Contract Design for Biodiversity Procurement

Abstract

Market based instruments are proving e¤ective in biodiversity procure- ment and in the management of regulatory schemes to preserve biodiversity. The design of these schemes brings together issues in auction design, con- tract theory, ecology, and monitoring. Using a mixed adverse selection, moral hazard procurement model, we show that optimal contract design may di¤er signi?cantly between procurement and regulatory policy environ- ments