Optimizing contract allocation for risky conservation tenders
MetadataShow full item record
Funding and Sponsorship
In the face of a shrinking budget for environmental activities, conservation agencies must design and implement agri-environmental policies that cost-effectively meet the environmental objectives. However, designing such programs is often challenging due to different uncertainties. For example, landholders may be exposed to risks when carrying out conservation projects. To minimise the negative impact of unexpected losses, landholders may require additional financial incentives as compensation for undertaking “risky” conservation projects. In such situations, the conservation agency risks over-spending public funds because of prohibitively high opportunity costs from landholders or failing to meet the environmental target. We used analytical and simulation approaches to explore optimal budget allocation in a target-constrained conservation tender. We also compared the performance of the tender with and without own-cost uncertainty. Results showed that as landholders’ own-cost uncertainty rises, the conservation agency is forced to allocate more funding to secure the same level of the environmental target. We found that the optimal funding level is sensitive to landholders’ competition uncertainty and the magnitude of expected losses.
Showing items related by title, author, creator and subject.
Investigating the potential of insurance as a mechanism to enhance the performance of risky conservation tendersOlita, Toto ; Schilizzi, Steve; Iftekhar, Sayed; Latacz-Lohmann, Uwe; Boxall, Peter (2019)Different types of uncertainties impact the performance of environmental programs. For example, landholders can be exposed to substantial cost variability when delivering environmental services. Therefore, they may demand ...
The influence of a conservation insurance mechanism on optimal bidding in risky conservation auctionsOlita, Toto ; Schilizzi, Steven; Iftekhar, Sayed (2018)Conservation auctions or tenders (CTs) are gaining popularity globally due to their ability to generate efficiency gains with limited public funding. However, the existence of various types of uncertainties, in particular, ...
Townsend, P.; Harper, R.; Brennan, P.; Dean, C.; Wu, S.; Smettem, K.; Cook, Simon (2012)The impact of reforestation on water supplies is often considered in terms of impacts on water yields. In specific circumstances, reforestation will improve water quality, to the extent that previously unusable water can ...