This paper develops a bioeconomic model to investigate the effects of wildlife damage compensation programs, and income taxes, on both wildlife population and social welfare. Wildlife damage compensation programs generally compensate local people after wildlife damage occurred. In our model, the compensation program is financed by government tax revenue. We clarify how the production and consumption behaviors of local people change after introducing income taxes for the compensation program. Based on the steady-state analysis and numerical simulation, we conclude that with appropriate taxation policy under certain conditions, a self-financing wildlife damage compensation programs can both increase wildlife population and improve local social welfare, even under the circumstance where compensation programs financed by external resources lower them, which is obtained in the previous studies.
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