Dec 17, 2024 · 1 hr 2 minEconomics, markets, and policy all have significant impacts on human behavior and decision making. Nick Parker is an environmental economics professor at the University of Wisconsin-Madison and the Hoover Institution who has been studying the human interaction with wolves, and especially the indirect effects wolves have on environments they live, to examine if it was possible for wolves to actually benefit humans and reduce threats to human lives and property. He found that the reintroduction of wolves into Wisconsin and other US States led to a 25% decrease in deer vehicle collisions. The research suggests that two thirds of this reduction is due to how wolves change deer behaviour rather than just eating deer. The wolves prefer to travel along strait corridors such as roads, creeks, and railway lines leading to fewer deer in the vicinity of roads. The benefits from wolves was found to be 63 to one when the costs associated with human mortality, injuries, and damage to vehicles was compared to the compensation payments the state was making to ranchers for livestock predation.
However, the impact of wolves and deer populations on communities is actually far more complex than just vehicle collisions and predation of livestock. Deer also eat farmers crops, damage gardens, and damage timber, and they can spread Lyme disease. So deer vehicle collisions are only one aspect of the damages caused by over abundance of deer. Wolves also help control subservient predators like coyotes and foxes and and compete with mountain lions and bear. In the US the number one cause of livestock damage is from coyotes. Large deer populations can also provide economic benefits through hunting. All these indirect effects also feeds into the cost benefit analysis question.
Economics is a powerful tool for optimizing natural resource use and it is possible to set up a system where those who benefit compensate those who bear the cost.
“Is it possible to set up a system that those who benefit compensate those who bear the cost. Because, as an economist, I think that's the that's the gold standard for determining the optimal level of any natural resource use that's both the asset and a liability. Like wildlife is the asset and a liability. Some people want more, some people want less. Those who want more should pay for it, and those who bear the cost should be compensated in some way.”
The big challenge is that policy frequently focuses on the direct effects with little consideration of the indirect effects. Nick Parkers’s study on impact of wolves on deer vehicle collisions shows that for policies to be effective the whole system needs to be understood as the secondary, and tertiary effects and how these can be more important than the primary effect.
“If you want long term resource conservation and sustainability, we need policies that cause users of those resources to treat them like they're the owner. Now we might not want to convey ownership, and might not be practical or politically feasible, or even socially desirable, for individuals and groups to own every natural resource. But if we have have policies that encourage them to act as if they own it, then the incentives are going to be lined for long term.”
You can listen to my conversation with Nick parker here.
Nick Parker is the Ilene and Morton Harris Senior Fellow (adjunct) and the Hoover Institution and the Anderson-Bascom Professor of Applied Economics at the University of Wisconsin-Madison.
Send us Fan Mail
