Generating spatially optimized habitat in a trade‐off between social optimality and budget efficiency

Auctions have been proposed as alternatives to payments for environmental services when spatial interactions and costs are better known to landowners than to the conservation agency (asymmetric information). Recently, an auction scheme was proposed that delivers optimal conservation in the sense that social welfare is maximized. I examined the social welfare and the budget efficiency delivered by this scheme, where social welfare represents the difference between the monetized ecological benefit and the conservation cost incurred to the landowners and budget efficiency is defined as maximizing the ecological benefit for a given conservation budget. For the analysis, I considered a stylized landscape with land patches that can be used for agriculture or conservation. The ecological benefit was measured by an objective function that increases with increasing number and spatial aggregation of conserved land patches. I compared the social welfare and the budget efficiency of the auction scheme with an agglomeration payment, a policy scheme that considers spatial interactions and that was proposed recently. The auction delivered a higher level of social welfare than the agglomeration payment. However, the agglomeration payment was more efficient budgetarily than the auction, so the comparative performances of the 2 schemes depended on the chosen policy criterion–social welfare or budget efficiency. Both policy criteria are relevant for conservation. Which one should be chosen depends on the problem at hand, for example, whether social preferences should be taken into account in the decision of how much money to invest in conservation or whether the available conservation budget is strictly limited.     

Effects of payments for ecosystem services on wildlife habitat recovery

Conflicts between local people's livelihoods and conservation have led to many unsuccessful conservation efforts and have stimulated debates on policies that might simultaneously promote sustainable management of protected areas and improve the living conditions of local people. Many government‐sponsored payments‐for‐ecosystem‐services (PES) schemes have been implemented around the world. However, few empirical assessments of their effectiveness have been conducted, and even fewer assessments have directly measured their effects on ecosystem services. We conducted an empirical and spatially explicit assessment of the conservation effectiveness of one of the world's largest PES programs through the use of a long‐term empirical data set, a satellite‐based habitat model, and spatial autoregressive analyses on direct measures of change in an ecosystem service (i.e., the provision of wildlife species habitat). Giant panda (Ailuropoda melanoleuca) habitat improved in Wolong Nature Reserve of China after the implementation of the Natural Forest Conservation Program. The improvement was more pronounced in areas monitored by local residents than those monitored by the local government, but only when a higher payment was provided. Our results suggest that the effectiveness of a PES program depends on who receives the payment and on whether the payment provides sufficient incentives. As engagement of local residents has not been incorporated in many conservation strategies elsewhere in China or around the world, our results also suggest that using an incentive‐based strategy as a complement to command‐and‐control, community‐ and norm‐based strategies may help achieve greater conservation effectiveness and provide a potential solution for the park versus people conflict.     

Cost‐effectiveness of conservation payment schemes for species with different range sizes

Payments to compensate landowners for carrying out costly land‐use measures that benefit endangered biodiversity have become an important policy instrument. When designing such payments, it is important to take into account that spatially connected habitats are more valuable for many species than isolated ones. One way to incentivize provision of connected habitats is to offer landowners an agglomeration bonus, that is, a bonus on top of payments they are receiving to conserve land if the land is spatially connected. Researchers have compared the cost‐effectiveness of the agglomeration bonus with 2 alternatives: an all‐or‐nothing, agglomeration payment, where landowners receive a payment only if the conserved land parcels have a certain level of spatial connectivity, and a spatially homogeneous payment, where landowners receive a payment for conserved land parcels irrespective of their location. Their results show the agglomeration bonus is rarely the most cost‐effective option, and when it is, it is only slightly better than one of the alternatives. This suggests that the agglomeration bonus should not be given priority as a policy design option. However, this finding is based on consideration of only 1 species. We examined whether the same applied to 2 species, one for which the homogeneous payment is best and the other for which the agglomeration payment is most cost‐effective. We modified a published conceptual model so that we were able to assess the cost‐effectiveness of payment schemes for 2 species and applied it to a grassland bird and a grassland butterfly in Germany that require the same habitat but have different spatial‐connectivity needs. When conserving both species, the agglomeration bonus was more cost‐effective than the agglomeration and the homogeneous payment; thus, we showed that as a policy the agglomeration bonus is a useful conservation‐payment option.     

Costa Rica's Payment for Environmental Services Program: Intention, Implementation, and Impact

Abstract:  We evaluated the intention, implementation, and impact of Costa Rica's program of payments for environmental services (PSA), which was established in the late 1990s. Payments are given to private landowners who own land in forest areas in recognition of the ecosystem services their land provides. To characterize the distribution of PSA in Costa Rica, we combined remote sensing with geographic information system databases and then used econometrics to explore the impacts of payments on deforestation. Payments were distributed broadly across ecological and socioeconomic gradients, but the 1997–2000 deforestation rate was not significantly lower in areas that received payments. Other successful Costa Rican conservation policies, including those prior to the PSA program, may explain the current reduction in deforestation rates. The PSA program is a major advance in the global institutionalization of ecosystem investments because few, if any, other countries have such a conservation history and because much can be learned from Costa Rica's experiences.     

Enhancing Conservation,Ecosystem Services,and Local Livelihoods through a Wildlife Premium Mechanism

We propose the wildlife premium mechanism as an innovation to conserve endangered large vertebrates. The performance‐based payment scheme would allow stakeholders in lower‐income countries to generate revenue by recovering and maintaining threatened fauna that can also serve as umbrella species (i.e., species whose protection benefits other species with which they co‐occur). There are 3 possible options for applying the premium: option 1, embed premiums in a carbon payment; option 2, link premiums to a related carbon payment, but as independent and legally separate transactions; option 3, link premiums to noncarbon payments for conserving ecosystem services (PES). Each option presents advantages, such as incentive payments to improve livelihoods of rural poor who reside in or near areas harboring umbrella species, and challenges, such as the establishment of a subnational carbon credit scheme. In Kenya, Peru, and Nepal pilot premium projects are now underway or being finalized that largely follow option 1. The Kasigau (Kenya) project is the first voluntary carbon credit project to win approval from the 2 leading groups sanctioning such protocols and has already sold carbon credits totaling over $1.2 million since June 2011. A portion of the earnings is divided among community landowners and projects that support community members and has added over 350 jobs to the local economy. All 3 projects involve extensive community management because they occur on lands where locals hold the title or have a long‐term lease from the government. The monitoring, reporting, and verification required to make premium payments credible to investors include transparent methods for collecting data on key indices by trained community members and verification of their reporting by a biologist. A wildlife premium readiness fund would enable expansion of pilot programs needed to test options beyond those presented here. Mejora de la Conservación, Servicios del Ecosistema y Calidad de Vida Local Mediante un Mecanismo de Compensación de Vida Silvestre     

Five challenges to reconcile agricultural land use and forest ecosystem services in Southeast Asia

Southeast Asia possesses the highest rates of tropical deforestation globally and exceptional levels of species richness and endemism. Many countries in the region are also recognized for their food insecurity and poverty, making the reconciliation of agricultural production and forest conservation a particular priority. This reconciliation requires recognition of the trade‐offs between competing land‐use values and the subsequent incorporation of this information into policy making. To date, such reconciliation has been relatively unsuccessful across much of Southeast Asia. We propose an ecosystem services (ES) value‐internalization framework that identifies the key challenges to such reconciliation. These challenges include lack of accessible ES valuation techniques; limited knowledge of the links between forests, food security, and human well‐being; weak demand and political will for the integration of ES in economic activities and environmental regulation; a disconnect between decision makers and ES valuation; and lack of transparent discussion platforms where stakeholders can work toward consensus on negotiated land‐use management decisions. Key research priorities to overcome these challenges are developing easy‐to‐use ES valuation techniques; quantifying links between forests and well‐being that go beyond economic values; understanding factors that prevent the incorporation of ES into markets, regulations, and environmental certification schemes; understanding how to integrate ES valuation into policy making processes, and determining how to reduce corruption and power plays in land‐use planning processes.     

Benefits of Investing in Ecosystem Restoration

Measures aimed at conservation or restoration of ecosystems are often seen as net‐cost projects by governments and businesses because they are based on incomplete and often faulty cost‐benefit analyses. After screening over 200 studies, we examined the costs (94 studies) and benefits (225 studies) of ecosystem restoration projects that had sufficient reliable data in 9 different biomes ranging from coral reefs to tropical forests. Costs included capital investment and maintenance of the restoration project, and benefits were based on the monetary value of the total bundle of ecosystem services provided by the restored ecosystem. Assuming restoration is always imperfect and benefits attain only 75% of the maximum value of the reference systems over 20 years, we calculated the net present value at the social discount rates of 2% and 8%. We also conducted 2 threshold cum sensitivity analyses. Benefit‐cost ratios ranged from about 0.05:1 (coral reefs and coastal systems, worst‐case scenario) to as much as 35:1 (grasslands, best‐case scenario). Our results provide only partial estimates of benefits at one point in time and reflect the lower limit of the welfare benefits of ecosystem restoration because both scarcity of and demand for ecosystem services is increasing and new benefits of natural ecosystems and biological diversity are being discovered. Nonetheless, when accounting for even the incomplete range of known benefits through the use of static estimates that fail to capture rising values, the majority of the restoration projects we analyzed provided net benefits and should be considered not only as profitable but also as high‐yielding investments. Beneficios de Invertir en la Restauración de Ecosistemas     

Effects of human demand on conservation planning for biodiversity and ecosystem services

Safeguarding ecosystem services and biodiversity is critical to achieving sustainable development. To date, ecosystem services quantification has focused on the biophysical supply of services with less emphasis on human beneficiaries (i.e., demand). Only when both occur do ecosystems benefit people, but demand may shift ecosystem service priorities toward human-dominated landscapes that support less biodiversity. We quantified how accounting for demand affects the efficiency of conservation in capturing both human benefits and biodiversity by comparing conservation priorities identified with and without accounting for demand. We mapped supply and benefit for 3 ecosystem services (flood mitigation, crop pollination, and nature-based recreation) by adapting existing ecosystem service models to include and exclude factors representing human demand. We then identified conservation priorities for each with the conservation planning program Marxan. Particularly for flood mitigation and crop pollination, supply served as a poor proxy for benefit because demand changed the spatial distribution of ecosystem service provision. Including demand when jointly targeting biodiversity and ecosystem service increased the efficiency of conservation efforts targeting ecosystem services without reducing biodiversity outcomes. Our results highlight the importance of incorporating demand when quantifying ecosystem services for conservation planning.     

Estimating the Value of Non‐Use Benefits from Small Changes in the Provision of Ecosystem Services

Abstract: The unit of trade in ecosystem services is usually the use of a proportion of the parcels of land associated with a given service. Valuing small changes in the provision of an ecosystem service presents obstacles, particularly when the service provides non‐use benefits, as is the case with conservation of most plants and animals. Quantifying non‐use values requires stated‐preference valuations. Stated‐preference valuations can provide estimates of the public's willingness to pay for a broad conservation goal. Nevertheless, stated‐preference valuations can be expensive and do not produce consistent measures for varying levels of provision of a service. Additionally, the unit of trade, land use, is not always linearly related to the level of ecosystem services the land might provide. To overcome these obstacles, we developed a method to estimate the value of a marginal change in the provision of a non‐use ecosystem service—in this case conservation of plants or animals associated with a given land‐cover type. Our method serves as a tool for calculating transferable valuations of small changes in the provision of ecosystem services relative to the existing provision. Valuation is achieved through stated‐preference investigations, calculation of a unit value for a parcel of land, and the weighting of this parcel by its ability to provide the desired ecosystem service and its effect on the ability of the surrounding land parcels to provide the desired service. We used the water vole (Arvicola terrestris) as a case study to illustrate the method. The average present value of a meter of water vole habitat was estimated at UK£12, but the marginal value of a meter (based on our methods) could range between £0 and £40 or more.     

Improving Environmental and Social Targeting through Adaptive Management in Mexico's Payments for Hydrological Services Program

Natural resource managers are often expected to achieve both environmental protection and economic development even when there are fundamental trade‐offs between these goals. Adaptive management provides a theoretical structure for program administrators to balance social priorities in the presence of trade‐offs and to improve conservation targeting. We used the case of Mexico's federal Payments for Hydrological Services program (PSAH) to illustrate the importance of adaptive management for improving program targeting. We documented adaptive elements of PSAH and corresponding changes in program eligibility and selection criteria. To evaluate whether these changes resulted in enrollment of lands of high environmental and social priority, we compared the environmental and social characteristics of the areas enrolled in the program with the characteristics of all forested areas in Mexico, all areas eligible for the program, and all areas submitted for application to the program. The program successfully enrolled areas of both high ecological and social priority, and over time, adaptive changes in the program's criteria for eligibility and selection led to increased enrollment of land scoring high on both dimensions. Three factors facilitated adaptive management in Mexico and are likely to be generally important for conservation managers: a supportive political environment, including financial backing and encouragement to experiment from the federal government; availability of relatively good social and environmental data; and active participation in the review process by stakeholders and outside evaluators. Mejorando los Objetivos Ambiental y Social Mediante el Manejo Adaptativo en el Programa de Pagos por Servicios Hidrológicos en México     

Safeguarding Biodiversity and Ecosystem Services in the Little Karoo,South Africa

Abstract: Global declines in biodiversity and the widespread degradation of ecosystem services have led to urgent calls to safeguard both. Responses to this urgency include calls to integrate the needs of ecosystem services and biodiversity into the design of conservation interventions. The benefits of such integration are purported to include improvements in the justification and resources available for these interventions. Nevertheless, additional costs and potential trade‐offs remain poorly understood in the design of interventions that seek to conserve biodiversity and ecosystem services. We sought to investigate the synergies and trade‐offs in safeguarding ecosystem services and biodiversity in South Africa's Little Karoo. We used data on three ecosystem services—carbon storage, water recharge, and fodder provision—and data on biodiversity to examine several conservation planning scenarios. First, we investigated the amount of each ecosystem service captured incidentally by a conservation plan to meet targets for biodiversity only while minimizing opportunity costs. We then examined the costs of adding targets for ecosystem services into this conservation plan. Finally, we explored trade‐offs between biodiversity and ecosystem service targets at a fixed cost. At least 30% of each ecosystem service was captured incidentally when all of biodiversity targets were met. By including data on ecosystem services, we increased the amount of services captured by at least 20% for all three services without additional costs. When biodiversity targets were reduced by 8%, an extra 40% of fodder provision and water recharge were obtained and 58% of carbon could be captured for the same cost. The opportunity cost (in terms of forgone production) of safeguarding 100% of the biodiversity targets was about US$500 million. Our results showed that with a small decrease in biodiversity target achievement, substantial gains for the conservation of ecosystem services can be achieved within our biodiversity priority areas for no extra cost.     

Impact of payments for environmental services and protected areas on local livelihoods and forest conservation in northern Cambodia

The potential impacts of payments for environmental services (PES) and protected areas (PAs) on environmental outcomes and local livelihoods in developing countries are contentious and have been widely debated. The available evidence is sparse, with few rigorous evaluations of the environmental and social impacts of PAs and particularly of PES. We measured the impacts on forests and human well‐being of three different PES programs instituted within two PAs in northern Cambodia, using a panel of intervention villages and matched controls. Both PES and PAs delivered additional environmental outcomes relative to the counterfactual: reducing deforestation rates significantly relative to controls. PAs increased security of access to land and forest resources for local households, benefiting forest resource users but restricting households’ ability to expand and diversify their agriculture. The impacts of PES on household well‐being were related to the magnitude of the payments provided. The two higher paying market‐linked PES programs had significant positive impacts, whereas a lower paying program that targeted biodiversity protection had no detectable effect on livelihoods, despite its positive environmental outcomes. Households that signed up for the higher paying PES programs, however, typically needed more capital assets; hence, they were less poor and more food secure than other villagers. Therefore, whereas the impacts of PAs on household well‐being were limited overall and varied between livelihood strategies, the PES programs had significant positive impacts on livelihoods for those that could afford to participate. Our results are consistent with theories that PES, when designed appropriately, can be a powerful new tool for delivering conservation goals whilst benefiting local people.     

The Ability of Landowners and Their Cooperatives to Leverage Payments Greater Than Opportunity Costs from Conservation Contracts

In negotiations over land‐right acquisitions, landowners have an informational advantage over conservation groups because they know more about the opportunity costs of conservation measures on their sites. This advantage creates the possibility that landowners will demand payments greater than the required minimum, where this minimum required payment is known as the landowner's willingness to accept (WTA). However, in recent studies of conservation costs, researchers have assumed landowners will accept conservation with minimum payments. We investigated the ability of landowners to demand payments above their WTA when a conservation group has identified multiple sites for protection. First, we estimated the maximum payment landowners could potentially demand, which is set when groups of landowners act as a cooperative. Next, through the simulation of conservation auctions, we explored the amount of money above landowners’ WTA (i.e., surplus) that conservation groups could cede to secure conservation agreements, again investigating the influence of landowner cooperatives. The simulations showed the informational advantage landowners held could make conservation investments up to 42% more expensive than suggested by the site WTAs. Moreover, all auctions resulted in landowners obtaining payments greater than their WTA; thus, it may be unrealistic to assume landowners will accept conservation contracts with minimum payments. Of particular significance for species conservation, conservation objectives focused on overall species richness, which therefore recognize site complementarity, create an incentive for landowners to form cooperatives to capture surplus. To the contrary, objectives in which sites are substitutes, such as the maximization of species occurrences, create a disincentive for cooperative formation. La Habilidad de Propietarios y Sus Cooperativas para Implementar Pagos Mayores que los Costos de Oportunidad en Contratos de Conservación     

Payments for Ecosystem Services as a Framework for Community-Based Conservation in Northern Tanzania

Abstract:  Payments for ecosystem services (PES) are an increasingly promoted approach to conservation. These approaches seek to develop financial mechanisms that create economic incentives for the maintenance of ecosystems and associated biodiversity by rewarding those who are responsible for provision of ecological services. There are, however, few cases in which such schemes have been used as a strategy for conserving wildlife in developing countries and very few operational examples of such schemes of any sort in sub-Saharan Africa. In savannah ecosystems, large mammal populations generally depend on seasonal use of extensive areas and are widely declining as a result of habitat loss, overexploitation, and policies that limit local benefits from wildlife. Community-based conservation strategies seek to create local incentives for conserving wildlife, but often have limited impact as a result of persistent institutional barriers that limit local rights and economic benefits. In northern Tanzania, a consortium of tourism operators is attempting to address these challenges through an agreement with a village that possesses part of a key wildlife dispersal area outside Tarangire National Park. The operators pay the community to enforce voluntary restrictions on agricultural cultivation and permanent settlement in a defined area of land. The initiative represents a potentially cost-effective framework for community-based conservation in an ecologically important area and is helping to reconcile historically conflicting local and national interests relative to land tenure, pastoralist livelihoods, and conservation. Wider adaptation of payments for ecosystem services approaches to settings where sustaining wildlife populations depends on local stewardship may help address current challenges facing conservation outside state-protected areas in savannah ecosystems in sub-Saharan Africa and other parts of the world.     

Combining Auctions and Performance‐Based Payments in a Forest Enrichment Field Trial in Western Kenya

Cost‐effectiveness is an important aspect in the assessment of payments for environmental services (PES) initiatives. In participatory field trials with communities in Western Kenya, we combined procurement auctions for forest enrichment contracts with performance‐based payments and compared the outcomes with a baseline scenario currently used by the Kenyan Forest Service. Procurement auctions were the most cost‐effective. The competitive nature of the auction reduced contracting expenses (provision costs), and the result‐oriented payments provided additional incentives to care for the planted seedlings, resulting in their improved survival rates (service quantity). These gains clearly exceeded increases in transaction costs associated with conducting an auction. The number of income‐poor auction participants and winners was disproportionately high and local institutional buy‐in was remarkably strong. Our participatory approach may, however, require adaptations when conducted at a larger scale. Although the number of contracts we monitored was limited and prohibited the use of statistical tests, our study is one of the first to reveal the benefits of using auctions for PES in developing countries. Combinando Subastas y Pagos Basados en Desempeño en un Ensayo de Campo de Enriquecimiento de Bosques en el Oeste de Kenia     

Increasing the impact of collective incentives in payments for ecosystem services

Collective payments for ecosystem services (PES) programs make payments to groups, conditional on specified aggregate land-management outcomes. Such collective contracting may be well suited to settings with communal land tenure or decision-making. Given that collective contracting does not require costly individual-level information on outcomes, it may also facilitate conditioning on additionality (i.e., conditioning payments upon clearly improved outcomes relative to baseline). Yet collective contracting often suffers from free-riding, which undermines group outcomes and may be exacerbated or ameliorated by PES designs. We study impacts of conditioning on additionality within a number of collective PES designs. We use a framed field-laboratory experiment with participants from a new PES program in Mexico. Because social interactions are critical within collective processes, we assess the impacts from conditioning on additionality given: (1) group participation in contract design, and (2) a group coordination mechanism. Conditioning on above-baseline outcomes raised contributions, particularly among initially lower contributors. Group participation in contract design increased impact, as did the coordination mechanism.     

Difference in the net value of ecological services between natural and artificial forests in China

Land degradation is a global problem that seriously threatens human society. However, in China and elsewhere, ecological restoration still largely relies on a traditional approach that focuses only on ecological factors and ignores socioeconomic factors. To improve the effectiveness of ecological restoration and maximize its economic and ecological benefits, a more efficient approach is needed that provides support for policy development and land management and thereby promotes environmental conservation. We devised a framework for assessing the value of ecosystem services that remain after subtracting costs, such as the opportunity costs, costs of forest protection, and costs for the people who are affected by the program; that is, the net value of ecosystem services (NVES). To understand the difference between the value of a resource and the net value of the ecosystem service it provides, we used data on VES, timber sales, and afforestation costs from China's massive national afforestation programs to calculate the net value of forest ecosystem services in China. Accounting for the abovementioned costs revealed an NVES of ¥6.1 × 10¹² for forests in 2014, which was 35.9% less than the value calculated without accounting for costs. As a result, the NVES associated with afforestation was 55.9% less than the NVES of natural forests. In some regions, NVES was negative because of the huge costs of human-made plantations, high evapotranspiration rates (thus, high water opportunity costs), and low forest survival rates. To maximize the ecological benefits of conservation, it is necessary to account for as many costs as possible so that management decisions can be based on NVES, thereby helping managers choose projects that maximize both economic and ecological benefits.     

Environmental cost of using poor decision metrics to prioritize environmental projects

Conservation decision makers commonly use project‐scoring metrics that are inconsistent with theory on optimal ranking of projects. As a result, there may often be a loss of environmental benefits. We estimated the magnitudes of these losses for various metrics that deviate from theory in ways that are common in practice. These metrics included cases where relevant variables were omitted from the benefits metric, project costs were omitted, and benefits were calculated using a faulty functional form. We estimated distributions of parameters from 129 environmental projects from Australia, New Zealand, and Italy for which detailed analyses had been completed previously. The cost of using poor prioritization metrics (in terms of lost environmental values) was often high—up to 80% in the scenarios we examined. The cost in percentage terms was greater when the budget was smaller. The most costly errors were omitting information about environmental values (up to 31% loss of environmental values), omitting project costs (up to 35% loss), omitting the effectiveness of management actions (up to 9% loss), and using a weighted‐additive decision metric for variables that should be multiplied (up to 23% loss). The latter 3 are errors that occur commonly in real‐world decision metrics, in combination often reducing potential benefits from conservation investments by 30–50%. Uncertainty about parameter values also reduced the benefits from investments in conservation projects but often not by as much as faulty prioritization metrics.     

Ergebnisorientierte Honorierung ökologischer Leistungen der Landwirtschaft

Background and Objectives

As an instrument of agro-environmental economic policy, remuneration to farmers for implementing ecologically sound practices are often identified as beingthe alternative to inefficient or unpopular legal instruments. This paper shows that such an approach assumes to be an idealized conception of the way in which economic instruments work. Only result-oriented payment is capable of matching such an idealized conception; hence, the conditions are accordingly ambitious.

Key aspects

Starting from a definition of result-oriented remuneration for ecological benefits, this approach is systematically contrasted by action-oriented payments. Either is examined in respect to its comparative efficiency enabling assessment of the potential of both instruments. In the second section, the limits of the approach using result-oriented payments are discussed in relation to the corresponding prerequisites set down for them.

Results

The key criterion for distinguishing between result-oriented payments on the one hand and action-oriented payments and legal instruments on the other is the number of options available to the farmer when he/she chooses to take advantage of the payments. On the basis of this criterion, the following advantages emerge from the economic (rewards-based) approach: it promotes self-interest, increases innovative potential, reduces informational asymmetries, promotes continuity, promotes co-operative practice, promotes intrinsic motivation and, finally, it achieves a distribution of risks between farmers and society. However, one essential requirement for applying such instruments are indicators attached to payment. The attempt to develop such indicators reveal three central problems: the complexity of cause-and-effect relations, the diversity of environmental objectives and the normativity of the process by which indicators are devised. These problems simultaneously define the limits of the instrument of result-oriented payments for ecological benefits.

Conclusions

No general statements can be made about whether result-oriented payments are preferable to other instruments, as this depends on the concrete circumstances and, in particular, on the specific environmental issues involved, along with the possibilities of developing environmental indicators. However, from the economic point of view, the benefits of result-oriented payments are obvious, as long as the prerequisites for the application of this instrument can be met.

Further Research and Recommendations

Given the persuasive benefits of result-oriented payment from an economic point of view, more efforts should in future be made to test the practicability of such instruments. Two examples of result-oriented payment are discussed in this paper.     

The Grain of Spatially Referenced Economic Cost and Biodiversity Benefit Data and the Effectiveness of a Cost Targeting Strategy

Facing tight resource constraints, conservation organizations must allocate funds available for habitat protection as effectively as possible. Often, they combine spatially referenced economic and biodiversity data to prioritize land for protection. We tested how sensitive these prioritizations could be to differences in the spatial grain of these data by demonstrating how the conclusion of a classic debate in conservation planning between cost and benefit targeting was altered based on the available information. As a case study, we determined parcel‐level acquisition costs and biodiversity benefits of land transactions recently undertaken by a nonprofit conservation organization that seeks to protect forests in the eastern United States. Then, we used hypothetical conservation plans to simulate the types of ex ante priorities that an organization could use to prioritize areas for protection. We found the apparent effectiveness of cost and benefit targeting depended on the spatial grain of the data used when prioritizing parcels based on local species richness. However, when accounting for complementarity, benefit targeting consistently was more efficient than a cost targeting strategy regardless of the spatial grain of the data involved. More pertinently for other studies, we found that combining data collected over different spatial grains inflated the apparent effectiveness of a cost targeting strategy and led to overestimation of the efficiency gain offered by adopting a more integrative return‐on‐investment approach.