Abstract
This paper focuses on the issue of payments for ecosystem services (PES) mechanism design when the activity incentivised through the scheme benefits multiple groups, each of whom might be prepared to contribute to payments made through the scheme. In particular, we examine spatial coordination on the demand side of the market; that is to say, the question of which beneficiary of the PES scheme buys land-management changes on which land parcels. We show through spatial simulation modelling that it is possible for negotiation to lead to Pareto improvements when compared to solutions reached through non-cooperative strategic solutions; however, we also show that this result is not universal and only holds under certain conditions. In particular, the spatial correlation and spatial interdependence of the ecosystem service benefits are key in determining whether negotiation between beneficiaries is optimal and therefore if policy makers and designers of PES schemes should be prioritising bringing together multiple beneficiaries of ecosystem services.
Highlights
The primary aim for many rural landowners is to grow agricultural products for sale in markets
This paper explores the design of optimal multiple-purchaser payments for ecosystem services (PES) schemes when a single land-management change leads to multiple benefits
It has been shown in the literature (Bode et al 2011) that cooperation between multiple beneficiaries can lead to Pareto improving outcomes for those beneficiaries
Summary
The primary aim for many rural landowners is to grow agricultural products for sale in markets. Multiple-purchaser schemes might broaden the range of PES-funded investments potentially giving rise to opportunities for the complementary production of multiple ecosystem services. We use spatial simulation modelling to study multiple-purchaser PES institutions. In those simulations there are multiple beneficiaries across the landscape with each beneficiary looking to increase the delivery of a different ecosystem service. This paper is most similar to Bode et al (2011) who address how multiple independent organisations may organise themselves in a multiple-purchaser PES-like scheme regarding biodiversity improvements They show that a cooperative frontier exists with the potential for Pareto improving outcomes for beneficiaries, they do not specify a decision making institution that could reach solutions on that frontier.
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