The Cost-Effectiveness of Conservation Payments

R. David Simpson and Paul Ferraro

RFF Working Paper Series from Resources for the Future

Abstract: Intact ecosystems provide important global services. Many valuable ecosystems are located in low-income countries in which citizens are not in a position to provide global public goods gratis. To address this problem, international conservation and development donors have been making substantial investments in habitat conservation. Among the more common conservation schemes are interventions aimed at encouraging commercial activities that produce ecosystem services as joint products. We argue that it would be more cost-effective to pay for conservation performance directly. We use a simple yet general model to establish three conclusions. First, the overall cost of conservation is least when direct payments are employed. Second, the donor will generally find direct payments more cost-effective. Third, the preferences of donors and eco-entrepreneurs are opposed: when the donor prefers direct payments, the eco-entrepreneur prefers indirect subsidies. There are a number of reasons why direct incentive programs may be difficult to implement. We argue, however, that any approach to conservation will face similar challenges. Furthermore, we demonstrate with an empirical example that direct payment initiatives can offer spectacular cost-savings relative to less direct approaches. We therefore believe that continued experimentation with direct conservation incentives in the developing world is warranted and will prove successful.

Date: 2000-07-01
New Economics Papers: this item is included in nep-env
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The Cost-Effectiveness of Conservation Payments (2002)
Working Paper: The Cost-Effectiveness of Conservation Payments (2000)
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