The impact of cost feedbacks on the land-use dynamics induced by a tradable permit market

Abstract

The costs of conserving land for species generally vary in space and time. In addition, they are not exogenous to the land-use dynamics but develop endogenously. This gives rise to feedback loops because the costs determine the land use dynamics which in turn determine the costs. This cost feedback is likely to affect the effectiveness of biodiversity conservation instruments that target land use in a spatially explicit manner. In the present paper a model of a tradable permit market with agglomeration bonus is extended for the consideration of cost feedbacks such that the presence of conserved land in the neighborhood may increase or decrease the local cost. The model analysis demonstrates that the in the former case the level of spatial clustering of conserved land is reduced while in the latter case it is increased. Clustering of conserved land is important for many species and thus cost feedbacks will eventually affect the survival of species and need to be considered in the design of conservation instruments.