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Spatial targeting of payments for environmental services: A tool for boosting conservation benefits

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  • Wünscher, Tobias
  • Engel, Stefanie
  • Wunder, Sven
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    Abstract

    Payments for environmental services (PES) have become an increasingly popular market-based instrument to translate external, non-market environmental services into financial incentives for landowners to preserve the ecosystems that provide the services. However, lack of spatial differentiation in the targeting mechanism may lead to efficiency losses. Addressing this challenge, we construct an applied site selection tool, which takes into account three variables that vary in space: environmental services provided, risks of losing those services, and participation costs. Using data from Costa Rica's Nicoya Peninsula, we empirically test the tool's potential to increase the financial efficiency of the forest-focused PES program in place. Results show that, given a fixed budget, efficiency increases radically if per hectare payments are aligned to landowners' heterogeneity in participation costs, involving opportunity, transaction and direct costs of protection, respectively. Selecting sites based on environmental service potential also moderately increases efficiency. Overall additionality could in the best case be doubled, but remains generally limited due to current low deforestation risks prevailing in Costa Rica. To take advantage of the high efficiency potentials of flexible payments, we propose inverse auction systems as a cost-effective approach for the determination of micro-level participation costs.

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    File URL: http://www.sciencedirect.com/science/article/B6VDY-4RYXSRW-1/1/99c503536fa23a198c294e0e065022be
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    Bibliographic Info

    Article provided by Elsevier in its journal Ecological Economics.

    Volume (Year): 65 (2008)
    Issue (Month): 4 (May)
    Pages: 822-833

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    Handle: RePEc:eee:ecolec:v:65:y:2008:i:4:p:822-833

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    Web page: http://www.elsevier.com/locate/ecolecon

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    References

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    1. Kirchhoff, Stefanie & Colby, Bonnie G. & LaFrance, Jeffrey T., 1997. "Evaluating the Performance of Benefit Transfer: An Empirical Inquiry," Journal of Environmental Economics and Management, Elsevier, vol. 33(1), pages 75-93, May.
    2. Muñoz-Piña, Carlos & Guevara, Alejandro & Torres, Juan Manuel & Braña, Josefina, 2008. "Paying for the hydrological services of Mexico's forests: Analysis, negotiations and results," Ecological Economics, Elsevier, vol. 65(4), pages 725-736, May.
    3. Antle, John M. & Valdivia, Roberto O., 2006. "Modelling the supply of ecosystem services from agriculture: a minimum-data approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(1), March.
    4. Pagiola, Stefano & Arcenas, Agustin & Platais, Gunars, 2005. "Can Payments for Environmental Services Help Reduce Poverty? An Exploration of the Issues and the Evidence to Date from Latin America," World Development, Elsevier, vol. 33(2), pages 237-253, February.
    5. Sierra, Rodrigo & Russman, Eric, 2006. "On the efficiency of environmental service payments: A forest conservation assessment in the Osa Peninsula, Costa Rica," Ecological Economics, Elsevier, vol. 59(1), pages 131-141, August.
    6. Babcock, Bruce A. & Lakshminarayan, P. G. & Wu, J. & Zilberman, David, 1997. "Targeting Tools for the Purchase of Environmental Amenities," Staff General Research Papers 5220, Iowa State University, Department of Economics.
    7. Pagiola, Stefano, 2008. "Payments for environmental services in Costa Rica," Ecological Economics, Elsevier, vol. 65(4), pages 712-724, May.
    8. Turpie, J.K. & Marais, C. & Blignaut, J.N., 2008. "The working for water programme: Evolution of a payments for ecosystem services mechanism that addresses both poverty and ecosystem service delivery in South Africa," Ecological Economics, Elsevier, vol. 65(4), pages 788-798, May.
    9. Ferraro, Paul J., 2008. "Asymmetric information and contract design for payments for environmental services," Ecological Economics, Elsevier, vol. 65(4), pages 810-821, May.
    10. Claassen, Roger & Cattaneo, Andrea & Johansson, Robert, 2008. "Cost-effective design of agri-environmental payment programs: U.S. experience in theory and practice," Ecological Economics, Elsevier, vol. 65(4), pages 737-752, May.
    11. Paul J. Ferraro, 2004. "Targeting Conservation Investments in Heterogeneous Landscapes: A Distance-Function Approach and Application to Watershed Management," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 905-918.
    12. Pfaff, Alexander S. P. & Sanchez-Azofeifa, G. Arturo, 2004. "Deforestation pressure and biological reserve planning: a conceptual approach and an illustrative application for Costa Rica," Resource and Energy Economics, Elsevier, vol. 26(2), pages 237-254, June.
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    Cited by:
    1. Valle, Haydn & Capon, Timothy & Harris, Michael & Reeson, Andrew, 2012. "Coordination and Strategic Behaviour in Landscape Auctions," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124466, Australian Agricultural and Resource Economics Society.
    2. Zabel, Astrid & Engel, Stefanie, 2010. "Performance payments: A new strategy to conserve large carnivores in the tropics?," Ecological Economics, Elsevier, vol. 70(2), pages 405-412, December.
    3. Katrina Mullan & Andreas Kontoleon, 2009. "Participation in Payments for Ecosystem Services programmes in developing countries: The Chinese Sloping Land Conversion Programme," Environmental Economy and Policy Research Working Papers 42.2009, University of Cambridge, Department of Land Economics, revised 2009.
    4. Börner, Jan & Wunder, Sven & Wertz-Kanounnikoff, Sheila & Tito, Marcos Rügnitz & Pereira, Ligia & Nascimento, Nathalia, 2010. "Direct conservation payments in the Brazilian Amazon: Scope and equity implications," Ecological Economics, Elsevier, vol. 69(6), pages 1272-1282, April.
    5. Schönhart, Martin & Schauppenlehner, Thomas & Schmid, Erwin & Muhar, Andreas, 2011. "Integration of bio-physical and economic models to analyze management intensity and landscape structure effects at farm and landscape level," Agricultural Systems, Elsevier, vol. 104(2), pages 122-134, February.
    6. Blackman, Allen & Woodward, Richard T., 2010. "User financing in a national payments for environmental services program: Costa Rican hydropower," Ecological Economics, Elsevier, vol. 69(8), pages 1626-1638, June.
    7. Canton, Joan & De Cara, Stéphane & Jayet, Pierre-Alain, 2009. "Agri-environmental schemes: Adverse selection, information structure and delegation," Ecological Economics, Elsevier, vol. 68(7), pages 2114-2121, May.
    8. Yang, Wanhong & Bryan, Brett A. & MacDonald, Darla Hatton & Ward, John R. & Wells, Geoff & Crossman, Neville D. & Connor, Jeffrey D., 2010. "A conservation industry for sustaining natural capital and ecosystem services in agricultural landscapes," Ecological Economics, Elsevier, vol. 69(4), pages 680-689, February.
    9. Astrid Zabel & Karen Pittel & Göran Bostedt & Stefanie Engel, 2011. "Comparing Conventional and New Policy Approaches for Carnivore Conservation: Theoretical Results and Application to Tiger Conservation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 48(2), pages 287-301, February.
    10. Crossman, Neville D. & Connor, Jeffrey D. & Bryan, Brett A. & Summers, David M. & Ginnivan, John, 2010. "Reconfiguring an irrigation landscape to improve provision of ecosystem services," Ecological Economics, Elsevier, vol. 69(5), pages 1031-1042, March.
    11. Wunder, Sven & Engel, Stefanie & Pagiola, Stefano, 2008. "Taking stock: A comparative analysis of payments for environmental services programs in developed and developing countries," Ecological Economics, Elsevier, vol. 65(4), pages 834-852, May.
    12. Reeson, Andrew F. & Rodriguez, Luis C. & Whitten, Stuart M. & Williams, Kristen & Nolles, Karel & Windle, Jill & Rolfe, John, 2011. "Adapting auctions for the provision of ecosystem services at the landscape scale," Ecological Economics, Elsevier, vol. 70(9), pages 1621-1627, July.
    13. Neville D Crossman & Jeffrey D Connor & Brett A Bryan & David A Summers & John Ginnivan, 2009. "Reconfiguring an Irrigation Landscape to Improve Provision of Ecosystem Services," Socio-Economics and the Environment in Discussion (SEED) Working Paper Series 2009-07, CSIRO Sustainable Ecosystems.
    14. Wendland, Kelly J. & Honzák, Miroslav & Portela, Rosimeiry & Vitale, Benjamin & Rubinoff, Samuel & Randrianarisoa, Jeannicq, 2010. "Targeting and implementing payments for ecosystem services: Opportunities for bundling biodiversity conservation with carbon and water services in Madagascar," Ecological Economics, Elsevier, vol. 69(11), pages 2093-2107, September.
    15. Wunscher, Tobias & Engel, Stefanie & Wunder, Sven, 2011. "Practical Alternatives to Estimate Opportunity Costs of Forest Conservation," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 115774, European Association of Agricultural Economists.
    16. Fisher, Brendan & Kulindwa, Kassim & Mwanyoka, Iddi & Turner, R. Kerry & Burgess, Neil D., 2010. "Common pool resource management and PES: Lessons and constraints for water PES in Tanzania," Ecological Economics, Elsevier, vol. 69(6), pages 1253-1261, April.
    17. Engel, Stefanie & Pagiola, Stefano & Wunder, Sven, 2008. "Designing payments for environmental services in theory and practice: An overview of the issues," Ecological Economics, Elsevier, vol. 65(4), pages 663-674, May.
    18. Barbier, Edward B., 2012. "Natural capital, ecological scarcity and rural poverty," Policy Research Working Paper Series 6232, The World Bank.
    19. Sommerville, Matthew & Jones, Julia P.G. & Rahajaharison, Michael & Milner-Gulland, E.J., 2010. "The role of fairness and benefit distribution in community-based Payment for Environmental Services interventions: A case study from Menabe, Madagascar," Ecological Economics, Elsevier, vol. 69(6), pages 1262-1271, April.

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