Assessing the efficiency of payments for biodiversity conservation: A bio-econometric analysis of Natura 2000 contracts in forest

In this article, we empirically assess the efficiency of Natura 2000 contracts in forest, a payment for environmental service (PES) scheme, aiming at biodiversity conservation. To do so, we perform a bio-econometric analysis of public and private contracts in France. We estimate a cost function for biodiversity provision, in which the level of biodiversity output is quantified by a biodiversity index value. Estimation results show that payments for Natura 2000 contracts are inadequately defined. While payments’ definition considers opportunity costs linked to landvalue, the latter neglects opportunity costs associated with foregone profits from timber production. This impedes satisfactory participation, especially from private forest owners, whose forests could bring interesting results in terms of cost-efficiency. We show that the cost elasticity of biodiversity provision is significantly lower than one, suggesting to implement ecologically more ambitious contracts with lower average costs. Public owners are able to bear higher opportunity costs than private owners.