Florian Hartig

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Stay by thy neighbor? Social organization determines the efficiency of biodiversity markets with spatial incentives

Florian Hartig & Martin Drechsler

Ecological Complexity, 7(1), 91–99 (2010)
Cite this
@article{hartig2010stay,
  author = {Florian Hartig and Martin Drechsler},
  title = {Stay by thy neighbor? Social organization determines the efficiency of biodiversity markets with spatial incentives},
  journal = {Ecological Complexity},
  volume = {7},
  number = {1},
  pages = {91--99},
  year = {2010},
  doi = {10.1016/j.ecocom.2009.07.001},
}

DOI: 10.1016/j.ecocom.2009.07.001
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Abstract

Market-based conservation instruments, such as payments, auctions or tradable permits, are environmental policies that create financial incentives for landowners to engage in voluntary conservation on their land. But what if ecological processes operate across property boundaries and land use decisions on one property influence ecosystem functions on neighboring sites? This paper examines how to account for such spatial externalities when designing market-based conservation instruments. We use an agent-based model to analyze different spatial metrics and their implications on land use decisions in a dynamic cost environment. The model contains a number of alternative submodels which differ in incentive design and social interactions of agents, the latter including coordinating as well as cooperating behavior of agents. We find that incentive design and social interactions have a strong influence on the spatial allocation and the costs of the conservation market.

What the paper shows and why it matters

(AI-generated)

Market-based conservation schemes (payments, auctions, tradable permits) award landowners credits for voluntary conservation. Ecological processes often cross property boundaries, so a conserved site is worth more when its neighbours are conserved too. Spatial incentives, such as those of Parkhurst et al. (2002), build this into the credits. The paper asks how the benefit shared by neighbouring sites should be divided: equally between them (“additive” incentives) or by crediting each site with the loss in total value that its removal would cause (“marginal” incentives). It also asks whether landowners who each decide for themselves produce the intended landscape pattern at reasonable cost. Finally, it asks whether the design of the incentive alone settles the outcome, or whether the social organisation of the landowners matters as well.

In market-based conservation with spatial incentives, both the design of the incentive and the social organisation of the landowners shape the resulting landscape pattern and what it costs. The paper shows this with an agent-based model: every cell of a 50 × 50 grid has its own owner, and costs fluctuate. Owners who decide individually end up with either one large cluster of conserved sites or scattered ones, switching sharply between the two once the variation in costs passes a critical level. They stop trading once no owner can gain alone, leaving them in a local cost optimum: an arrangement that no individual move can improve. Additive incentives make owners abandon the cluster too early, at a cost variation of about 0.33 instead of 0.5 under marginal incentives (for a connectivity weight of 0.5). This raises costs by roughly 20% near the transition. Non-binding exchange of intentions (“cheap talk”) closes most of the cost gap without moving the transition. With full cooperation, costs are lowest, the response is gradual, and the two incentive types perform identically.

The results suggest that simple local incentives can steer landscape-scale conservation. Marginal incentives, which depend on the order of trading, suit sequential, long-term schemes such as tradable permits; additive incentives, for which the order does not matter, suit parallel, short-term schemes such as yearly payments. If landowners decide individually, marginal incentives perform better. The paper concludes that market designs encouraging cooperation among landowners look beneficial, while leaving open whether it is stable against free-riding and strategic misreporting, which the model excludes.

References

  • Parkhurst et al. (2002). Agglomeration bonus: an incentive mechanism to reunite fragmented habitat for biodiversity conservation. Ecological Economics 41, 305–328. doi:10.1016/s0921-8009(02)00036-8