ABSTRACT. Biodiversity conservation through land-use systems on private land is becoming a pressing environmental policy issue. Agroforestry, such as shade-coffee production, contributes to biodiversity conservation. However, falling coffee prices force many coffee growers to convert their sites into economically more attractive land uses. We performed an economic evaluation of coffee pollination by bees in two distinct tropical regions: an area of low human impact with forests neighboring agroforestry in Indonesia and an area of high human impact with little remaining forest in Ecuador. We evaluated bee pollination for different forest-destruction scenarios, where coffee yields depend on forests to provide nesting sites for bees. We used two novel approaches. First, we examined how coffee net revenues depend on the pollination services of adjacent forests by considering berry weight in addition to fruit set, thereby providing a comprehensive evaluation. Second, we determined the net welfare effects of land-use changes, including the fact that former forestland is normally used for alternative crops. In both regions, crop revenues exceeded coffee pollination values, generating incentives to convert forests, even if owners would be compensated for pollination services. The promotion of certified "biodiversity-friendly" coffee is a feasible option to maintain shade-coffee systems. This is of special importance in high-impact areas where only small forest fragments remain. We conclude that a comprehensive economic analysis is necessary to adequately evaluate rainforest preservation for the enhancement of ecosystem services, such as pollination.

We develop a nonlinear mathematical optimization program for investigating the economic and environmental implications of wind penetration in electrical grids and evaluating how hydropower storage could be used to offset wind power intermittence. When wind power is added to an electrical grid consisting of thermal and hydropower plants, it increases system variability and results in a need for additional peak-load, gas-fired generators. Our empirical application using load data for Alberta's electrical grid shows that 32% wind penetration

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Conservation payments can be used to preserve forest and agroforest systems. To explain landowners' land-use decisions and determine appropriate conservation payments, it is necessary to focus on revenue risk. Marginal conditional stochastic dominance rules are used to derive conditions for determining the conservation payments required to guarantee that the environmentally preferred land use dominates. An empirical application to shaded coffee protection in the biologically important Chocó region of West Ecuador shows that conservation payments required for preserving shaded coffee areas are much higher than those calculated under risk-neutral assumptions. Further, the extant distribution of land has strong impacts on the required payments.

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