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The cost of policy simplification in conservation incentive programs
Amanda Luna MeraECL 212 BSpring 2014
The cost of policy simplification in conservation incentive programs Ecology Letters (2012)
Journal in Ecology Keywords: Ecological Letters, community ecology, microbial ecology,
evolutionary ecology, population ecology, molecular ecology, infectious disease ecology, conservation ecology
The authors examine how ecology and socioeconomic sciences can be integrated more effectively to inform conservation strategies Paul Armsworth, Ecology and Evolutionary Biology, University of
Teneessee B.S. in Mathematics and PhD in Mathematics and Biological Sciences analyzed the integrated models.
Szvetlana Acs – University of Stirling analyzed the integrated models.
Martin Damiller- PhD in Biology Conducted and analyzed ecological surveys
Kevin Gaston –PhD in Biology Nick Hanley - Economics Paul Wilson – Agricultural and Environmental Sciences
Coordinated the farm surveys
The design of incentive payment programs for biodiversity conservation must be cost-effective Evaluations have given
mixed results. Cost-effectiveness
evaluations have been limited because the cost to farmers is private information.
Other variables are landscape, taxonomic group (biodiversity indicator),
Incentive payment
Farmers take management
actions to provide
environmental benefits
Objective
They built an integrated model of biodiversity change and farm production choices to evaluate cost-effectiveness of AE.
It examined the effectiveness of different payment schemes using field parameterized, ecological economic models of extensive grazing farms.
Biodiversity Production
Agricultural outputs Profit
maximizing farm management plans
Indicator of biodiversity bird species
+Methods
Methods
• They estimated farmers’ marginal private costs of enhancing a biodiversity target
Farmers’ MAC
•Costs relating improvements in a biodiversity target to associated foregone farm profits
Tradeoff curves
• Purchasing the maximum possible improvement for a fixed budget. Optimal
Policy characteristic
s
• Benchmark to estimate the efficiency cost of policy simplifications common in AES programs.
Cost of policy simplificaton
44 extensive farms in the UK Sheep, dairy or beef cattle
Biodiversity measured twice in 2007 Density (based on bird counts) Richness
They gathered information from socioeconomic and biodiversity surveys in farms across the UK.
Surveys included:• Land area• Land type use• Production activities
• Commodity produced (crops,livestock)
• Inputs (fertilizer, labor)• Subsidy payments received.
Dark Peak
Eastern Moors
Southwest Peak
The profit maximization condition included the production and the biodiversity constraints.
max V = p . xNet farm income
Gross margins
Farming activities
Ax ≤ b
xi≥0
Cj(x) = djTechnical coefficients
Resource endowments
Density of birds
Diversity constraint
Farming activities
Linear Production Constraints
Non-linear biodiversity Constraints
relates the response of a given biodiversity indicator to the farm management variables
The variation in the tradeoff curves was explained by comparing the elasticities between levels of diversity targets. Elasticity: how responsive an economic variable is to a change
in another
Tradeoff between maximum farm
income and biodiversity
improvement.
Negative elasticities
Change in Net farm income
Change in conservation
target
+Results
The sources of failure were simplifying spatial and farm income variation.
Cost-effective policies
Maximum farm income reduced =
incentive
Non cost-effective
policies
Farm income forgone= incentive
Farms go out of business
Fixed incentive payments
Loss of efficiency when
targeting enhancements in spp richness
The tradeoff curves relate the percentage reduction in farm income that results from a given percentage increase in biodiversity target.`
Each curve correspond to the farm types:• Solid- Dark Peak• Dashed –Eastern Moors• Dot-dashed –Southwest
Peak
a) Eurasian curlewb) Skylarkc) Requiring simultaneous
enhancement in density of both spp.
d) Total density of birdse) Total richness of birdsf) Requiring simultaneous
enhancements in total density and total richness.
The policy simplifications result in a 49–100% reduction in biodiversity relative to the maximum through the optimal policy
Simplifications:
Not including nonlinear costs of farmers (fixed costs)
Not including spatial variation in target allocation
Spatially uniform pricing
It is worth expending 70% or more to implement policies that recognize the regional variation in costs of enhancing biodiversity and that allocate incentive
contracts accordingly.
Ecological Costs of policy simplifications as the proportion of the maximum biodiversity gain available for a given budget with the optimal policy that is achieved with each simplified policy.
Inefficiencies stem from not dealing with spatial heterogeneity in the PC of producing biodiversity benefits.
Spatial differentiati
on
Conservation targets•Species richness
•Species density
Environmental variation
Private costs of farmers
Purchasing conservation improvements at a fixed cost rather than employing a sliding payment rate only incurs a comparable loss of efficiency when targeting enhancements in species richness
Conceptually, does the proposed payment to landowners reflect the supplier’s (landowner’s) WTA or the demander’s (public’s) WTP? Demander’s WTPWhat are the implications for surplus from the transaction? -Inefficient outcome -It is not cost-effective from the perspective of maximizing budget
+Critique and discussion
r2 was relatively low (0.08–0.31).
Sensitivity of results to
uncertainty in the
regression
Covariates describing
habitat increase r2
Excluded not included
in farm managemen
t
The nonlinear regression focused on common farm management variables.
Management variables:
The sample size preclude to include the covariates. Underestimate how inefficient policy simplifications can be
Cj(x) = dj
• number of sheep• number of cattle• tons of fertiliser• number of cuts
Incentive payment programs aim to deliver biodiversity benefits cost-effectively. Which definition of cost-effectiveness do incentive payment
programs match? Minimizing costs Maximizing budget use
The implementation cost of complex policies are worth bearing when benefits are larger
The evaluation of different payment schemes must consider distributional impacts.
Do you agree that what they identify as most cost-effective will deal with the distributional implications?
What exactly are landowners paid for in this analysis? By what metric would we verify that the landowner has met the
obligation?
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