Misallocation in Conservation Area Placement

Rufus Panelius and Lassi Ahlvik

No 22100, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper develops a welfare-based misallocation accounting framework for conservation siting, combining biodiversity value, opportunity cost of land, risk of nature loss, and local amenity benefits. We use the framework to study the recent expansion of the conservation network in Finland and estimate misallocation at 87%: the same expected biodiversity gains could have been achieved at a fraction of the social cost through better spatial targeting. We then recover revealed conservation priorities from observed siting decisions and find that placement shows little or no response to opportunity costs or amenity benefits, neglects harvest risk on private land, and reflects strong regional priorities. If future conservation continues to follow these priorities, meeting the thirty percent conservation target would generate 49% misallocation relative to a socially efficient allocation that achieves the same expected biodiversity impact.

Date: 2026-10
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