The cost of policy simplification in conservation incentive programs

Abstract

Incentive payments to private landowners provide a common strategy to conserve biodiversity and enhance the supply of goods and services from ecosystems. To deliver cost-effective improvements in biodiversity, payment schemes must trade-off inefficiencies that result from over-simplified policies with the administrative burden of implementing more complex incentive designs. We examine the effectiveness of different payment schemes using field parameterized, ecological economic models of extensive grazing farms. We focus on profit maximising farm management plans and use bird species as a policy-relevant indicator of biodiversity. Common policy simplifications result in a 49-100% loss in biodiversity benefits depending on the conservation target chosen. Failure to differentiate prices for conservation improvements in space is particularly problematic. Additional implementation costs that accompany more complicated policies are worth bearing even when these constitute a substantial proportion (70% or more) of the payments that would otherwise have been given to farmers.

Should We Pay for Ecosystem Service Outputs, Inputs or Both?

“…However, fixed price contracts are relatively costly to the regulator as they pay more rent to farmers Armsworth et al, 2012).…”

Nudges, Social Norms, and Permanence in Agri-environmental Schemes

“…Other options, pertaining more to the "land sharing" approach, offer payments to farmers who agree to reduce the intensity of agricultural production, such as a limitation in stocking rates or a reduction of chemical pesticide or fertilizer use. Typically, these changes also come at a cost in terms of profits foregone (Armsworth et al, 2012) since they usually induce lower and more variable yields or may require higher management costs. Assuming that farmers make their decisions based on relative profits from alternative land management options, it is logical to expect that farmers will not maintain more costly practices without compensatory payments.…”

Integrating quantitative and qualitative data in assessing the cost-effectiveness of biodiversity conservation programmes

“…Another recurrent theme was the need for improved advice on appropriate management and meaningful monitoring programmes linked closely to the objectives which have been set -sentiments that echo findings in other recent studies (e.g. Hart et al 2011;Perkins et al 2011;Armsworth et al 2012).…”