When should biodiversity tenders contract on outcomes?
AbstractMaking conservation program payments conditional on outcomes offers potential efficiency and innovation improvements over input based contracts. This paper explores the trade-offs involved in choosing the payment criteria for biodiversity tenders. A model where the budget for a conservation tender can be allocated to input, outcome or mixed payments is used to explore the impacts of hidden actions, adverse selection, and landholder risk aversion on the optimal policy design. We discuss the implications of these results for the design of the ‘Nest Egg’ tender. This tender is targeting habitat and breeding of ground-nesting birds in the New South Wales Murray Catchment.
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Bibliographic InfoPaper provided by Australian Agricultural and Resource Economics Society in its series 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia with number 5979.
Date of creation: 2008
Date of revision:
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OUTCOME CONTRACTS; RISK AVERSION; BIODIVERSITY TENDERS; CONTRACT DESIGN; NEST EGG; Environmental Economics and Policy;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-18 (All new papers)
- NEP-CTA-2008-11-18 (Contract Theory & Applications)
- NEP-ENV-2008-11-18 (Environmental Economics)
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