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Products: Roumasset, James

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Valuing Indirect Ecosystem Services: the Case of Tropical Watersheds

Mitigating the harmful effects of development projects and industries (negative environmentalism) is inadequate, especially in resource-dependent economies whose resources are at risk from other forces. While positive environmentalism includes conservation projects, the non-market benefits of such projects are difficult to evaluate. This paper provides and illustrates a method for evaluating the indirect, watershed benefits of a tropical forest, without resorting to survey methods. The conservation of trees prevents a reapportionment from groundwater recharge to runoff that would otherwise occur. The value of the water saved is then valued at the shadow prices obtained from an optimizing model. An illustration of the model shows that watershed conservation projects may have very high payoffs, even before assessing existence values and other forest amenities.

working paper

Control of Invasive Species: Lessons from Miconia in Hawai'i

 The threat of invasive species stems from their ability to rapidly and irreversibly change ecosystems and degrade the value of ecosystem services. Optimal control of a pre-established exotic pest minimizes the costs of population reduction plus the residual damages from the remaining pest population. The shrubby tree, Miconia calvescens, is used to illustrate dynamic policy options for a forest invader. Potential damages to Hawaii's forest ecosystems are related to decreased aquifer recharge, biodiversity, and other ecosystem values. We find that population reduction is the optimal management policy for the islands of Oahu, Maui, and Hawaii. On the island of Kauai, however, optimal policy calls for deferring control expenditures until the (larger) steady state population is reached.

working paper

Prevention, Eradication, and Containment of Invasive Species: Illustrations from Hawaii

Invasive species change ecosystems and the economic services such ecosystems provide. Optimal policy will minimize the expected damages and costs of prevention and control. We seek to explain policy outcomes as a function of biological and economic factors, using the case of Hawaii to illustrate. First, we consider an existing invasion, Miconia calvescens, a plant with the potential to reduce biodiversity, soil cover, and water availability. We then examine an imminent threat, the potential arrival of the Brown Treesnake (Boiga irregularis). The arrival of the snake to Guam has led to native bird extirpations, power outages, and health costs.

Published: Burnett, K., Kaiser, B., Pitafi, B. A., Roumasset, J., 2006.  Prevention, eradication, and containment of invasive species: Illustrations from Hawaii.  Agricultural and Resource Economics Review, 35 (1), 63-77.

working paper version

Discontinuous extraction of a nonrenewable resource

This paper examines the sequence of optimal extraction of nonrenewable resources in the presence of multiple demands. We provide conditions under which extraction of a nonrenewable resource may be discontinuous over the course of its depletion.

Published:  Im, E. I., Chakravorty, U. and Roumasset, J., 2006, Discontinuous extraction of a nonrenewable resource. Economics Letters, 90 (1), 6-11.

Sustainable Growth with Environmental Spillovers

In this paper, we apply the approach of Ramsey and Koopmans to the problem of optimal and sustainable growth. Under plausible assumptions, intertemporal neutrality implies that the optimal growth path is sustainable without the contrivance of a sustainability constraint. The model is extended to cases involving environmental disamenities. The solutions equivalently solve the problem of maximizing net national product adjusted for depreciation in natural capital and environmental effects. Green net national product in this framework is constant over time, thus avoiding the paradox of declining sustainable income.

Published: Endress, L. H., Roumasset, J. A. and Zhou, T., 2005. Sustainable growth with environmental spillovers.  Journal of Economic Behavior & Organization, 58 (4), 527-547.

Specialization and non-renewable resources: Ricardo meets Ricardo

The one-demand Hotelling model fails to explain the observed specialization of non renewable resources. We develop a model with multiple demands and resources to show that specialization of resources according to demand is driven by Ricardian comparative advantage while the order of resource use over time is determined by Ricardian absolute advantage. An abundant resource with absolute advantage in all demands must be initially employed in all demands. When each resource has an absolute advantage in some demand, no resource may be used exclusively. The two-by-two model is characterized. Resource and demand-specific taxes are shown to have significant substitution effects.

Published: Chakravorty, U., Krulce, D., and Roumasset, J., 2005.  Specialization and non-renewable resources: Ricardo meets Ricardo.  Journal of Economic Dynamics and Control, 29 (9) 1517-1545.

Some Resource Economics of Invasive Species


Pitafi, B. and J. Roumasset, 2005.

Mitigating Runoff As Part of an Integrated Strategy for Nearshore Resource Conservation

This report first presents theoretical considerations for integrated resource management of forested watershed and nearshore resources, then estimates current economic benefits from nearshore resources (beaches and reef) as well as expected economic benefits, in the form of preserved nearshore resource benefits, from conservation of forest resources.

Uhero project report

Optimal Management of a Renewable and Replaceable Resource: The Case of Coastal Groundwater


Published: Roumasset, J., Krulce, D. and Wilson, T., 1997. Optimal management of a renewable and replaceable resource: The case of coastal groundwater. American Journal of Agricultural Economics, November 1997. Reprinted in Easter, W. and Renwick, M., 2004. Economics of Water Resources, Ashgate.

Endogenous Substitution Among Energy Resources and Global Warming

The theory of resource extraction has focused primarily on extraction when there is a single, homogeneous demand for the resource. In reality, however, we observe the simultaneous extraction of different resources such as oil, coal, and natural gas and multiple demands such as trasportation, residential and commercial heating, and electricity generation. This paper develops a model with multiple resources and grades and multiple demands. The model is simulated with extraction cost, estimated reserves, and energy demand data for the world economy. It is shown that if historical rates of cost reduction in the production of solar energy are maintained, more than 90 percent of the world's coal will never be used. The world will move from oil and natural gas use to solar energy. Global temperatures will rise by only about 1.5–2 degrees centigrade by the middle of the next century and then decline steadily to preindustrial levels, even without carbon taxes. These results are significantly lower than those predicted by the Intergovernmental Panel on Climate Change and suggest that the case for global warming may be seriously overstated.

Chakravorty, U., Roumasset, J., Tse, K., 1997. Endogenous substitution among energy resources and global warming.  Journal of Political Economy, 105 (6), 1201-1234.  Reprinted in Hoel, M. Recent developments in environmental economics. Edward Elgar, 2004.

Efficient Groundwater Pricing and Intergenerational Welfare: The Honolulu Case


working paper

Environmental Valuation and the Hawaiian Economy

Economic planning and policy analysis are commonly criticized for their failure to properly account for adverse effects of economic development on the environment and other interactions between nature and the market economy. The limited and piecemeal curbs on land development projects, e.g. as provided by environmental impact requirements, fail to diagnose the major negative impacts of the economy on development and to direct available resources to the most serious environmental problems in a cost-effective manner.

working paper

Inter-district Water Allocation with Conjunctive Use


Published: Roumasset, J. and Smith, R., 2001.  Inter-district water allocation with conjunctive use. Water Resources Update, 118, 68-73.

Constrained conjunctive-use for endogenously separable water markets: managing the Waihole-Waikane aqueduct

An internal solution to an optimal control problem involving conjunctive-use of surface and groundwater may be inapplicable if water is not sufficiently fungible across space and time. We provide a more general solution and apply it to the problem of allocating a limited amount of water from the Ko‘olau mountains to two Oahu water districts separated by those mountains. The solution involves initially allocating all of the mountain water to the district supplied by groundwater but eventually allocating all of the water to the district supplied by surface water. The conditions for an internal solution hold only in the intervening years when some mountain water is allocated to each district.

Published: Smith, R. B. W. and Roumasset, J., 2000.  Constrained conjunctive-use for endogenously separable water markets: managing the Waihole-Waikane aqueduct.  Agricultural Economics, 24 (1). 61-71.

Privatizing Public Services with Externalities: Water and Wastewater Systems


Published: Roumasset, J., 2000. Privatizing public services with externalities: water and wastewater systems,” Water Resources Update, 117 (October 2000).

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