Academic journal article Agricultural and Resource Economics Review

Conservation Contracting in Heterogeneous Landscape: An Application to Watershed Protection with Threshold Constraints

Academic journal article Agricultural and Resource Economics Review

Conservation Contracting in Heterogeneous Landscape: An Application to Watershed Protection with Threshold Constraints

Article excerpt

A key issue in the design of land use policy is how to integrate information about spatially variable biophysical and economic conditions into a cost-effective conservation plan. Using common biophysical scoring methods, in combination with economic data and simple optimization methods, an illustration is provided for how to identify a set of priority land parcels for conservation investment. This study also demonstrates a way in which conservation agencies can incorporate concerns about biophysical thresholds in the identification of their priority land parcels. These methods are applied using Geographic Information System data from a New York conservation easement acquisition initiative for water quality protection.

Key Words: conservation, spatial, threshold, water quality

Concerns over the effect of private land use on the supply of environmental amenities have led to an increasing global reliance on conservation contracting initiatives (Ferraro and Kiss, 2002). The term "conservation contracting" describes the contractual transfer of payments from one party (e.g., government) to another (e.g., landowner) in exchange for land use practices that contribute to the supply of an environmental amenity (e.g., biodiversity, water quality). Examples of conservation contracts include easements and short-term conservation leases. A key issue in the design of conservation contracting initiatives, like any conservation policy, is how to integrate information about spatially variable biophysical and economic conditions into a cost-effective conservation plan.

Much of the previous work on targeting scarce conservation funds in heterogeneous environments has focused on the conservation of biological diversity. Targeting approaches favored by biological scientists and conservationists emphasize the environmental amenities a given land unit produces, while often ignoring the costs of acquiring those amenities. For example, based on their finding that endangered species in the United States were concentrated spatially, Dobson et al. (1997) suggested conservationists should focus their efforts on a small number of geographic areas. In response to this argument, Ando et al. (1998) assert that variability in economic factors is just as important as ecological variability in efficient species conservation, specifically noting an approach which considers both economic and ecological variability could cost less than one-sixth the cost of an approach considering only ecological variability.

A similar debate has developed over targeting ecosystem conservation investments at the global scale (Mittermeir et al., 1998; Balmford, Gaston, and Rodrigues, 2000). Other studies by economists have also demonstrated the importance of integrating biophysical and economic data, as illustrated by Polasky, Camm, and Garber-Yonts (2001) for the case of species conservation in Oregon, and Babcock et al. (1996,1997) for the case of the Conservation Reserve Program.

This study adds to the existing literature in several ways. First, the analysis focuses on an increasingly common, but little studied, conservation initiative: conservation contracting for water quality objectives. The results of the empirical analysis support previous empirical work suggesting the failure to incorporate cost data in conservation investment decisions can lead to large efficiency losses. Moreover, studies of cost-efficient targeting (e.g., Ando et al., 1998; Polasky, Camm, and Garber-Yonts, 2001; Babcock et al., 1996, 1997) have tended to focus on a single biophysical attribute (such as species absence or presence, erodibility of soil, distance to water). A narrow focus on a single attribute, however, fails to consider the full range of biophysical attributes that are critical to the supply of an environmental amenity. Most conservation initiatives, like the U.S. Conservation Reserve Program [U.S. Department of Agriculture (USDA), 1999] or the World Wildlife Fund's Global 200 initiative (Olson et al. …

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