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Gollier, Christian
(2017)
Valuation of natural capital under uncertain substitutability.
TSE Working Paper, n. 17-813, Toulouse
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Abstract
Natural capital is complex to price notably because of the high uncertainties surrounding the substitutability of its future ecosystem services. We examine a two-tree Lucas economy where both the economic growth and the degree of substitutability are uncertain. We show that the uncertain substitutability raises the expected value of the service and the rate at which it should be discounted. The value effect dominates the discounting effect, so the economic value of natural capital is increased. When the prior beliefs about substitutability are Gaussian, the economic value of future ecosystem services goes to infinity for finite maturities.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | May 2017 |
| Place of Publication: | Toulouse |
| Uncontrolled Keywords: | Asset pricing, CCAPM beta, discounting, bioeconomics |
| JEL Classification: | G12 - Asset Pricing; Trading volume; Bond Interest Rates Q01 - Sustainable Development |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Institution: | Université Toulouse 1 Capitole |
| Site: | UT1 |
| Date Deposited: | 18 May 2017 12:14 |
| Last Modified: | 02 Apr 2021 15:55 |
| OAI Identifier: | oai:tse-fr.eu:31743 |
| URI: | https://publications.ut-capitole.fr/id/eprint/24094 |
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