2002 World Congress of Environmental and Resource Economists

Compensation payments for biodiversity-enhancing land-use measures are now a frequently used instrument in Western Europe. Given that spatial differences in costs and benefits of such measures usually exist, considerations of allocational efficiency call for spatially differentiated compensation payments. However, when deciding whether to implement uniform or spatially differentiated compensation payments, the regulator has to balance allocational efficiency losses of uniform payments with disadvantages of spatially differentiated payments such as high administrative and information costs as well as equity or legal concerns. To support this decision the paper provides a conceptual framework that allows the extent of allocational efficiency losses associated with uniform payments to be assessed. For this purpose a simple model is developed which is able to calculate the efficiency losses associated with uniform compensation payments for different types of benefit and cost functions. A particular feature of the model is that the benefit functions are derived from ecological theory.



	Paper Title:	Spatial Differentiation Of Compensation Payments For Biodiversity-Enhancing Land-Use Measures
	Presenting Author:	Frank Wätzold (UFZ)
	Coauthor 1:	Martin Drechsler
	Coauthor 2:
	Coauthor 3:
	Abstract:	Compensation payments for biodiversity-enhancing land-use measures are now a frequently used instrument in Western Europe. Given that spatial differences in costs and benefits of such measures usually exist, considerations of allocational efficiency call for spatially differentiated compensation payments. However, when deciding whether to implement uniform or spatially differentiated compensation payments, the regulator has to balance allocational efficiency losses of uniform payments with disadvantages of spatially differentiated payments such as high administrative and information costs as well as equity or legal concerns. To support this decision the paper provides a conceptual framework that allows the extent of allocational efficiency losses associated with uniform payments to be assessed. For this purpose a simple model is developed which is able to calculate the efficiency losses associated with uniform compensation payments for different types of benefit and cost functions. A particular feature of the model is that the benefit functions are derived from ecological theory.
	Link to paper:	http://weber.ucsd.edu/~carsonvs/papers/369(475).pdf

	Session / Day / Time	10A / Wednesday / 10:15 - 11:45 am

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