Discussion Paper

Potential Cost-Effectiveness of Incentive Payment Programs for Biological Conservation

Jun 13, 2006 | Juha Siikamäki, David F. Layton


This study assesses the potential cost-effectiveness of incentive payment programs relative to traditional top-down regulatory programs for biological conservation. We develop site-level estimates of the opportunity cost and the nonmonetized biological benefits of protecting biodiversity hotspots in Finnish nonindustrial private forests. We then use these estimates to compare and contrast the cost-effectiveness of alternative conservation programs. Our results suggest that incentive payment programs, which tacitly capitalize on landowners’ private knowledge about the opportunity costs of conservation, may be considerably more cost-effective than traditional top-down regulatory programs.