Habitat Conservation: The dynamics of direct and indirect payments

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2001

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Abstract

This paper examines the dynamic efficiency of direct and indirect payments for habitat conservation, as well as the preferences of donors who make the payments. A direct (or performance) payment is an annual payment to a landowner based on the number of hectares of undisturbed habitat that the landowner has preserved. An indirect payment is an annual payment to a landowner that subsidizes the use of other, non-habitat, inputs to an "eco-friendly" activity (e.g., eco-tourism). Direct payments are dynamically efficient. They can achieve a desired level of preserved habitat at lower levels of the other, non-habitat, inputs. Direct payments, however, may not be preferred by the donor who funds the conservation effort. The analytical model is calibrated to the Ranomafana National Park in Madagascar. For the amount of funds invested in Ranomafana by international conservation organizations, direct payments generate dramatically lower costs for the conservation agent and higher profit levels for the rural residents who control the fate of the ecosystem.

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Keywords

National parks, Ecosystem management, Economic analyses, Payments for environmental services, Conservation strategy, Biodiversity conservation, Direct payments, Indirect payments, Habitat conservation, Dynamic efficiency, Subsidies, Economics, Ranomafana national park, Madagascar, Donor preferences, Transaction costs, Ecosystem Farm/Enterprise Scale

Citation

Environmental Policy Working Paper Series 2001-005, Andrew Young School of Policy Studies, Georgia State University, Atlanta, GA