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Optimal contract length for biodiversity conservation under conservation budget constraint

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  • Juutinen, Artti
  • Ollikainen, Markku
  • Mönkkönen, Mikko
  • Reunanen, Pasi
  • Tikkanen, Olli-Pekka
  • Kouki, Jari

Abstract

We examine the optimal length of a contract period in a conservation program with payments for ecosystem services aiming at protecting biodiversity on privately owned forests. The government chooses the number of stands and the length of contracts so as to maximize biodiversity benefits under a binding conservation budget. We examine the implication of two alternative budgets: a separate budget for each period (periodic budget) or one budget that to be used in all periods (intertemporal budget). The impact of the budget type shows up in the fact that with intertemporal budget choice set is larger and more high quality stands are available for contracting. Based on theoretical characterization we conduct a numerical landscape-level analysis. We find that both short and long conservation contracts are used to protect privately owned forest land. Transactions costs tend to reduce the number of short contracts. A budget increase results in a use of longer contracts.

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  • Juutinen, Artti & Ollikainen, Markku & Mönkkönen, Mikko & Reunanen, Pasi & Tikkanen, Olli-Pekka & Kouki, Jari, 2014. "Optimal contract length for biodiversity conservation under conservation budget constraint," Forest Policy and Economics, Elsevier, vol. 47(C), pages 14-24.
    • Handle: RePEc:eee:forpol:v:47:y:2014:i:c:p:14-24
    DOI: 10.1016/j.forpol.2013.11.008
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    2. Miljand, Matilda & Bjärstig, Therese & Eckerberg, Katarina & Primmer, Eeva & Sandström, Camilla, 2021. "Voluntary agreements to protect private forests – A realist review," Forest Policy and Economics, Elsevier, vol. 128(C).
    3. Nguyen, Trung Thanh & Nghiem, Nhung, 2016. "Optimal forest rotation for carbon sequestration and biodiversity conservation by farm income levels," Forest Policy and Economics, Elsevier, vol. 73(C), pages 185-194.
    4. Triviño, María & Juutinen, Artti & Mazziotta, Adriano & Miettinen, Kaisa & Podkopaev, Dmitry & Reunanen, Pasi & Mönkkönen, Mikko, 2015. "Managing a boreal forest landscape for providing timber, storing and sequestering carbon," Ecosystem Services, Elsevier, vol. 14(C), pages 179-189.
    5. Thilo W. Glebe, 2022. "The influence of contract length on the performance of sequential conservation auctions," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(2), pages 739-764, March.
    6. Sharma, Bijay P. & Cho, Seong-Hoon, 2021. "Analyzing how forest-based amenity values and carbon storage benefits affect spatial targeting for conservation investment," Forest Policy and Economics, Elsevier, vol. 131(C).
    7. Juutinen, Artti & Ahtikoski, Anssi & Lehtonen, Mika & Mäkipää, Raisa & Ollikainen, Markku, 2018. "The impact of a short-term carbon payment scheme on forest management," Forest Policy and Economics, Elsevier, vol. 90(C), pages 115-127.

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