Essays on land use and externalities

One of the important reasons for biodiversity loss is the loss of habitats that occurs due to increasing human activities. It is a challenge to manage landscapes simultaneously for both human productivity and biodiversity conservation. Conservation actions do not occur in a vacuum, but these decisions unfold on a landscape where often multiple demands compete for land. Setting aside land for biodiversity conservation or for provision of open space means these lands can not be used for production and may increase pressure to develop land elsewhere.;The first essay in this dissertation incorporates feedback effects that can occur on a landscape as a consequence of a planner's decision to buy land for conservation. The model includes feedback effect for the risk of development faced by remaining sites on the landscape as well as impacts of biological interactions among sites for the biodiversity of the landscape. Along with the feedback effects, I explore the trade offs involved in a dynamic reserve selection process. Using stochastic dynamic programming along with heuristic rules I show that considering the feedback effects helps target the conservation funds to sites that need protection and minimize the impacts of the displaced development pressure on the neighboring sites.;With the increased interest in biofuel production, it is important to understand the benefits and costs associated with resource allocation choices made of land use decisions. The second essay estimates potential nitrate pollution cost for private well owners associated with land use change. This essay develops a regression model to explain the relationship between groundwater nitrate levels in private wells in Olmsted County, Minnesota and a number of variables that may affect nitrate levels in groundwater including land use practices. Coefficients of the regression model are then employed to estimate the potential nitrate pollution levels under alternative land use scenarios. Finally an estimate of the costs of cleaning up nitrate pollution for private wells in the county is calculated for each land use scenario. It is shown that the profits generated by the assumed land use changes are greater than the pollution costs incurred for the respective scenarios.