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Optimal design of pro-conservation incentives

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  • Zabel, Astrid
  • Roe, Brian

Abstract

Payments for environmental services (PES) schemes have become an increasingly accepted and popular mode for governmental and non-governmental agencies to use in addressing local and regional declines in ecosystem services. In PES schemes, payments can either be tied to indicators of actions for service provision or to indicators of the generated service itself. Performance payments are synonymous for this second group, i.e. payments are completely contingent on the procurement of an environmental good or service. Such a focus raises several practical issues during implementation. We review and translate key aspects of the economic theory of incentives into the context of performance payment schemes with special attention paid to two practical issues: risks outside the individual's control and distortion in the measurement of environmental services. Four different incentive payment approaches are presented and the effects of risk and distortion on optimal incentives are discussed. The investigation of each payment approach is accompanied by a discussion of examples from the field.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 69 (2009)
Issue (Month): 1 (November)
Pages: 126-134

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Handle: RePEc:eee:ecolec:v:69:y:2009:i:1:p:126-134

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

Related research

Keywords: Optimal incentive contracts Payments for environmental services Performance incentives Distortion;

References

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Citations

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Cited by:
  1. Sauer, Johannes & Walsh, John, 2011. "ESS versus NVZ – The Cost-Effectiveness of Command-and-Control versus Agreement Based Policy Instruments," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108963, Agricultural Economics Society.
  2. Sauer, Johannes & Walsh, John & Zilberman, David, 2012. "Behavioural Change through Agri-Environmental Policies ? – A Distance Function based Matching Approach," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134783, Agricultural Economics Society.
  3. Sauer, Johannes & Walsh, John & Zilberman, David, 2013. "Agri-Environmental Policy Effects at Producer Level - Identification and Measurement," 53rd Annual Conference, Berlin, Germany, September 25-27, 2013 156099, German Association of Agricultural Economists (GEWISOLA).
  4. Zabel, Astrid & Engel, Stefanie, 2010. "Performance payments: A new strategy to conserve large carnivores in the tropics?," Proceedings of the German Development Economics Conference, Hannover 2010 19, Verein für Socialpolitik, Research Committee Development Economics.
  5. Ajayi, Oluyede C. & Jack, B. Kelsey & Leimona, Beria, 2012. "Auction Design for the Private Provision of Public Goods in Developing Countries: Lessons from Payments for Environmental Services in Malawi and Indonesia," World Development, Elsevier, vol. 40(6), pages 1213-1223.
  6. Sauer, Johannes & Walsh, John & Zilberman, David, 2012. "Producer Behaviour and Agri-Environmental Policies: A Directional Distance based Matching Approach," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124877, Agricultural and Applied Economics Association.
  7. Cristiana Parisi, 2013. "The impact of organisational alignment on the effectiveness of firms’ sustainability strategic performance measurement systems: an empirical analysis," Journal of Management and Governance, Springer, vol. 17(1), pages 71-97, February.

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