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.     

Incentivizing sustainable rangeland practices and policies in Colombia’s Orinoco region

Livestock grazing, along with agriculture, are key drivers of deforestation and land degradation that subsequently affect ecosystem service provision in the tropics. Although environmental and agricultural policies may curtail these negative effects, information is needed on how specific programs and instruments could be used to incentivize ranchers into adopting rangeland practices to achieve land conservation. We examine what encourages livestock ranchers to adopt more sustainable rangeland practices with various technical and conservation attributes in Colombia’s Orinoco region. First, we analyze a management alternative based on an improved pasture (IP) approach traditionally used in tropical South America, and another practice that promotes silvopastoral systems (SP) that better sustain the long term provision of ecosystem services. Second, we assess the influence that technical assistance and conservation payment instruments can have on the adoption of the IP or SP programs. Using expert-based elicitation, questionnaires, choice experiments, and econometrics, we found that when either SP or IP management alternatives include a complete technical assistance program (CTAP), emphasizing forage or cattle production, the propensity to adopt the conservation focused SP alternative significantly increases. The SP alternative with CTAP for cattle production was valued by ranchers at $290 ha/year and the CTAP prioritizing forage production was valued at $233 per ha/year. Nonetheless, a basic technical assistance program for cattle production using the IP alternative was valued at $128, but when including the CTAP, the value increased to $262. Adopting conservation practices in the form of compensation payments for not grazing portions of their land in the SP was valued by ranchers at an average of $8 and $10 in the IP. Our findings show that decisions to adopt conservation oriented rangeland practices and policies are not strictly based on monetary payments for ecosystem services alone, but also on technical support.     

Landowners’ conservation motives and the size of information rents in environmental bidding systems

We examine landowners’ conservation motives, conservation costs and information rents in environmental bidding systems designed for forestry with the help of Faustmann and Hartman models and data from Finnish conservation program. We show that the Faustmann landowners receive information rents, on average 55% of the rental payments. For the Hartman landowners the high conservation costs of old stands result in low information rents; they are only 13% of the rental payments. This estimate omits amenity benefits the landowners derive from their forests; accounting for these benefits would increase information rents dramatically. Despite the high information rents, landowners’ conservation motives decrease the rental payment required for participation in the conservation program. Hence, landowners’ conservation motives give governments a great opportunity to allocate conservation contracts in a more cost effective way, thereby extracting larger benefits for scarce conservation funds.     

Abstracts of Award-Winning Theses

This thesis determines the tradeoff between producer welfare and the provision of environmental benefits, through reduced soil erosion and fertilizer applications, on agricultural working land. A land-use allocation model of two Iowa counties is formulated as a mathematical programming problem, building upon the Takayama and Judge framework. Slope is used to reflect terrain heterogeneity, such that the spatial allocation of land-use practices impacts economic and environmental outcomes via a yield damage function and differentiated rates of soil erosion. The model differs from prior empirical models in that it includes both crop and livestock production, which gives the model the flexibility to choose whether the two activities are optimally nonseparable.
Price policy analysis indicates that the land use allocation is relatively insensitive to changes in commodity prices, i.e., altering commodity-based support payments is insufficient to attain environmental improvements. Several "green" policy instruments are simulated to estimate the cost to producers of reducing environmental damages. Limiting soil erosion with either a regulatory standard or a per unit tax reduces the average return to land by 10%. Shifting current income support payments into a system of payments for conservation land management practices, similar in essence to the Conservation Security Program, cannot attain the same soil erosion reduction with less cost to producers. Overall, the inelastic response of land use practices to commodity prices indicates that targeting the use of productive inputs, as opposed to commodity outputs, may be a more efficient means of attaining environmental improvements.     

Passive farming and land development: A real options approach

The EU's farmers are no longer required to produce commodities to receive direct payments as long as they keep their land in good condition. Some believe this is bad for development because it encourages passive farming. We evaluate, using a real options approach, the implications of decoupled payments for the desirability and optimal timing of agricultural land development when considering sunk investment costs and uncertain future returns. We find that decoupled payments accelerate development while passive farming increases, by adding managerial flexibility, the value associated with land. We then use the Nash bargaining solution to identify the rental share to be paid for leasing land. We show that a deal for the lease of land can always be reached, but that the facility to use passive farming as an outside option allows landowners to extract policy rents, thereby undermining the potential for the Basic Payment Scheme to support tenant farmers’ incomes.     

Is Passive Farming A Problem for Agriculture in the EU?

We address a new agricultural policy concern following the decoupling of CAP direct payments in 2005: passive farming, whereby landowners maintain their agricultural area to collect payments without producing commodities. It is claimed that passive farming is hindering agricultural development by ‘blocking’ access to farmland for expanding farmers. We evaluate the links between the EU's Single Payment Scheme (SPS), passive farming, land use and agricultural development. Following identification of the rational landowners’ optimal land‐use choice, we evaluate the effects of the SPS using a spatial, agent‐based model that simulates farmers’ competition for land in a case‐study region of Sweden. We show that passive farming does not constrain land from being used in production; on the contrary more land is used than would be the case without the SPS. We conclude that passive farming is not a problem for agriculture, but provides public goods that would otherwise be under provided: preservation of marginal farmland and future food security. However SPS payments on highly productive land inflate land values (capitalisation) and slow structural change, which hinder agricultural development. Consequently CAP goals could be better served by targeting payments on marginal land and phasing out payments to highly productive land.     

Playing musical chairs with land use obligations: Market-based instruments and environmental public policies in Brazil

In Brazil, market-based instruments focusing on land use dimensions are increasingly promoted as a means to make public environmental policies effective. Landowners and farmers call for more flexible regulations and economic incentives to adopt ecologically sound practices, while public agencies and conservation NGOs seek new ways of financing and legitimising legal standards. Market-based instruments are considered by these actors as having the potential to both achieve their own goals and conciliate all interests. As a result, legal frameworks (including cap-and-trade systems, biodiversity offsetting and payments for ecosystem services) are being designed which allow to exchange land use rights and obligations. Under a sociolegal approach, this article provides an overview of such instruments. It shows to what extent they may entail a reconfiguration of the burden sharing and the priority setting of nature conservation. Depending on how actors use legal standards, their responsibilities may be eased and the level of conservation may be lowered, both facts that raise significant controversy.     

A participatory framework for conservation payments

This paper describes a participatory framework used in Alta Verapaz, Guatemala to analyze the future viability of different conservation measures in a cloud forest area. It presents how in the case of conservation initiatives, participatory developed instruments could provide the incentive for farmers to reinforce or introduce conservation measures in their farming systems to preserve habitats, reduce species disruptions and alleviate poverty. A model's architecture was created with stakeholders of different settings of the region of study. Together, baseline-scenarios and policy-scenarios on land use and income generation were developed. The paper investigates the potential impacts of different policy measures for conservation and poverty reduction through the instrument “payments for environmental services”. Aim was to integrate social, economic and environmental aspects.     

How to achieve fairness in payments for ecosystem services? Insights from agrobiodiversity conservation auctions

This paper provides insights into the multiple dimensions of fairness in payments for ecosystem services (PES) using the results of pilot agrobiodiversity conservation auctions. In two sites in the Bolivian and Peruvian Andes farming groups bid for payments for the conservation of traditional crop varieties. We assess different payment rules relating to how to allocate payments among groups subject to a fixed conservation budget. The discriminatory, uniform and conditional payment rules tested in these case studies incorporate alternative principles of fairness, while resulting in varying conservation and distributional outcomes. The latter are measured in terms of the distributional equality of payments among farmers and groups, and the distributional effects of payments on different types of groups. Findings indicate that conservation and distributional outcomes are highly sensitive to the payment rule chosen and vary across study sites. There may be contexts where cost-effectiveness does not need to be traded-off against fairness. Yet given the number of competing fairness considerations, achieving PES outcomes that are perceived as fair is very challenging.     

How U.S. Farm Programs and Crop Revenue Insurance Affect Returns to Farm Land

A simulation model incorporating price and yield variability is used to examine the impact of government farm program and crop revenue coverage (CRC) insurance payments on the probability distribution of returns to land. Results indicate that Marketing Loan Program payments have the greatest impact on both the mean and standard deviation of returns. Agricultural Market Transition Act payments shift the distribution of returns without changing the variability, creating a reduction in relative risk. Market loss assistance payments increase the mean, reduce variability, and increase skewness. When combined, farm programs substantially increase the value that risk-averse producers place on the residual returns to land and substantially reduce the certainty equivalent value of CRC.     

Cost-effectiveness of alternative green payment policies for conservation technology adoption with heterogeneous land quality

This paper quantitatively analyses the cost‐effectiveness of alternative green payment policies designed to achieve a targeted level of pollution control by heterogeneous microunits. These green payment policies include cost‐share subsidies that share the fixed costs of adoption of a conservation technology and/or input reduction subsidies to reduce the use of a polluting input. The paper shows that unlike a pollution tax that achieves abatement through three mechanisms, a negative extensive margin effect, a negative intensive margin effect and a technology switching effect, a cost‐share subsidy and an input reduction subsidy are much more restricted in the types of incentives they provide for conservation of polluting inputs and adoption of a conservation technology to control pollution. Moreover, they may lead to varying levels of expansion of land under production. Costs of abatement with alternative policies and implications for production and government payments are compared using a simulation model for controlling drainage from irrigated cotton production in California, with drip irrigation as a conservation technology.     

Comparison of land use change in payments for environmental services and National Biological Corridor Programs

Costa Rica established the National Biological Corridor Program in 2006. Under the National Biological Corridor Program, the long-running Payment for Environmental Services Program was newly prioritized into biological corridors throughout the country. The National Biological Corridor Program caused a nationwide spatial shift in placement of payments for environmental services throughout Costa Rica. We classified ASTER 15-m resolution imagery in a central Costa Rica corridor connecting the eastern and western protected areas networks to analyze the change in forests during the National Biological Corridor Program with its targeted payments for environmental services effort. We used object-based classification methods, and compared land cover changes over an initial four-year period of corridor policy enactment. We calculated the changes within PES properties and outside of PES regions, and we also calculated forest patch metrics during the same time period. Results indicate a decline in forest cover over the study period, along with an increase in urban and pasture land covers, with higher change and loss of forest centered inside of the biological corridor, near the construction area for the new San Carlos highway, and within eastern pasture areas. We also saw a higher percentage of forest loss inside of the biological corridor area as compared to areas outside of the biological corridor. Forest loss was drastically less within current and historic PES properties, as compared to the overall study region. Across the entire study region, patch metrics show a decrease in the number of patches and a slight decrease in average patch size. These results suggest that current and past designation of PES prevents forest loss within PES properties while the current designation of priority conservation status via the National Biological Corridor Program is not increasing connectivity and forest conservation. This is shown by increased land use change and a decrease in forest associated with biological corridor designation. These results are antithetical to the goals of the National Biological Corridor Program.     

Output and input bias effects of U.S. direct payments

This study examines the national effect of U.S. direct payments on the extent and direction of biased technical change on U.S. agriculture. We also assess the economic significance of the estimated bias effects for economic policy modeling endeavors involving a reduction of domestic support payments. A two outputs (livestock and crops) and four inputs (labor, capital, land, and material) translog cost function was estimated from national time series (1948–2011) data. Results indicate that payments do not induce output‐biased technical change. We do find evidence of Hicksian bias that is land using and material input saving attributable to support payments. Global computable general equilibrium simulations suggest that price and output effects of discontinuing direct payments are 1/4 to 1/3 the size once the bias effects are incorporated.     

Knowing but not knowing: Systematic conservation planning and community conservation in the Sierra Norte of Oaxaca,Mexico

Systematic conservation planning (SCP) seeks to propose new reserves through a scientifically rigorous process using databases and research selection algorithims. However, SCP exercises have been criticized for “knowing but not doing”, i.e. not implementing the proposed reserve. But there is an additional problem that can be called “knowing but not knowing”, knowing things from databases, but not knowing crucial contextual information about community-based social processes that have supported the high forest cover and biodiversity detected. Examined here is how a common property region of the Sierra Norte of Oaxaca, Mexico has maintained high forest cover in the absence of public protected areas, while multiple SCP exercises have advocated for the creation of public protected areas in communal tropical montane cloud forests and pine forests as strategies for biodiversity conservation and resilience to climate change. Methods included archival research, review of community documents, focus group interviews, semi-structured interviews, participant observation, land use transects, and GIS analysis and remote sensing. Conservation in the region originally occurred because of low population densities, steep slopes and a lack of agricultural subsidies, supported by locally adapted agricultural practices. In the 1990s, a transition from passive to active conservation took place with land use zoning plans, community conservation rules, community forestry enterprises and payments for environmental service programs that consolidated a trend towards high, unthreatened forest cover. Today, the study communities have an average of 88.3% forest cover, with 61% of that in informal conservation based on community land use zoning and rules and another 14% governed by forest management plans approved by the Mexican government. We argue that truly systematic conservation plans would seek to understand how communities in the region are already managing forests for conservation. It is pointless and uninformed to advocate for top-down conservation interventions of forests that are already robustly conserved and resilient to climate change due to community action.     

Perceptions and outlook on intercropping coffee with banana as an opportunity for smallholder coffee farmers in Uganda

Coffee and banana are important cash and food crops in Uganda and the surrounding East African highland region. Production is dominated by smallholders that have limited arable land and often coffee and banana are intercropped. No significant research and development efforts have been undertaken over the last few decades on this coffee/banana intercropping system. Because recent studies suggest that this system could be a practice with high benefits to the farmers, we decided to study the perceptions of stakeholders along the coffee value chain starting with farmers. Perception analysis based on open-ended interviews following interview guides revealed that a major limitation for the sustainability of this system was poor soil fertility conditions. Perceptions on the benefits of intercropping differed little among coffee actors; that is, banana intercropping provides additional food and income from smallholders’ limited land and helps farmers reduce risks related to drought, pest/disease attacks and coffee price volatility. However, farmers’ desire to minimize risks does not match the objective of stakeholders higher up the coffee value chain to maximize coffee production. Furthermore, research by public institutes, both national and international, is primarily organized for single crops and not systems. We conclude that the institutional setting of the coffee sector hampers the promotion of intercropping, despite the benefits for the farmer.     

Impacts of Decoupled Agricultural Support on Farm Structure,Biodiversity and Landscape Mosaic: Some EU Results

The decoupling of direct payments from production represents a substantial reform of the Common Agricultural Policy (CAP). Farmers are no longer required to produce commodities to be entitled to support but only to keep land in Good Environmental and Agricultural Condition. If output declines as a result, there is concern that landscape services produced jointly with commodities will also decline. The aim of this paper is to assess the long‐term effects of the 2003 reform on farm structure, landscape mosaic and biodiversity for a sample of EU regions. Impacts are quantified using a spatial agent‐based modelling approach by simulating agricultural development with links to indicators of landscape value. Our results demonstrate that eliminating the link between support payments and production has possible negative consequences for the landscape, but only under particular circumstances. It is shown that these effects could be offset by strengthening (Pillar II) agri‐environmental schemes. Further the single payment scheme results in higher land rental prices which reduces its ability to achieve its goal of providing income security for farmers. Implications of these results for the direction of continued CAP reform are discussed.     

Impacts of 2003 CAP reform on land rental prices and capitalization

Based on a graphical analysis, we investigate the impacts of the Fischler Reform of the Common Agricultural Policy on land rental prices and the capitalization of single farm payments (SFP) into land values. The model shows that the degree of capitalization mainly depends on the scarcity/surplus of SFP entitlements relative to eligible hectares, the implementation model (historical versus regional) and the land supply elasticity. If there are more SFP entitlements than eligible hectares, the degree of capitalization into land values may not decline and may even increase due to the inclusion of other supports such as animal premiums in the SFP. We test this hypothesis with an empirical analysis of cross-section data on land rental prices in Bavaria for 2005. Empirical results indicate that decoupled SFP are capitalized into rental prices to a larger degree than the coupled direct payments of the time prior to the reform.     

Towards understanding and resolving the conflict related to the Eastern Imperial Eagle (Aquila heliaca) conservation with participatory management planning

Conflicts often arise in relation to the conservation of protected predator species. If stakeholders are well defined and involved in participatory processes, their views and perceptions can be incorporated and steps can be made towards resolving such conflicts. In this paper, a case from Hungary is presented. In this case, a participatory management planning process was initiated in the Jászság Special Protection Area of European importance (SPA), within the frame of a LIFE+ project focusing on the conservation of the Eastern Imperial Eagle (Aquila heliaca). It provided a good opportunity to address a complex conflict situation between nature conservationists, game managers and farmers. We identified structural conflicts such as contradictions between direct agricultural payments and nature conservation goals, conflicts related to different views of the main influencing factors, relational problems between various stakeholders, and even differences in value orientation. The participatory management planning process was successful in clarifying the conflict situation and making productive steps toward a common understanding and resolution. Besides the mutually agreed conservation measures, the establishment of an administrative and financial incentive such as the high nature value area (HNVA) scheme proved to be an especially important factor for mitigating the conflict. It also contributed to a more successful realisation of nature conservation objectives in an area dominated by private land owners. However, continued interaction and cooperation are needed to stabilise this progress. Our paper also shows that stakeholder involvement in conservation management planning can transcend the strategic dimension of participation, and address broader common values besides the interests of land user groups.     

Interaction effects of targeted agri-environmental payments on non-marketed goods and services under climate change in a mountain region

Targeting of agri-environmental measures (AEMs) is a key to increasing the cost-effectiveness of governmental support for biodiversity conservation and the provision of ecosystem services from agriculture. Existing literature, however, often focuses on single measures without considering that policies are usually bundles of different measures addressing multiple non-marketed goods and services. Thus, interaction effects of a set of policies in a given policy mix may influence the cost-effectiveness of single measures. Recently, Swiss agricultural policy was redesigned using the Tinbergen rule as its basis, i.e., a single measure for each policy goal, including additional targeted direct payments. This facilitates testing for interaction effects of multiple targeted AEMs. Here we use a social-ecological, agent-based modelling framework to assess interaction effects of these agricultural policies while accounting for climate change impacts in our analysis. The results from our case study in a mountain region show that ecosystem service provision increases with targeted payments. However, interaction effects of the different targeted policies affect the provision levels of all goods and services. In particular, changes at the extensive margin, i.e., the total amount of land that is under production, largely determine the amount of ecosystem services provided. Thus, climate change driven productivity increases and policies that keep land in production may substantially support the provision of non-marketed goods and services in marginal agricultural production regions with a high potential for land abandonment. Consequently, the effectiveness of targeted policy measures should also consider changes at the extensive margin and be assessed in the context of bundles or portfolios of different policy measures.     

Forest Conservation in Costa Rica when Nonuse Benefits are Uncertain but Rising

Stochastic dynamic programming is used to investigate optimal holding of primary tropical forest in humid Costa Rica when future nonuse benefits of forest conservation are uncertain and increasing. The quasi-option value of maintaining primary forests is included as a component of investment in natural capital. Although the impact of uncertainty on conservation incentives is substantial, our results indicate that a rising trend in future benefits and compensation by the international community for beneficial spillovers are more important factors in determining optimal holdings of forest stocks. Without compensatory payments, however, further deforestation may be warranted.