Incentive contracts for Natura 2000 implementation in forest areas

Signe Anthon, Serge Garcia and Anne Stenger ()
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Signe Anthon: Forest and Landscape - KVL - Royal Veterinary and Agricultural University = Kongelige Veterinær- og Landbohøjskole

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Abstract: The implementation of nature conservation policy is often based on contracts between public authorities and landowners. In this article, we model incentive contracts in forest areas in the presence of adverse selection and moral hazard when the conservation outcome is uncertain ex ante but observable ex post. The results show that agents who are likely to achieve a higher level of conservation should be offered a contract where transfers depend on the final outcome, with a bonus for a high ecological level of the forest. When conservation measures are correlated with forest management, we show that the contractual measures involve distorted transfers. We analyse the payment mechanisms used in France and Denmark in the context of the Natura 2000 policy. These mechanisms result in overcompensation and under-performance since they do not take the problem of moral hazard and natural variability into account.

Keywords: ADVERSE SELECTION; CONSERVATION CONTRACTS; FOREST; INCENTIVES; LIMITED LIABILITY; MORAL HAZARD; NATURA 2000; UNCERTAIN OUTCOME; ECONOMIE FORESTIERE (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (7)

Published in Environmental and Resource Economics, 2010, 46 (3), pp.281-302. ⟨10.1007/s10640-009-9341-1⟩

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Journal Article: Incentive Contracts for Natura 2000 Implementation in Forest Areas (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01072345

DOI: 10.1007/s10640-009-9341-1

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