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Paris Environmental and Energy Economics Seminar

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Transaction Costs, Communication and Spatial Coordination in Payment for Ecosystem Services Schemes

Frans P. de Vries (University of Stirling)

Landowner participation and spatial coordination of land use decisions are key components for enhancing the effective delivery of ecosystem services from private land. However, inducing landowner participation in Payment for Ecosystem Services schemes for coordinating land management choices is challenging from a policy design perspective owing to transaction costs associated with participation. This paper employs a laboratory experiment to investigate the impact of such costs on participation and land use in the context of an Agglomeration Bonus (AB) scheme. The AB creates a coordination game with multiple Nash equilibria relating to alternative spatially-coordinated land use patterns. The experiment varies transaction costs between two levels (high and low), which affects the risks and payoffs of coordinating on the different equilibria. Additionally, the possibility of communication is implemented between neighboring landowners arranged on a local network to facilitate spatial coordination. Results indicate a significant difference in participation under high and low transaction costs, with a lower uptake when transaction costs are high. This effect is, however, impacted by transaction costs faced in the past. Communication improves AB performance with the effect being greater for participants facing high transaction costs.

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Bio-economic trade-offs in agricultural public policies

Lauriane Mouysset (GREThA, Université de Bordeaux)

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This paper examines the role played by biodiversity goals in the design of agricultural policies. A bio-economic model is developed with a dynamic and multi-scale perspective. It combines biodiversity dynamics, farming land-uses selected at the micro level and public policies at the macro level based on financial incentives for land-uses. The public decision-maker identifies optimal subsidies or taxes with respect to both biodiversity and budgetary constraints. These optimal policies are then analysed through different costs. The model is calibrated and applied to metropolitan France at the small agricultural region scale, using common birds as biodiversity metrics. First results relying on optimality curves and private costs stress the bio-economic trade-off between biodiversity and economic scores. In contrast, the analysis of public costs suggests that accounting for biodiversity can generate a second benefit in terms of public budget. Social costs defined as the sum of private and public costs also show possible bio-economic synergies.

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