Should conservation contracts include incentive payments and also be put up for tender?

Steven Schilizzi and Uwe Latacz-Lohmann

No 165873, 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia from Australian Agricultural and Resource Economics Society

Abstract: In order to maximize efficiency, should conversation contracts include incentive payments and also be put up for tender? This work uses laboratory experiments to investigate this question. We find that there exists an optimal share of performance payment which yields maximum total stewardship effort and expected environmental outcome. While cost-effectiveness is maximized with the totality of payments linked to outcomes, it comes at the cost of reduced participation. Tendering such contracts yields additional benefits in terms of effort extraction and cost-effectiveness, but these benefits rapidly decline with the share of performance payment. Combining high shares of performance payments with tendering runs the risk of falling far short of the environmental target.

Keywords: Agricultural and Food Policy; International Relations/Trade (search for similar items in EconPapers)
Pages: 38
Date: 2014
New Economics Papers: this item is included in nep-agr, nep-cta, nep-env and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aare14:165873

DOI: 10.22004/ag.econ.165873

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