Conservation tenders are being used as a policy mechanism to deliver environmental benefits through changes in land, water and biodiversity management. While these mechanisms can potentially be more efficient than other agri-environmental and payment for ecosystem service schemes, a key limitation in practice is that participation rates from eligible landholders are often low, limiting both efficiency and effectiveness. In this paper we document and review potential causes of low participation in two categories: those that treat participation as an adoption issue focused on searching for the landholder, farm or practice characteristics that limit participation; and those that treat it as an auction design issue, looking for the different auction, contract or transaction cost elements that limit landholder interest in participation. We then model how landholders make choices to engage and bid in a tender, making three important contributions to the literature on this topic. First, we document the low participation rates in conservation tenders, mostly across developed countries, an issue that has received little attention to date. Second, we explain that a decision to participate in a conservation tender involves three simultaneous decisions about whether to change a management practice, whether to be involved in a public or private program with contractual obligations, and how to set a price or bid. Third, we explain that there are a number of factors that affect each stage of the decision process with some, such as landholder attitudes and risk considerations, relevant to all three. Our findings suggest that decisions to participate in a conservation tender are more complex than simple adoption decisions, involving optimisation challenges over a number of potentially offsetting factors.
The declining health of the Great Barrier Reef from diffuse source pollutants has resulted in substantial policy attention on increasing the adoption of improved management practices by agricultural producers. Although economic modelling indicates that many improved management practices are financially rewarding, landholders with dated management practices remain hesitant to change. This research involved bio-economic modelling to understand the variance in private returns for grazing enterprises across a climate cycle. Results show that financial returns to landholders can vary substantially across different 20-year periods of a climate cycle, demonstrating that the variability in expected returns may be an important reason why landholders are cautious about changing their management practices. Although previous research has separately identified financial returns and attitudes to risk and uncertainty of landholders as key influences on decisions concerning adoption of improved management practices, this research demonstrates that it is the interaction between these factors that is important to understand when designing policy settings.
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