UC Berkeley

There is a growing literature on what is now termed ecosystem services, including in particular the ways in which the environment augments agricultural productivity. The services are many, they are critical and we are still learning ways in which we can enhance the benefits of positive services and mitigate the damages of negative services. There are many challenges confronting this quest, and in many cases the problems bridge biological and economic systems, necessitating work integrating facets of biology, ecology and economics in a holistic framework.

A few of these challenges are gaining particular prominence in the literature. Measuring the services provided in terms of monetary value, what might seem like an initial step in the process, is proving to be a stumbling block as valuation methodologies are many and produce conflicting measures. In this thesis I look at the existing valuation studies for a particular context -- crop pollination by bees -- and develop a framework that relates the existing methodologies, explain the differences in values they produce, and then propose a new approach that better incorporates the biology of the plants and economics of the farmer.

Another set of challenges arise from the fact that the benefits of ecosystem services are heterogeneous over space and time. More than that, actions at a particular location and time will often have dynamic consequences for other locations on the landscape and into the future. Analysis that incorporates both spatial and temporal dynamic elements are complex, and few studies have been able to effectively deal with both and result in meaningful policy implications. Continuing within the context of crop pollination, I address a trade-off that is of growing concern to producers -- determining whether to invest in the managed and recently troubled honey bee for crop pollination, or whether to invest in on-/off-farm habitat that can enhance native bees providing pollination services. The results of the model demonstrate that even in cases when an ecosystem and a domesticated organism/technology provide substitutable services -- as perhaps the case for native bee and honey bee pollination, investments to enhance the respective services will not necessarily be substitutable but can rather be necessary compliments.

Ultimately, these research efforts aim to inform appropriate policy and the potential role for government intervention and/or improvements to market institutions. In most cases, ecosystem service problems boil down to externality problems. Even barring the problems of quantifying these externalities at the margin or internalizing them over space and time, the policy implications are still not always clear. There are still in many cases important institutional organizational considerations, such as when the product used to substitute or mitigate the service is provided by a patent-generated monopoly. In such cases, the monopolist's restricted supply of the product affects the role of government intervention. In the last part of this thesis I look at the case of pesticides and the rising biological resistance to them, addressing the implications of having a patent-generated monopoly producer of the pesticide on the buildup of resistance to the product. The results of the dynamic optimization model argue for sensitivity of policy to market structure and the life of relevant patents.