Explaining differences in environmental policy across Europe: the importance of informal institutions, incomplete information and path dependence

What factors shape environmental policies across Europe? In order to answer this question most economists would probably adopt a Public Choice approach. This approach has explained some aspects of environmental policies that exist in a similar fashion across Europe convincingly. But why do many environmental policies differ across European countries? This article argues that in order to understand differences in environmental policies in Europe North's analysis on institutions and institutional change is useful. It demonstrates the relevance of North's approach with a case study: the implementation of the EU's Eco- Management and Audit Scheme in Germany, the Netherlands and the UK. The starting point of the analysis is the observation that participation of companies in the scheme markedly differs between countries. It is shown that in order to understand these differences it is necessary to take into account some key concepts of North's institutional analysis, namely, differences in informal institutions, incomplete information of relevant actors, and path dependence. Recommendations for further research and for environmental policy are derived. --Environmental policy,informal institutions,incomplete information,path dependence,European policy,environmental management

Applying tradable permits to biodiversity conservation: effects of space-dependent ecological benefits and cost heterogeneity on habitat allocation

This paper is concerned with the cost-effective allocation of habitat for endangered species under spatio-temporally heterogeneous economic development. To address the dynamic dimension of the problem we consider tradable development rights (TDR) as the instrument of choice. A particular challenge in applying TDR is that the ecological benefit of an individual habitat patch depends on its spatial relationship with other habitats and thus is an emergent rather than a fixed property. We analyse the spatial and temporal dynamics of habitats in a region under a TDR market that takes spatial interaction of habitats explicitly into account. We show that depending on the levels of spatial interaction and cost heterogeneity, two different outcomes may emerge: an "ordered" structure where habitats are clustered in space and stable over time, and a "disordered" structure where habitats are scattered in space and subject to high turnover of destruction and recreation. --ecological-economic model,cost heterogeneity,phase transition,spatial interaction,tradable development rights

Spatial differentiation of compensation payments for biodiversity enhancing land-use measures

Given that both the costs and the benefits of biodiversity-enhancing land-use measures are subject to spatial variation, considerations of allocational efficiency call for spatially differentiated compensation payments for such measures. However, when deciding whether to implement uniform or spatially differentiated compensation payments, the regulator has to balance the allocational efficiency losses of uniform payments with the disadvantages of spatially differentiated payments. To help resolve this issue, this paper provides a conceptual framework that allows the extent of allocational efficiency losses associated with uniform payments for biodiversity-enhancing land-use measures to be assessed. A simple ecologicaleconomic model is presented which calculates the efficiency losses associated with uniform payments for different types of benefit and cost functions. --

Species conservation in the face of political uncertainty

Recent political developments and academic debate indicate that future political commitment to the protection of natural resources is uncertain. This political uncertainty is particularly problematic when the danger of irreversible damage such as the extinction of species looms. Accordingly, policies are needed which can ward off such damage. This paper analyses a particular policy regarding a situation where the survival of an endangered species depends on certain types of biodiversity-enhancing land-use measures being carried out regularly, yet due to uncertain political commitment the periodical availability of a budget to finance these measures is not guaranteed. To insure against future underfunding for conservation, a fund is established which allows money to be saved for conservation in later periods. To maximise the long-term survival of the endangered species, it has to be decided in each period whether to spend the available money now or to allocate it to the fund for future use. The paper provides an ecological-economic model for this dynamic optimisation problem. --Species conservation,ecological-economic modelling,political uncertainty,environmental policy

Applying tradable permits to biodiversity conservation: A conceptual analysis of trading rules

Tradable permits have already been applied in many areas of environmental policy and may be a possible response to increasing calls for flexible conservation instruments which are able to successfully conserve biodiversity while allowing for economic development. The idea behind applying tradable permits to conservation is that developers wishing to turn land to economic purposes, thereby destroying valuable habitat, may only do so if they submit a permit to the conservation agency showing that habitat of at least the equivalent ecological value is restored elsewhere. The developer himself does not need to carry out the restoration, but may buy a permit from a third party thus allowing a market to emerge. However, applying tradable permits to biodiversity conservation is a complex issue, because destroyed and restored habitats are likely to differ. The purpose of this essay is to discuss on a conceptual level the consequences of these differences along the dimensions of type, space and time for the design of trading rules. We consider the resulting effects on trading activity in the permit market and the cost-effectiveness as well as the ecological effectiveness of the scheme. We find various trade-offs with regard to market activity, cost-effectiveness, ecological effectiveness and transaction costs . --Tradable permits,conservation policy,cost-effectiveness,habitat banking,economic development,land use,market based instruments

Comparing visible and less visible costs of the Habitats Directive: The case of hamster conservation in Germany

The EU Habitats Directive provides in Annexes II and IV a list of species needing to be conserved. Member States have implemented a variety of conservation measures in response to this obligation. These measures include the rejection, modification or delay of land development plans, payments for landowners to perform conservation measures and management actions such as breeding programmes. The costs of the various conservation measures are not always apparent. There may be an underestimation of the resulting costs when land development plans are altered, because there is no visible flow of financial resources. Such a biased perception may result in selecting conservation measures with high but less visible costs, whereas conservation measures with low but more visible costs are neglected. The purpose of this paper is to contribute to avoiding a biased selection of conservation measures by presenting a framework which captures a broad variety of costs relevant to the conservation of species protected by the Habitats Directive. We also demonstrate the relevance of a biased selection of conservation measures by using the framework to empirically estimate the costs of protecting the common hamster (Cricetus cricetus) in the region of Mannheim, Germany. We find that the less visible costs of changes in development plans are significantly higher than the more visible costs of payments to landowners and management actions. This result suggests that measures with visible costs should be given more attention in the future. --Common hamster,Cost assessment,Cost-effectiveness,EU Habitats Directive,Land use,Spatial planning,Species conservation

Climate change and the cost-effective governance mode for biodiversity conservation

Optimal planning of biodiversity conservation and habitat location is paramount for the cost-effective implementation of nature and biodiversity conservation measures. Established approaches for land use planning and conservation site selection however might not be optimal in a world with changing climatic conditions. Generally, conservation organizations can choose one of two main governance modes: (1) buy land to implement conservation measures themselves on their land, or (2) compensate landowners for their voluntary provision of conservation measures on their land. We analyse in a conceptual ecological-economic simulation four different conservation site selection strategies in either of the two governance modes. Afterwards, we investigate the ecological and economic effectiveness of each governance-mode-strategy combination in a climatically changing environment, and in particular the influence of climate change characteristics. We show that the choice of the two governance modes and four patch selection strategies influences the cost-effectiveness of the implementation, generally suggesting that buying land, combined with the a species targeting patch selection strategy generates the highest cost-effectiveness

Managing land use and land cover change in the biodiversity context with regard to efficiency, equality and ecological effectiveness

The introduction of conservation-friendly farming measures is an important tool for biodiversity conservation. Recently, a debate has started whether this money is spent effectively, i.e. whether it successfully contributes to conserve biodiversity in agricultural landscapes. Several types of criticism have been raised that are adequately responded by environmental policies leading to spatially and temporally heterogeneous habitats. However existing policies for species conservation are still designed to support one conservation measure only by paying an equal amount of compensation to all land-users carrying out the corresponding measure. Regarding ecological findings we firstly point out in which cases environmental policies have to be differentiated in space and time. Secondly, we analyse the necessary and sufficient conditions for transfer schemes to exist that are able to introduce a spatio-temporally heterogeneous land use and land cover type. Thirdly, we reveal that strategic considerations of land-owners limit efficiency and fairness considerations of the policy makers when determining the ecologically accurate payment scheme. However ' surprisingly ' if policy makers seek to minimise their budget required for implementing the desired policy goal, this at the same time guarantees that the individual profits of the land-owners (when performing with the desired policy goal) are as equal as feasible. --

Differences and similarities between ecological and economic models for biodiversity conservation

In this paper we investigate an important obstacle which substantially complicates cooperation between ecologists and economists but which has received little attention so far: differences between the modelling approaches in economics and ecology. To understand these differences, 60 models addressing issues relevant to biodiversity conservation have been selected randomly from eight international economic and ecological journals. The models have been compared according to a number of criteria including the level of generality/universality the models aim at; the mathematical technique employed for formulation and solution of the model; the level of complexity and the way time, space and uncertainty are taken into account. The economic models sampled are formulated and analysed analytically, tend to be relatively simple and are generally used to investigate general questions. Furthermore, they often ignore space, dynamics and uncertainty. Although some ecological models have similar properties, there is also a substantial number of another type of ecological models that are relatively complex and analysed by simulation. These models tend to be rather specific and often explicitly consider dynamics, space and uncertainty. The integrated ecological-economic models are observed to lie 'in the middle' between ecological and economic models, an unexpected result being that they are not more complex than ecological and economic models (as one could have expected from a simple 'merger' of both modelling attitudes), but have an intermediate complexity. --Ecological-economic modelling,modelling,biodiversity,conservation

An agglomeration payment for cost-effective biodiversity conservation in spatially structured landscapes

Compensation schemes in which land owners receive payments for voluntarily managing their land in a biodiversity-enhancing manner have become one of the most important instruments for biodiversity conservation worldwide. One key challenge when designing such schemes is to account for the spatial arrangement of habitats bearing in mind that for given total habitat area connected habitats are ecologically more valuable than isolated habitats. To integrate the spatial dimension in compensation schemes and based on the idea of an agglomeration bonus we consider a scheme in which land-owners only receive payments if managed patches are arranged in a specific spatial configuration. We compare the cost-effectiveness of agglomeration payments with spatially homogeneous payments on a conceptual level and for a real world case and find that efficiency gains of agglomeration payments are positive or zero but never negative. In the real world case, agglomeration payments lead to cost-savings of up to 70% compared to spatially homogeneous payments. --agglomeration bonus,biodiversity conservation,cost-effectiveness,ecologicaleconomic modelling,metapopulation,spatial heterogeneity