When should biodiversity tenders contract on outcomes?
Making 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.
|Date of creation:||2008|
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- Rob Fraser, 2002.
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- Rob Hart, 2005. "Combating moral hazard in agri-environmental schemes: a multiple-agent approach," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 32(1), pages 75-91, March.
- R. Preston McAfee & John McMillan, 1986. "Bidding for Contracts: A Principal-Agent Analysis," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 326-338, Autumn.
- Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, June.
- Uwe Latacz-Lohmann & Carel Van der Hamsvoort, 1997. "Auctioning Conservation Contracts: A Theoretical Analysis and an Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 407-418.
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