Using Cost‐Effective Targeting to Enhance the Efficiency of Conservation Investments in Payments for Ecosystem Services

Abstract: Ecosystem services are being protected and restored worldwide through payments for ecosystem services in which participants are paid to alter their land‐management approaches to benefit the environment. The efficiency of such investments depends on the design of the payment scheme. Land features have been used to measure the environmental benefits of and amount of payment for land enrollment in payment for ecosystem services schemes. Household characteristics of program participants, however, may also be important in the targeting of land for enrollment. We used the characteristics of households participating in China's Grain‐to‐Green program, and features of enrolled land to examine the targeting of land enrollment in that program in Wolong Nature Reserve. We compared levels of environmental benefits that can be obtained through cost‐effective targeting of land enrollment for different types of benefits under different payment schemes. The efficiency of investments in a discriminative payment scheme (payments differ according to opportunity costs, i.e., landholders’ costs of forgoing alternative uses of land) was substantially higher than in a flat payment scheme (same price paid to all participants). Both optimal targeting and suboptimal targeting of land enrollment for environmental benefits achieved substantially more environmental benefits than random selection of land for enrollment. Our results suggest that cost‐effective targeting of land through the use of discriminative conservation payments can substantially improve the efficiency of investments in the Grain‐to‐Green program and other payment for ecosystem services programs.     

A Conceptual Analysis of the Application of Tradable Permits to Biodiversity Conservation

Abstract: Tradable permits have been applied in many areas of environmental policy and may be a response to increasing calls for flexible conservation instruments that successfully conserve biodiversity while allowing for economic development. The idea behind applying tradable permits to conservation is that developers wishing to turn land to economic purposes, thereby destroying valuable habitat, may only do so if they submit a permit to the conservation agency showing that habitat of at least the equivalent ecological value is restored elsewhere. The developer himself does not need to carry out the restoration, but may buy a permit from a third party, thus allowing a market to emerge. Nevertheless, the application of tradable permits to biodiversity conservation is a complex issue because destroyed and restored habitats are likely to differ. There may be various trade‐offs between the ecological requirements that destroyed and restored habitats be as similar as possible, and the need for a certain level of market activity to have a functioning trading system. The success of tradable permits as an instrument for reconciling the conflicts between economic development and conservation depends on the existence of certain economic, institutional, and ecological preconditions, for example, a functioning institutional framework, sufficient expert knowledge, and adequate monitoring and enforcement mechanisms.