Conservation Tenders Research Articles

Community-Level Incentive Mechanisms for the Conservation of Crop Wild Relatives: A Malawi Case Study

Despite being an increasingly important source of genes for crop breeding aimed at improving food security and climate change adaptation, crop wild relatives (CWRs) are globally threatened. A root cause of CWR conservation challenges is a lack of institutions and payment mechanisms by which the beneficiaries of CWR conservation services (such as breeders) could compensate those who can supply them. Given that CWR conservation generates important public good values, for the significant proportion of CWRs found outside of protected areas, there is a strong justification for the design of incentive mechanisms to support landowners whose management practices positively contribute to CWR conservation. This paper contributes to facilitating an improved understanding of the costs of in situ CWR conservation incentive mechanisms, based on a case study application of payments for agrobiodiversity conservation services across 13 community groups in three districts in Malawi. Results demonstrate a high willingness to participate in conservation activities, with average conservation tender bids per community group being a modest MWK 20,000 (USD 25) p.a. and covering 22 species of CWRs across 17 related crops. As such, there appears to be significant potential for community engagement in CWR conservation activities that is complementary to that required in protected areas and can be achieved at modest cost where appropriate incentive mechanisms can be implemented.

Optimizing contract allocation for risky conservation tenders

In the face of a shrinking budget for environmental activities, conservation agencies must design and implement agri-environmental policies that cost-effectively meet the environmental objectives. However, designing such programs is often challenging due to different uncertainties. For example, landholders may be exposed to risks when carrying out conservation projects. To minimise the negative impact of unexpected losses, landholders may require additional financial incentives as compensation for undertaking “risky” conservation projects. In such situations, the conservation agency risks over-spending public funds because of prohibitively high opportunity costs from landholders or failing to meet the environmental target. We used analytical and simulation approaches to explore optimal budget allocation in a target-constrained conservation tender. We also compared the performance of the tender with and without own-cost uncertainty. Results showed that as landholders’ own-cost uncertainty rises, the conservation agency is forced to allocate more funding to secure the same level of the environmental target. We found that the optimal funding level is sensitive to landholders’ competition uncertainty and the magnitude of expected losses.

Increasing environmental outcomes with conservation tenders: The participation challenge

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.

Key questions for conservation tenders as a means for delivering biodiversity benefits on private land

SummaryIn 2021, as part of the Convention on Biological Diversity, the world’s nations will meet to determine biodiversity targets for this decade, including area‐based protection targets. Conservation tenders (a form of market‐based instrument) have been used in several countries for the protection and restoration of biodiversity and ecosystem services​ within a defined area, mostly on private land. Conservation tenders are promoted as delivering cost‐effective and targeted investment/outcomes in the context of limited funding for conservation. Despite the significant investment in the approach, the resultant biodiversity conservation outcomes from these tenders have received relatively little research attention. Key questions on the efficacy of conservation tenders for achieving biodiversity conservation outcomes are discussed, to inform policy makers, programme managers and researchers. Questions include the following: (i) What are the conservation objectives that conservation tenders seek to address that other mechanisms cannot?, (ii) What have been the biodiversity outcomes realised as they relate to ecosystem/habitat representation or ecosystem services?, (iii) How do policy makers plan to realise biodiversity values beyond the term of the agreement given no publicly stated strategy on securing long‐term outcomes?, (iv) Is reporting of activities and results sufficient to judge changed biodiversity condition or delivery of expected outcomes at the end of the agreement, and are there efforts/plans/aims to follow up on outcomes post the agreement term?, (v) What proportion of successful tenderers have a protective conservation covenant in place prior to signing a tender or as a result of signing a tender agreement?, (vi) What do we know about the intentions and capacity of landholders beyond the term of the agreement and what has been the fate of agreements (and conservation outcomes) if they have changed hands during the course of the agreement?, (vii) Is the confidential nature of bidding in many conservation tenders missing the opportunity for collective or collaborative conservation efforts that can sustain learning and enthusiasm post‐tender?, and (viii) Is the information on ecological values (ecosystem type, quality, landscape context etc) presented or made available in a way to landholders that maximises likely bidding to ensure a large pool and thus programme efficiency?

Can partial project selection improve conservation auction performances?

ABSTRACTConservation auctions often follow an ‘all or nothing’ bid selection approach, which restricts the selection of the most suitable parts of a submitted project. The problem with ‘lumpy’ (or all-or-nothing) project selection has been identified in the literature as a major problem in conservation policy; however, the extent of the problem has been rarely quantified. Using an actual conservation tender dataset from Tasmania, the effect of the approach was estimated. This study finds that with a relatively small budget, the cost-effectiveness loss could be as high as one-quarter. To avoid such problem, a partial bid selection could be applied. The basic principle of a partial bid selection is to invite a single project from each landholder with the option for the environmental planning agency to partially select sections of the offer lands that maximise the achievement of the agency's policy objectives. A sensitivity analysis with different bid and ecological value correction factors shows that when the corrections are low, the partial selection approach could be more cost-effective than an ‘all or nothing’ approach. The results indicate that agencies should consider alternative project selection approaches with better targeting capabilities.

Conservation tenders in developed and developing countries − status quo, challenges and prospects

Conservation tenders − or procurement auctions − are a competitive mechanism, in which payment for ecosystem service contracts are allocated to landholders based on their submitted bids. These encompass a price and sometimes a measure for the environmental services the landholder offers to provide. This special edition comprises a set of papers from a workshop on conservation tenders across developed and developing countries. These papers assess the status quo, and the challenges and prospects of tendering approaches. Four high level lessons emerge: 1) Conservation tender performance has been robust; 2) Developed − developing country conservation tender differences are modest; 3) Conservation tender prospects are dependent on political and institutional support; and 4) Optimal conservation tender design is circumstance specific.

Conservation tenders in low-income countries: Opportunities and challenges

The number of payments for environmental service schemes (PES) in low-income countries has grown more rapidly than in high-income countries. Yet, scarce funding among potential service buyers in low-income countries arguably makes it even more important to design PES cost-effectively. Tendering conservation contracts is one possible way to improve the cost-effectiveness of PES schemes. There is reason to believe that they are particularly well-suited to overcome some typical constraints in low-income environments. However, experience with conservation tenders in low-income countries remains limited to a handful of scientifically motivated experimental trials. Larger roll-outs can so far only be found in high-income countries, mainly the US and Australia. How different would rolled-out PES tenders perform in low-income countries, and would they require distinct design features? Here, we identify specific opportunities and challenges for implementing conservation tenders in low-income countries. Conceptually, we examine each implementation step of a tendered PES for typical low-income country characteristics. Some may affect the design requirements for successful implementation, in either positive or negative ways, compared with the typical high-income country case. Imperfect markets and information about production systems, high subsistence incomes, high variability in prices and yields, and risk-averse behavior all constitute characteristics which conservation tenders may be particularly suited to address. Conversely, lack of expertise and infrastructure can hamper tender design and the dissemination of information to potential participants. Some of these challenges can be dealt with, but solutions unavoidably increase transaction costs which, in turn, may affect scalability. While tenders reduce poverty alleviation effects when informational rents of service providers are being squeezed, tendered PES programs do not reduce rents to zero under normal circumstances, and can therefore still deliver income transfers and contribute to poverty alleviation.

Designing and implementing conservation tender metrics: Twelve core considerations

In conservation tenders metrics are intended to describe the values that would result from alternate investments; they are the linkage between individual on-ground projects and tender scheme proponents. These metrics have received little attention by economists yet are the critical linchpin that defines the nature of the values that are traded in markets. In this paper we identify twelve lessons that can guide practitioners in metric design. These lessons embrace the principal biophysical changes likely to result from management change at each site and in combination, and reflect the values that society places on the outcomes from these changes. Practical application is explored through four example tenders encompassing five metrics which demonstrate substantial variation from the lessons identified. The practical consequences for cost-efficiency of investment, and for the use of conservation tenders generally, are unclear because of the practical and political difficulties in developing effective conservation tender approaches.

The Australian experience in using tenders for conservation

Over the past 15 years Australia has been trialling conservation tenders and other market based instrument approaches to generate environmental outcomes, particularly on private lands. The best known of these is the BushTender auction for vegetation protection in Victoria, begun in the early 2000s. Subsequently, nearly 100 other tenders for biodiversity protection have been run in Australia with substantial variations in application and methodology generated by a mix of both intended design and case study differences. The number of separate conservation tenders that have been performed, and the variations in environmental targets, state jurisdictions, case study circumstances, design and implementation, provides a rich data base of projects for analysis – unique at the international level.The review section of the paper covers three broad areas. The first aim is to provide an overview of the various tenders and their history and design in different settings. The second is to review their application, particularly in relation to auction design, metric design and contract design aspects, while the third is to identify the extent to which tenders provided more cost-effective outcomes than alternatives such a fixed rate grants. An additional goal is to explain why, after so many trials, conservation tenders are not more widely used in Australia. Key conclusions are that the multiple trials show that tenders are robust, relatively simple to apply and deliver more cost-effective allocations of public funding than other grant mechanisms. The reasons for their limited use can be related more to political and bureaucratic forces and inertia rather than to economic and design limitations.

Causes of high variance in building conservation tenders in Malaysia

Purpose – The purpose of this paper is to identify the reasons for the variance among tenders for conservation projects in Malaysia. Design/methodology/approach – Semi-structured interview approach was adopted because this method allows for effective probing of issues. The interviews are conducted with experienced conservation contractors. The interviews are transcribed and the data are analysed using thematic analysis. Coefficient of variation (CV) measure was also used to determine the level of variance that occurs in tenders for conservation projects. Findings – The study found that contractors faced difficulty in pricing competitively due to the following four factors, namely, uncertain information on the actual work on site, inexperience in conservation construction works, information in the bill of quantities is incomplete and uncertain labour and material cost. The study of 22 tenders also ascertains that there is a high variance among the tenderers for building conservation projects. This is determined by the CV analysis where conservation works has a mean CV of 25.5 per cent as compared to 6.5 per cent for new build works. Research limitations/implications – While the interviews managed to draw out insights into the reasons for the high variance among the tender amounts, a definitive conclusion cannot be drawn on the level of variance in tendering for conservation projects due to the limited data that is available for analysis. Originality/value – The paper offers an insight into the reasons why tenders for conservation projects usually have a higher variance than the norm.

What role for cooperation in conservation tenders? Paying farmer groups in the High Andes

This paper sheds light on the potential of group-level tenders to enhance conservation where it depends on cooperation of small-scale farmers. We analyze data from two pilot payment for ecosystem service (PES) schemes focused on the conservation of agricultural biodiversity in the Bolivian and Peruvian Andes. Contracts were assigned to farming groups who could choose between different types of in-kind payments with varying degrees of divisibility between group members. Our main results indicate that: (1) stronger general patterns of collective action are positively related to the level of cooperation in group-bid making; (2) where collective action is robust, collective payments seem to provide stronger conservation incentives than individual payments; (3) collective payments could mitigate some potential rent-seeking behavior; (4) selecting bid offers based on both a ‘cooperation’ criterion and conservation land area offered does not overly compromise the cost-effectiveness of PES; and (5) group-level contracts may create strong incentives for contract compliance. Hence, combining farmer group-level contracts with collective in-kind payments can enhance the cost-effectiveness of conservation tenders, while generating co-benefits in terms of increased interaction and social capital among group members.

Practitioner versus participant perspectives on conservation tenders

Extensive clearing of native vegetation on rural properties throughout Australia over the last century has generated significant damage to biodiversity. Conservation tenders have been broadly used to reduce the detrimental impact of such widespread clearance. To date, Australian conservation tender research has largely been limited to program evaluations and landholder surveys. This analysis differs by comparing and contrasting the views of non-landholders involved with these programs with those of participant landholders. The non-landholder group consists of individuals with involvement in conservation tenders across Australia. By contrast, the landholder group consists of individuals with participation experience in a series of Victorian tender initiatives. Each group is surveyed to investigate the drivers of cost-effectiveness within tender programs and landholder participation. This analysis explores these two perspectives, revealing important convergences and divergences in opinion. Both practitioners and landholders indicate that programs supported by close agency–landholder relationships and offering flexibility to landholders are most likely to succeed, particularly where landholders perceive the tender instrument to be fair. Whilst practitioners emphasise the role of transaction costs issues and program characteristics in achieving cost-effective biodiversity outcomes, landholders indicate that these factors are less important to participation rates. This research is important to guide future implementation of tender programs both in Australia and internationally.

Drivers of landholder participation in tender programs for Australian biodiversity conservation

Abstract Conservation tender program have been widely applied to biodiversity conservation in Australia and internationally in recent decades. Increasing participation rates is critical to these schemes, as competition is required for the cost-effectiveness benefits of the tender system to be fully realized. However, knowledge relating to the drivers of landholder participation in tender programs is limited. This study aims to identify the relative importance of different drivers of participation in Victorian conservation tenders. The novel method of maximum entropy ordinal regression is used given the small sample size, and supplemented with qualitative data obtained through face-to-face interviews. The regression analysis reveals that strong relationships between agencies and landholders and a low administrative burden drive increased participation. The provision of education, support, and easily-integrated management practices, however, may drive lower participation, with landholders confident to undertake conservation activities independently of assistance. Some evidence emerges that ten-year contracts may be well-received. A key concern is low additionality in biodiversity benefits, with typical tender participants displaying a strong conservation ethic and high levels of management activity pre-participation. This work has shown that in conservation policies involving self-selection by participants, economic incentives for adoption may be less important than non-monetary drivers.

Designing conservation tenders to support landholder participation: A framework and case study assessment

Conservation tenders are emerging as a critical mechanism for supporting payments for ecosystem services in Australia and have been applied at the national, state and regional level. These tenders are designer markets or policy mechanisms in which the proactive participation of landholders is required for success. In this paper we develop a five step framework to identify barriers to participation and to support the design of conservation tenders. We consider participation in six case study tenders covering a variety of land management objectives using our framework. These case studies also provide further pragmatic lessons in managing participation in tenders. Participation supporting factors include alignment of management priorities, opportunity for payment/compensation, effective engagement via information workshops and site visits, and clear and uncomplicated bidding and contracting experiences. Post-contract support may require further attention. Attention to these design elements is likely to support adequate participation and achieve the competitive allocation of funds from which conservation tenders derive their economic efficiency outcomes.

Conservation tenders: linking theory and experiments for policy assessment*

Auction theory has mostly focussed on target‐constrained auctions and is less well developed for budget‐constrained tenders, which are the norm in environmental policy. This study assesses a theoretical model developed for budget‐constrained tenders in its capacity to predict tendering performance under information deficiencies typical of field applications. If complemented by laboratory experiments, the model is able to make the correct policy recommendation when comparing the tender to an equivalent fixed‐price scheme, even with poor predictive accuracy. This holds even if the policymaker has only limited information on the model’s key input variables.

Comparing a best management practice scorecard with an auction metric to select proposals in a water quality tender

The focus of this paper is to compare different evaluation frameworks for selecting landholder proposals to improve water quality. The case study is a water quality tender performed in the Burdekin region in Northern Australia in 2007/2008 where bids could be assessed using an inputs-based best management practice scorecard or an outputs-based auction metric. The scorecard approach and other variants of multi-criteria analysis are commonly applied in grant schemes, where landholder proposals are rated by a range of inputs-based criteria. Output-based approaches are typically applied in water quality and conservation tenders, where an environmental benefits index is constructed to summarise the environmental improvements generated by each proposal. These then allow projects to be selected on the basis of cost effectiveness. The case study evaluation reported in this paper demonstrates that the input focus of multi-criteria analysis type assessments are flawed, and that the efficiency of public funding can be more than doubled using auction metrics to assess proposals for landholders to improve water quality.