Opportunity Cost of Environmental Conservation in the Presence of Externalities: Application to the Farmed and Wild Salmon Trade-Off in Norway

Abstract

Estimation of the opportunity cost is necessary for the economic assessment of environmental conservation policies. This paper considers the case where an environmental good is negatively affected in the process of the production of marketable goods. In the presence of externalities, conservation implies the undertaking of abatement measures by polluters. A relevant measure of opportunity cost in these settings is the abatement cost required to preserve or restore a unit of the environmental good in question. Current economic literature lacks an established methodology for deriving such measures, as it commonly focuses on pricing pollutants rather than the natural stocks affected by them. This paper uses a non-optimal valuation approach suggested by Fenichel and Abbott (2014) as a point of departure and develops a framework for deriving the opportunity cost of conservation as the cost of externality abatement per unit of environmental good. An empirical illustration is provided for the case of the farmed and wild salmon trade-off in Norway in light of the current pollution control regulations.

Cost-benefit analysis of aquaculture expansion in Arctic Norway

“…The challenges is, however, to distinguish between impacts from aquaculture activity and from other factors influencing the state of the wild salmon, and in turn to estimate the loss of income experienced in the Tromsø-region. Nikitina (2018) analyzed statistically the relationship between aquaculture production and the number of wild salmon returning to nearby rivers to spawn. She applied time-series data for 2005-2015 from all Norwegian salmon rivers and accompanying aquaculture facilities.…”

The impact of environmental regulation on regional economic growth: A case study of the Yangtze River Economic Belt, China

“…To a certain extent, this inhibits the iteration and upgrading of enterprise products and affects enterprise income, which is not conducive to enterprise economic growth. When command-based environmental regulation is implemented, the cost of environmental pollution control decreases year by year, and the investment in production and technological innovation increases year by year, and when both inputs reach a stable critical point, the overall level of regional economic development remains stable and improves [ 26 ]. Based on this, the first hypothesis is proposed.…”

To Tell or Not to Tell: Preference Elicitation with and without Emphasis on Scientific Uncertainty

“…However, it remains to be statistically verified that there is a negative relationship between migrating wild juvenile salmon and farmed salmon biomass in Norwegian fjords (Nikitina 2019).…”