Cost-effective Biodiversity Conservation: Procurement Auctions and Payment-by-Results - Kosteneffiziente Erhaltung der Artenvielfalt: Beschaffungsauktionen und ergebnisorientierte Honorierung

Abstract

Managed grasslands contribute in a number of ways to the biodiversity of European agricultural landscapes and provide a wide range of ecosystem services that are also of socio-economic value. Against the background of a rapid biodiversity loss in agricultural landscapes, increasing attention is being paid to farming practices that enhance ecosystem services. Therefore developing cost-effective conservation payment schemes is the main challenge facing present European agri-environmental policy. This article deals with the design, implementation and results of a case-study payment scheme in Steinburg county in Germany that compares payment-by-results conservation procurement auctions with a fixed flat-rate payment-by-results approach as a means of improving the cost-effectiveness of conservation schemes for grassland plant biodiversity. The empirical work indicates cost-effectiveness gains of auctioning – compared to current fixed flat-rate payment schemes – of up to 50 per cent. These findings along with the relatively high number of successful participants indicate that this specific approach will probably be an improvement over current action-orientated fixed flat-rate payments. This is mainly because low-cost producers gain smaller information rents and the conservation agency will – with a given budget – be able to close contracts with (some) high-cost farmers due to cost-effectiveness gains provided by low-cost landowners.