradeoffs occur • Bargaining potentially necessary/beneficial Lack of bargaining resolution success can lead to government intervention Mark Buckley, Environmental Incentives

11. Cooperative Outcome • Use Nash Bargaining Solution as a target max ∏(ui – di) • Universally individually-rational • Most stable = most individual gains = most equitable • Gains measured from non-cooperative outcome, NOT from prior case • Non-cooperative outcome is a function of pre-existing state • Net welfare gains possible when non-zero sum Present State Fully Restored Fully Developed Possible Outcomes Mark Buckley, Environmental Incentives

12. Farmer defend Restorationist restore nothing nothing Basic Restoration and Defense Decisions Restoration with defense Restoration only No Restoration Mark Buckley, Environmental Incentives

13. Restoration Decisions with Mitigation Restoration with defense Restoration only Restoration with mitigation and defense Restoration with mitigation No Restoration Farmer defend nothing restore Restorationist defend restore with mitigation nothing nothing Mark Buckley, Environmental Incentives

14. Weeds Mark Buckley, Environmental Incentives

15. 10 Year, 1 Farmer Weed Simulations B C ecological effects (+) A agricultural effects (-) Mark Buckley, Environmental Incentives

16. Conclusions • Compatibility of other land uses can influence restoration success • Ecological and social compatibility both influence existence of externalities, negative externality resolution options, and necessary tradeoffs • Beliefs and expectations of all parties influence outcomes and potential cooperative gains • Mitigation and cooperation can lead to mutual gains Mark Buckley, Environmental Incentives

17. Acknowledgements • National Science Foundation (Biocomplexity and Economics programs) • STEPS Institute for Innovation in Environmental Research • USDA CSREES NRI Managed Ecosystems Program Mark Buckley, Environmental Incentives

18. Mark Buckley, Environmental Incentives