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Abstract
This analysis presents a stylized depiction of a government program
such as the wetland reserve, where a social planner determines
which types of wetlands are brought into production and which are left
idle. If the planner is concerned with the dispersion or variance of benefits
across producers as well as the mean, his decision problem is algebraically
equivalent to a mean-variance portfolio model for a risk-averse
individual. The model also identifies an efficient frontier of policies under
various “inequality tolerance” levels. Based on available survey data,
I apply this method to determine the effects of wetland dispersion on
producers’ income.