IDEAS home Printed from https://ideas.repec.org/p/osf/socarx/fbqms_v1.html

Designing ecologically effective and economically efficient conservation compensation funds: lessons from theory and practice

Author

Listed:
  • Hawkins, Isobel
  • Gao, Shuo
  • Kim, Youngho
  • Teytelboym, Alexander
  • Bull, Joseph W.
  • Maron, Martine
  • Milner-Gulland, E.J.
  • Kate, Kerry ten
  • Theis, Sebastian
  • zu Ermgassen, Sophus

Abstract

The global community has committed to a substantial increase in the scale of investment in nature via Target 19 of the Kunming-Montreal agreement. An important but understudied mechanism for attracting private investment into biodiversity outcomes is conservation compensation funds – funds that aggregate payments to compensate for negative impacts on biodiversity to contribute to strategic objectives. We described the principles of effective compensation funds based on economic and ecological theory, and assembled by far the largest database of operational compensation funds to date (32 funds across 17 countries) through a mixed methods review. We explored the variety of practice in real-world implementation, and how empirical practice compares to theory, highlighting key gaps. In doing so, we provided a guide to the design of ecologically effective compensation funds, a hitherto understudied but potentially substantial source of investment for biodiversity outcomes.

Suggested Citation

  • Hawkins, Isobel & Gao, Shuo & Kim, Youngho & Teytelboym, Alexander & Bull, Joseph W. & Maron, Martine & Milner-Gulland, E.J. & Kate, Kerry ten & Theis, Sebastian & zu Ermgassen, Sophus, 2025. "Designing ecologically effective and economically efficient conservation compensation funds: lessons from theory and practice," SocArXiv fbqms_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:fbqms_v1
    DOI: 10.31235/osf.io/fbqms_v1
    as

    Download full text from publisher

    File URL: https://osf.io/download/694bb91432b47e2bef739091/
    Download Restriction: no
    File URL: https://libkey.io/10.31235/osf.io/fbqms_v1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Rob Fraser, 2002. "Moral Hazard and Risk Management in Agri‐environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 475-487, November.
    2. Thales A. P. West & Sven Wunder & Erin O. Sills & Jan Borner & Sami W. Rifai & Alexandra N. Neidermeier & Andreas Kontoleon, 2023. "Action needed to make carbon offsets from tropical forest conservation work for climate change mitigation," Papers 2301.03354, arXiv.org.
    3. Timothy N. Cason & Lata Gangadharan, 2004. "Auction Design for Voluntary Conservation Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1211-1217.
    4. Rob Hart, 2005. "Combating moral hazard in agri-environmental schemes: a multiple-agent approach," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 32(1), pages 75-91, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yano, Yuki & Blandford, David, "undated". "Use of Penalties and Rewards in Agri-Environmental Policy," 82nd Annual Conference, March 31 - April 2, 2008, Royal Agricultural College, Cirencester, UK 36873, Agricultural Economics Society.
    2. Schilizzi, Steven & Breustedt, Gunnar & Latacz-Lohmann, Uwe, "undated". "Does tendering conservation contracts with performance payments generate additional benefits?," Working Papers 100883, University of Western Australia, School of Agricultural and Resource Economics.
    3. Latacz-Lohmann, U. & Schilizzi, S. & Breustedt, G., . "Auctioning outcome-based conservation contracts," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 47.
    4. Nick Hanley & Simanti Banerjee & Gareth D. Lennox & Paul R. Armsworth, 2012. "How should we incentivize private landowners to ‘produce’ more biodiversity?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 28(1), pages 93-113, Spring.
    5. Latacz-Lohmann, Uwe & Schilizzi, Steven & Breustedt, Gunnar, 2011. "Auctioning Outcome-Based Conservation Contracts," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114523, German Association of Agricultural Economists (GEWISOLA).
    6. Cho, Wonjoo & Blandford, David, 2015. "Bilateral information asymmetry and irreversible practice adoption through agri-environmental policy: an application to peat land retirement in Norway," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204212, Agricultural Economics Society.
    7. Ferraro, Paul J., 2008. "Asymmetric information and contract design for payments for environmental services," Ecological Economics, Elsevier, vol. 65(4), pages 810-821, May.
    8. Kentaro Kawasaki & Takeshi Fujie & Kentaro Koito & Norikazu Inoue & Hiroki Sasaki, 2012. "Conservation Auctions and Compliance: Theory and Evidence from Laboratory Experiments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(2), pages 157-179, June.
    9. Bertoni, D. & Curzi, D. & Iacus, S. & Olper, A., 2018. "Estimating the Causal Effect of Green Payments in Agriculture: The Coarsened Exact Matching," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277381, International Association of Agricultural Economists.
    10. Sauer, Johannes & Walsh, John, 2011. "ESS versus NVZ – The Cost-Effectiveness of Command-and-Control versus Agreement Based Policy Instruments," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108963, Agricultural Economics Society.
    11. Gorddard, Russell J. & Whitten, Stuart M. & Reeson, Andrew, 2008. "When should biodiversity tenders contract on outcomes?," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 5979, Australian Agricultural and Resource Economics Society.
    12. Yano, Yuki & Blandford, David, 2008. "Agri-Environmental Policy and Moral Hazard under Output Price and Production Uncertainty," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44323, European Association of Agricultural Economists.
    13. Kim, Youngho & Lichtenberg, Erik & Newburn, David A., 2024. "Payments and penalties in ecosystem services programs," Journal of Environmental Economics and Management, Elsevier, vol. 126(C).
    14. 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).
    15. Rob Fraser, 2012. "Moral Hazard, Targeting and Contract Duration in Agri‐Environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(1), pages 56-64, February.
    16. Alban Lika & Francesco Galioto & Davide Viaggi, 2017. "Water Authorities’ Pricing Strategies to Recover Supply Costs in the Absence of Water Metering for Irrigated Agriculture," Sustainability, MDPI, vol. 9(12), pages 1-16, November.
    17. Yuki Yano & David Blandford, 2009. "Use of Compliance Rewards in Agri‐environmental Schemes," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(3), pages 530-545, September.
    18. Frans P. Vries & Nick Hanley, 2016. "Incentive-Based Policy Design for Pollution Control and Biodiversity Conservation: A Review," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 687-702, April.
    19. Signe Anthon & Serge Garcia & Anne Stenger, 2010. "Incentive Contracts for Natura 2000 Implementation in Forest Areas," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(3), pages 281-302, July.
    20. Evgeny A. Shvarts & Andrey V. Ptichnikov & Anna A. Romanovskaya & Vladimir N. Korotkov & Anastasia S. Baybar, 2025. "The Low-Carbon Development Strategy of Russia Until 2050 and the Role of Forests in Its Implementation," Sustainability, MDPI, vol. 17(15), pages 1-25, July.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osf:socarx:fbqms_v1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: OSF (email available below). General contact details of provider: https://socarxiv.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.