Tradable Set-Aside Requirements (TSARs): Conserving Spatially Dependent Environmental Amenities

• Published in: Environmental & resource economics 2016-04, Vol.63 (4), p.719-744
• Main Authors: Parkhurst, Gregory M., Shogren, Jason F., Crocker, Thomas
• Format: Article
• Language: English
• Subjects: Air pollution; Banking; Banking industry; Banks; Biodiversity; Credit policy; Economic models; Economic Policy; Economic statistics; Economic theory; Economics; Economics and Finance; Emissions trading; Endangered & extinct species; Endangered species; Environmental Economics; Environmental Law/Policy/Ecojustice; Environmental Management; Environmental policy; Environmental regulations; Habitat fragmentation; Habitats; Incentives; Land conservation; Land economics; Land use; Landowners; Opportunity costs; Pollution control; Protected species; Purchasing; Studies; Wildlife conservation
• ISSN: 0924-6460; 1573-1502
• DOI: 10.1007/s10640-014-9826-4

Land conversion patterns can conflict with endangered species protection by fragmenting the landscape. Incentive mechanisms can help mitigate the threat of habitat fragmentation by aggregating landowner conservation decisions across the landscape. The optimal conservation strategy for endangered species can target the most connected habitat cluster as an initial starting point, and then expand the conservation patch to maximize connectivity. Herein we present an incentive mechanism, the tradable set-aside requirements (TSARs), designed to target the low cost contiguous conservation landscape and share the burden of conservation among landowners. In the lab, we examine the performance of two land use conservation policies: TSARs, and the TSARs combined with an agglomeration bonus. Evaluated by economic and biological measures of efficiency, we find that TSARs, relative to a command and control policy, increases patch size and habitat connectivity within the landscape. Additionally, combining TSARS with the agglomeration bonus increases biological efficiency (habitat connectivity and patch size within the landscape) but at a price—higher opportunity cost. TSARs with the agglomeration bonus can be more cost-effective than a TSARs only policy for species sensitive to large core habitat requirements and landscape connectivity.