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The Efficiency of Voluntary Incentive Policies for Preventing Biodiversity Loss

  • Lewis, David J.

    (University of Wisconsin)

  • Plantinga, Andrew J.

    (Oregon State University)

  • Nelson, Erik

    (Natural Capital Project, Stanford University)

  • Polasky, Stephen

    (University of Minnesota)

In this paper we analyze the efficiency of voluntary incentive-based land-use policies for biodiversity conservation. Two factors combine to make it difficult to achieve an efficient result. First, the spatial pattern of habitat across multiple landowners is important for determining biodiversity conservation results. Second, the willingness of private landowners to accept a payment in exchange for enrolling in a conservation program is private information. Therefore, a conservation agency cannot easily control the spatial pattern of voluntary enrollment in conservation programs. We begin by showing how the distribution of a landowner's willingness-to-accept a conservation payment can be derived from a parcel-scale land-use change model. Next we combine the econometric land-use model with spatial data and ecological models to simulate the effects of various conservation program designs on biodiversity conservation outcomes. We compare these results to an estimate of the efficiency frontier that maximizes biodiversity conservation at each level of cost. The frontier mimics the regulator's solution to the biodiversity conservation problem when she has perfect information on landowner willingness-to-accept. Results indicate that there are substantial differences in biodiversity conservation scores generated by the incentive-based policies and efficient solutions. The performance of incentive-based policies is particularly poor at low levels of the conservation budget where spatial fragmentation of conserved parcels is a large concern. Performance can be improved by encouraging agglomeration of conserved habitat and by incorporating basic biological information, such as that on rare habitats, into the selection criteria.

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Paper provided by University of Wisconsin, Agricultural and Applied Economics in its series Staff Paper Series with number 533.

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Date of creation: Mar 2009
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Handle: RePEc:ecl:wisagr:533
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  2. Parkhurst, Gregory M. & Shogren, Jason F. & Bastian, Chris & Kivi, Paul & Donner, Jennifer & Smith, Rodney B. W., 2002. "Agglomeration bonus: an incentive mechanism to reunite fragmented habitat for biodiversity conservation," Ecological Economics, Elsevier, vol. 41(2), pages 305-328, May.
  3. Stephen Polasky & Jeffrey D. Camm & Brian Garber-Yonts, 2001. "Selecting Biological Reserves Cost-Effectively: An Application to Terrestrial Vertebrate Conservation in Oregon," Land Economics, University of Wisconsin Press, vol. 77(1), pages 68-78.
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  16. Adina M. Merenlender, 2006. "Habitat and Open Space at Risk of Land-Use Conversion: Targeting Strategies for Land Conservation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 28-42.
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  21. Polasky, Stephen & Doremus, Holly, 1998. "When the Truth Hurts: Endangered Species Policy on Private Land with Imperfect Information," Journal of Environmental Economics and Management, Elsevier, vol. 35(1), pages 22-47, January.
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  25. Nalle, Darek J. & Montgomery, Claire A. & Arthur, Jeffrey L. & Polasky, Stephen & Schumaker, Nathan H., 2004. "Modeling joint production of wildlife and timber," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 997-1017, November.
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