Fever From the Lost Forest: Impacts and Management of Health Externalities From Land Use Change in Brazil
31 Pages Posted: 8 Jul 2020
Date Written: December 15, 2019
Land use change alters the movement of people, pathogens, and vectors, creating novel pathways for disease emergence. A growing body of empirical evidence finds that land use change affects the incidence of vector-borne disease. When management decisions and policy do not consider this relationship, there is potential social welfare loss through health externalities. Herein we develop a dynamic model of optimal land use where both the state and control variable contribute to a negative externality- disease incidence. We compare the net social benefits and path of land conversion under an optimal management regime with scenarios in which the externalities are ignored. Using a two-tiered payment mechanism we demonstrate how the externalities can be internalized by adjusting the payments along the dynamic path of land use. The model is calibrated using malaria incidence and economic data from the Legal Amazon of Brazil. We find that ignoring the health costs of land use change reduces social net benefits of land management and impacts optimal land conversion trajectories. We then simulate the dynamic path of socially optimal management and examine the sensitivity of our predictions by modifying the model assumptions.
Keywords: Environmental externality; land use change; malaria; ecosystem services; vector-borne disease
JEL Classification: Q24; Q56; Q57; Q20; Q15
Suggested Citation: Suggested Citation