This paper demonstrates how the slope of a production possibilities frontier (PPF) can be used to empirically identify the presence of an ecosystem externality. Complementarity between non-market ecosystem services implies the PPF between these services may be upward sloping. In contrast, private landowners that ignore these complementarities will treat non-market ecosystem services as competing products thereby ensuring a downward sloping PPF. Using data from 738 U.S. watersheds, we compare the slope of PPFs on predominately private and predominately public watersheds. We find evidence that private markets are failing to internalize complementarities between forest habitat and two other non-market ecosystem services: instream flows and grazing. In addition, we show how three-stage least squares regression can be used to reduce endogeneity bias associated with more common approaches to estimating ecosystem service relationships.

中文翻译：

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生态系统互补性：来自美国 700 多个流域的证据

本文演示了如何使用生产可能性边界（PPF）的斜率来凭经验识别生态系统外部性的存在。非市场生态系统服务之间的互补性意味着这些服务之间的 PPF 可能向上倾斜。相比之下，忽视这些互补性的私人土地所有者会将非市场生态系统服务视为竞争产品，从而确保 PPF 向下倾斜。使用来自 738 个美国流域的数据，我们比较了主要是私人流域和主要是公共流域的 PPF 斜率。我们发现证据表明，私人市场未能将森林栖息地与其他两种非市场生态系统服务（河内流量和放牧）之间的互补性内在化。此外，我们还展示了如何使用三阶段最小二乘回归来减少与估计生态系统服务关系的更常见方法相关的内生性偏差。