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Incentivizing and Tendering Conservation Contracts: The Trade-off between Participation and Effort Provision

Author

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  • Steven Schilizzi
  • Uwe Latacz-Lohmann

Abstract

This paper uses lab experiments to investigate landholder responses to, and the resulting outcome performance of, programs that incentivize and tender conservation contracts. Assuming environmental outcome monitoring is costless, we find that increasing the share of payment linked to uncertain environmental outcomes raises the level of individual stewardship effort but reduces participation, thereby creating a trade-off. This leads to a second trade-off: environmental outcome is maximized at some intermediate level of contract incentivization, but cost-effectiveness at 100%. Tendering such contracts can yield additional benefits in terms of both environmental outcome and cost-effectiveness. However, these benefits decline rapidly with rising incentivization.

Suggested Citation

  • Steven Schilizzi & Uwe Latacz-Lohmann, 2016. "Incentivizing and Tendering Conservation Contracts: The Trade-off between Participation and Effort Provision," Land Economics, University of Wisconsin Press, vol. 92(2), pages 273-291.
    • Handle: RePEc:uwp:landec:v:92:y:2016:i:2:p:273-291
    Note: DOI: 10.3368/le.92.2.273
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    Citations

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    Cited by:

    1. Vergamini, Daniele & Viaggi, Davide & Raggi, Meri, 2020. "Evaluating the Potential Contribution of Multi-Attribute Auctions to Achieve Agri-Environmental Targets and Efficient Payment Design," Ecological Economics, Elsevier, vol. 176(C).
    2. Andeltová, Lucie & Catacutan, Delia C. & Wünscher, Tobias & Holm-Müller, Karin, 2019. "Gender aspects in action- and outcome-based payments for ecosystem services—A tree planting field trial in Kenya," Ecosystem Services, Elsevier, vol. 35(C), pages 13-22.
    3. Samuel D. Bell & Nadia A. Streletskaya, 2019. "The Random Quantity Mechanism: Laboratory and Field Tests of a Novel Cost-Revealing Procurement Mechanism," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 899-921, July.
    4. Wallander, Steven & Hellerstein, Daniel M. & Johnsen, Reid, 2018. "Cost Effectiveness of Conservation Auctions Revisited: The Benefits of Information Rents," 2018 Annual Meeting, August 5-7, Washington, D.C. 274457, Agricultural and Applied Economics Association.
    5. Berthet, Alice & Vincent, Audrey & Fleury, Philippe, 2021. "Water quality issues and agriculture: An international review of innovative policy schemes," Land Use Policy, Elsevier, vol. 109(C).
    6. Pengfei Liu, 2021. "Balancing Cost Effectiveness and Incentive Properties in Conservation Auctions: Experimental Evidence from Three Multi-award Reverse Auction Mechanisms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(3), pages 417-451, March.
    7. Carson Reeling & Leah H. Palm-Forster & Richard T. Melstrom, 2019. "Policy Instruments and Incentives for Coordinated Habitat Conservation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 791-813, July.
    8. Anastasio J. Villanueva & Klaus Glenk & Macario Rodríguez-Entrena, 2017. "Protest Responses and Willingness to Accept: Ecosystem Services Providers’ Preferences towards Incentive-Based Schemes," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(3), pages 801-821, September.
    9. Herzon, I. & Birge, T. & Allen, B. & Povellato, A. & Vanni, F. & Hart, K. & Radley, G. & Tucker, G. & Keenleyside, C. & Oppermann, R. & Underwood, E. & Poux, X. & Beaufoy, G. & Pražan, J., 2018. "Time to look for evidence: Results-based approach to biodiversity conservation on farmland in Europe," Land Use Policy, Elsevier, vol. 71(C), pages 347-354.
    10. Liu, Zhaoyang & Banerjee, Simanti & Cason, Timothy N. & Hanley, Nick & Liu, Qi & Xu, Jintao & Kontoleon, Andreas, 2023. "Spatially Coordinated Conservation Auctions: A Framed Field Experiment Focusing on Farmland Wildlife Conservation in China," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334572, Agricultural Economics Society - AES.
    11. Elofsson, Katarina & Hiron, Matthew & Kačergytė, Ineta & Pärt, Tomas, 2023. "Ecological compensation of stochastic wetland biodiversity: National or regional policy schemes?," Ecological Economics, Elsevier, vol. 204(PA).
    12. Star, Megan & Rolfe, John & Barbi, Emily, 2019. "Do outcome or input risks limit adoption of environmental projects: Rehabilitating gullies in Great Barrier Reef catchments," Ecological Economics, Elsevier, vol. 161(C), pages 73-82.
    13. Thampi, Vivek A. & Bauch, Chris T. & Anand, Madhur, 2019. "Socio-ecological mechanisms for persistence of native Australian grasses under pressure from nitrogen runoff and invasive species," Ecological Modelling, Elsevier, vol. 413(C).

    More about this item

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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