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

Artti Juutinen, Erkki Mäntymaa and Markku Ollikainen

Journal of Forest Economics, 2013, vol. 19, issue 2, 128-148

Abstract: 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.

Keywords: Biodiversity; Competitive bidding; Information rents; Payments for ecosystem services; Voluntary participation (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:foreco:v:19:y:2013:i:2:p:128-148

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DOI: 10.1016/j.jfe.2012.12.001

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