The evolution and empirical estimation of ecological-economic production possibilities frontiers

- Market failure is incorporated into a model of the evolution of an ecological-economic PPF.
- An empirical case of an EEPPF is developed for a watershed using genetic algorithms.
- Row crops compete with regulatory services, but hay is complementary.
- Regulatory services are complementary with one another.
- Considerable regulatory services can be provided with little loss in crop production.

This paper presents a graphical model of an ecological-economic production possibilities frontier (EEPPF) that explicitly considers the roles of market failure and technological asymmetry in the provision of ecosystem goods and services. An empirical example of a 6-dimensional EEPPF is provided using a watershed in Illinois where three provisioning ecosystem services (corn, soybeans, hay) and three regulating services (flood control, water quality, and carbon retention) are the objectives. When aggregated, provisioning and regulatory services form a linear-to-convex EEPPF, but regulatory services can be increased from 10 to over 90% of optimal with a reduction in provisioning services (crops) from 100 to 78% of optimal. While corn and soybeans are shown to form a trade-off with all other ecosystem services, hay is complementary with flood control, water quality and carbon retention. These three regulating services are complementary with one another, with water quality and carbon correlated at 0.80. These results demonstrate the use of GIS, distributed watershed models such as SWAT, and genetic algorithms as a valuable method to estimate empirical EEPPFs.