Putting a price on how land use impacts environment

UND economist Haochi Zheng studies the balance between economics and the environment

Haochi Zheng, associate professor in UND’s Department of Earth System Science & Policy, specializes in environmental and ecological economics. Photo by Patrick C. Miller/UND Today.

Is there such a thing as “optimal” pollution?

According to Haochi Zheng, an associate professor in UND’s Department of Earth System Science & Policy, pollution can be described as optimal from an economic perspective when its benefit to society outweighs the cost to the environment.

“I often ask my students whether they think cutting off all emissions or stopping all pollution is the only solution because with anything you produce, pollution is a byproduct,” Zheng explained. “If you really want something that’s pollution free, you must cut your production to zero, but we can’t really do that.

“We want an annual GDP (gross domestic product) increase of 5 percent or more, which means we have to keep our market running and the economy going,” she continued. “There must an amount of pollution that’s acceptable and efficient to society. It’s a matter of how much we’re willing to pay or sacrifice to reduce pollution.”

This, Zheng said, means establishing a balance between meeting society’s needs and protecting the environment. In economics, the optimal amount of pollution is what society decides is efficient, although she admitted that an ecologist or biologist might not think in those terms.

“Economics is all about tradeoffs – how much is gained compared to what the cost will be,” she noted. “That’s why economics is different from other fields.”

Studying North Dakota climate

In eastern North Dakota, a wet fall and early winter resulted in corn and other crops going unharvested. Funded by the National Science Foundation and North Dakota EPSCoR, the Center for Regional Climate Studies uses an interdisciplinary approach to studying climate impacts in the Northern Plains Region. Photo by Patrick C. Miller/UND Today.

In addition to teaching and applying her expertise in environmental and ecological economics to a variety of projects, Zheng is a member of a research team with the Center for Regional Climate Studies (CRCS), funded by the National Science Foundation (NSF) and North Dakota EPSCoR (Established Program to Stimulate Competitive Research).

“I mainly work on land use in terms of how a landowner makes decisions, not only how are they going to use a particular type of land, but also what kind of management practice they are going to engage in,” Zheng said.

“Will they grow corn or decide to change the use by enrolling in a conservation project or program? What kind of environmental consequences will be related to those decisions? And what will be the economic impact from these environmental changes?” she asked.

The CRCS research team brings an interdisciplinary scientific approach to studying climate, with team members specializing in such areas as atmospheric science, agriculture, physics, biology, geology, hydrology, computer modeling and simulations.

As an economist, Zheng adds a human component to how climate and weather impacts North Dakota agriculture.

“What I do is link the natural systems to human society,” she said. “I study how farmers and landowners make decisions. Those decisions will, of course, be affected by the climate – temperature and precipitation – plus market and policy drivers. This affects their decisions about what crops to grow and soil management – tillage or no till? How much fertilizer and how much irrigation will be required?”

Zheng grew up in Shanghai, China, and majored in international economics at Fanda University, China. She earned her master’s degree at Yokohama National University in Japan, studying the economics of developing countries. Zheng came to UND in 2010 after completing her Ph.D. in agricultural and applied economics at the University of Minnesota.

It wasn’t until after coming to the United States that she became interested in environmental issues.

Economics and environment

“I felt like all the economic tools I had learned or studied could be perfectly applied to environmental issues,” Zheng said. “While we understand the mechanism for landowners to make decisions from an economic perspective, we also need to know how those decisions relate to an economic evaluation of the environmental consequences.”

As a member of the research CRCS team, Zheng studies the impacts of climate variation on regional agricultural production, land use and its feedback to ecosystem services. Collaborating with other CRCS scholars, she conducts research on how market forces and policies integrate with environmental factors to jointly affect crop production and individual landowners’ decision-making on land use and management using a systematic approach.

As the Northern Plains Regions continues to experience wet and dry climate cycles, those changes will affect land-use decisions.

“Over the long term, these decisions will have a circular feedback impact,” Zheng said. “Humans make choices affected by nature, and humans make choices with consequences to nature. In a sense my work plays a very important role in the original design of the CRCS project.”

The Center for Regional Climate Studies is funded by the National Science Foundation, Grant No. NSF EPSCoR Award IIA-1355466.