American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands
American Economic Review
(pp. 1723–64)
Abstract
We introduce an empirical framework for valuing markets in environmental offsets. Using newly collected data on wetland conservation and offsets, we apply this framework to evaluate a set of decentralized markets in Florida, where land developers purchase offsets from long-lived producers who restore wetlands over time. We find offsets led to substantial private gains from trade, creating $2.4 billion of net surplus from 1995 to 2020 relative to direct conservation. Offset trading also generated new hydrological externalities. A locally differentiated Pigouvian tax would have prevented $1.6 billion of new flood damage while preserving more than two-thirds of the private gains from trade.Citation
Aronoff, Daniel, and Will Rafey. 2026. "Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands." American Economic Review 116 (5): 1723–64. DOI: 10.1257/aer.20231016Additional Materials
JEL Classification
- D47 Market Design
- D62 Externalities
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Q24 Renewable Resources and Conservation: Land
- Q57 Ecological Economics: Ecosystem Services; Biodiversity Conservation; Bioeconomics; Industrial Ecology
- R14 Land Use Patterns