Abstract
AbstractIncentive payments to landholders have become increasingly popular as mechanisms to achieve conservation goals. Within these mechanisms economists commonly recommend competitive tenders over fixed rate payment schemes because (a) specialist knowledge of landholders about their own enterprises and costs can be utilized, (b) auction prices are more likely to reflect the marginal value of the resources being used to produce the environmental outcome, and (c) the scope for rent seeking is reduced by competition between landholders. Yet there is very little uptake of conservation tenders as agrienvironmental schemes, potentially because of the difficulties in generating sufficient levels of landholder participation to make tenders effective. In this paper we summarize the efficiency benefits of using competitive tenders, analyze reasons why participation rates may be so low, and suggest potential mechanisms to address this.
Highlights
Most countries have only dabbled with trials, preferring to stay with flat-rate grant programs, the Conservation Reserve Program in the United States, which is a competitive tender for allocating conservation contracts to farmers, has been running since 1985
The second key hypothesis advanced by Rolfe et al (2018a) was that participation rates are lower in tenders than in other schemes because they are more complex for landholders to engage with
An alternative cause of low participation rates is that the issue may have limited relevance to landholders, perhaps because it is on the periphery of landholder interests or that payments comprise a small proportion of enterprise budgets (Whitten et al, 2013; Rolfe et al, 2018a)
Summary
Payment for Ecosystem Services (PES) schemes are directly targeted at changing the financial incentives that landholders face so that conservation becomes a viable land use option (Engel et al, 2008; Salzman et al, 2018; Wunder et al, 2008) They engage landholders as agents to achieve conservation outcomes and are much more empowering than regulatory approaches. Many economists have recommended that a competitive form of PES and other incentive schemes known as conservation tenders be adopted as mechanisms to improve the effectiveness of public spending (Ferraro et al, 2008; Hanley et al, 2012; Whitten et al, 2017) These differ from standard flat-rate grants in that each land manager is usually asked to specify the types of activities that they will undertake as well as a bid for the funding that they need to complete the work.
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