The Ability of Landowners and Their Cooperatives to Leverage Payments Greater Than Opportunity Costs from Conservation Contracts

Authored by Gareth D. Lennox, Paul R. Armsworth

Date Published: 2013-06

DOI: 10.1111/cobi.12039

Sponsors: United States Department of Agriculture (USDA) United Kingdom Research Council United States Department of Homeland Security United States National Science Foundation (NSF)

Platforms: No platforms listed

Model Documentation: Other Narrative

Model Code URLs: Model code not found

Abstract

In negotiations over land-right acquisitions, landowners have an informational advantage over conservation groups because they know more about the opportunity costs of conservation measures on their sites. This advantage creates the possibility that landowners will demand payments greater than the required minimum, where this minimum required payment is known as the landowner's willingness to accept (WTA). However, in recent studies of conservation costs, researchers have assumed landowners will accept conservation with minimum payments. We investigated the ability of landowners to demand payments above their WTA when a conservation group has identified multiple sites for protection. First, we estimated the maximum payment landowners could potentially demand, which is set when groups of landowners act as a cooperative. Next, through the simulation of conservation auctions, we explored the amount of money above landowners' WTA (i.e., surplus) that conservation groups could cede to secure conservation agreements, again investigating the influence of landowner cooperatives. The simulations showed the informational advantage landowners held could make conservation investments up to 42% more expensive than suggested by the site WTAs. Moreover, all auctions resulted in landowners obtaining payments greater than their WTA; thus, it may be unrealistic to assume landowners will accept conservation contracts with minimum payments. Of particular significance for species conservation, conservation objectives focused on overall species richness, which therefore recognize site complementarity, create an incentive for landowners to form cooperatives to capture surplus. To the contrary, objectives in which sites are substitutes, such as the maximization of species occurrences, create a disincentive for cooperative formation.

Tags

Agent-based modeling Payments for environmental services agricultural cooperatives agrienvironment schemes conservation auctions conservation contracting site selection