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Optimal restoration of common property resources under uncertainty
Published in Elsevier Ltd
Volume: 77
Mining for minerals, while a good source of income to the local economies, results in significant environmental damages. The Aravalli Mountain Range in India protects Delhi and adjoining areas from desertification risks posed by the Thar desert through acting as a physical barrier. However, it has become degraded over time due to persistent illegal mining and encroachment by real estate developers. Restoring the Aravallis will not only reduce the threat of desertification but also help generate valuable ecosystem services, such as water supply, to the nearby cities. Yet restoration efforts undertaken thus far have remained largely unsuccessful due to a lack of sufficient financial incentives. This study asks whether financial incentives for afforestation, such as desertification prevention permits and water-based payments for ecosystem services, can promote restoration of mineral rich commons in the Aravallis. It further seeks to explore the role of risk of restoration failure in discouraging conservation effort amongst communities. We design an incentive structure through which local communities benefit from water and land based payments resulting from restoration. We develop a dynamic optimization model of afforestation decisions in presence of land use change related risk from mining and real estate mafia to derive implications for the long run sustainability of the commons. Results indicate that desertification prevention permits and water payments can be useful towards incentivizing communities to take up protection of the degraded lands. However, when presented with the threat of failure of the restoration project due to illegal mineral extraction, community's optimal afforestation level declines considerably. © 2022 Elsevier Ltd
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