Environmental and Distributional Impacts of Conservation Targeting Strategies

Resource purchasing funds have become a major tool for environmental protection and resource conservation. These funds use various strategies to target resources for conservation, the choice of which may lead to striking differences in environmental performance. This paper develops an analytical framework to analyze the impact of alternative targeting strategies on different interest groups, including consumers, producers, labor, and environmentalists. We show that ignoring the output price effect of purchasing funds reduces environmental gain and in some cases may make a purchasing fund counterproductive, and we argue that the optimal design of targeting criteria must consider the price feedback effect.