Importing exotic plants and the risk of invasion: are market-based instruments adequate?

Exotic plant species are often intentionally imported into regions outside of their normal range as ornamental plants or as breeding stock, thereby generating benefits for consumers and producers. However, one of the unintended side effects of such introductions is that the exotic plant species may become invasive. Prohibiting sale of this type of exotic plant species, on the basis that it may become invasive, will have social costs in the form of foregone consumer benefits and nursery profits. We develop a model of a private commercial plant breeding industry that imports an exotic plant species into a region. The risk associated with invasion is modeled using a probabilistic 'hazard function', the key determinants of which are the characteristics of the exotic plant and the number of commercial nurseries contributing to its dispersal. We consider the possibility of employing market-based instruments (e.g., Pigovian tax) consistent with the concept of 'introducers pay', to regulate the nursery industry. We then provide an empirical illustration using the historical introduction of saltcedar (Tamarisk spp.) into the United States. Our results indicate that the mere presence of a risk of invasion does not mean that it is socially optimal to prevent commercial sales of an exotic plant species. Indeed, there appear to be plausible forms of the functional relationships involved that require only a modest reduction in the private industry optimum. In contrast, no sales of the exotic plant should occur at all under several sets of assumptions about the level of invasion risk and the linkage between dispersal sites and invasion hazard.