Solving carnivore-livestock conflicts is essential if goals to preserve biodiversity conservation are taken seriously and livelihoods especially of poor livestock owners are to be safeguarded. This paper presents an innovative performance payment approach for carnivore conservation, that has been successfully implemented in Sweden. Performance payments are made to reindeer herding Sami villages for certified carnivore offspring on the villages’ territories. First results support the assumption that this approach has the potential to solve many problems inherent to conventional compensation schemes. A well designed common pool regime is deemed necessary to direct the incentives set by the internal distribution of the performance payments toward collective action in carnivore conservation.Performance payments, Carnivore conservation, Sweden, Collective action, Environmental Economics and Policy, Institutional and Behavioral Economics, Resource /Energy Economics and Policy, Q2, Q57,

Holm-Muller, Karin

Zabel, Astrid

English

Research Papers in Economics

 
Institute for Agricultural Policy, Market Research and 
Economic Sociology, University of Bonn 
Discussion Paper 2007:2 
Performance payments for carnivore 
conservation in Sweden 
Astrid Zabel 
Environmental Policy and Economics, 
Institute for Environmental Decisions, ETH Zurich 
astrid.zabel@env.ethz.ch 
 
Karin Holm-Müller 
Department of Resource and Environmental Economics 
karin.holm-mueller@ilr.uni-bonn.de 
 
 
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1 
Performance payments for carnivore conservation in 
Sweden
Astrid Zabel, Karin Holm-Müller 
Abstract 
Solving carnivore-livestock conflicts is essential if goals to preserve biodi-
versity conservation are taken seriously and livelihoods especially of poor 
livestock owners are to be safeguarded. This paper presents an innovative per-
formance payment approach for carnivore conservation, that has been success-
fully implemented in Sweden. Performance payments are made to reindeer 
herding Sami villages for certified carnivore offspring on the villages’ territo-
ries. First results support the assumption that this approach has the potential to 
solve many problems inherent to conventional compensation schemes. A well 
designed common pool regime is deemed necessary to direct the incentives set 
by the internal distribution of the performance payments toward collective ac-
tion in carnivore conservation. 
Keywords: Performance payments, Carnivore conservation, Sweden, Collective 
action. 
JEL-classification: Q2, Q57 
 
1  Introduction 
Many carnivores require vast territories, and as human population increases, more 
and more pristine natural areas are being developed and converted into agricul-
tural land. Unsurprisingly, carnivores that live at the fringe between wild and 
agricultural land occasionally prey on livestock. Predation of livestock can result 
in severe economic losses (THIRGOOD ET AL. 2005; WOODROFFE ET AL. 2005; 
MISHRA 1997). Herders, whose livelihoods depend on livestock, oftentimes seek 
to kill the damage causing animal to prevent further damage. Conservationists on 
the other hand engage in measures to protect endangered carnivores since they are 
appreciated as an important component of biodiversity. Viable solutions to make 
coexistence of wildlife and livestock acceptable to both, conservationists and 
livestock owners, are already much-needed and are likely to be increasingly 
sought-after as human sprawl increases. 
Schemes that provide ex-post compensation to livestock owners for losses to 
predation have been installed in many places around the world but they have not 
proven to be widely successful. Most of the schemes’ deficiencies can be ascribed 
to one or several of the following problems: moral hazard (COZZA ET AL. 1996;  
2 
SWENSON  &  ANDRÉN  2005), high transaction costs (SABERWAL ET AL.  1994; 
BLANCO 2003), long time lags (FOURLI 1999; MADHUSUDAN 2003), and prob-
lems of trust and transparency (MONTAG 2002; WESTERN & WAITHAKA 2005). 
Mainly due to these problems, practitioners and analysts have denounced ex-post 
compensation schemes as being inadequate, fraudulent and cumbersome 
(NAUGHTON-TREVES ET AL. 2003). 
2  Performance payments in Sweden 
In search of new solutions to alleviate carnivore-livestock conflicts, a perform-
ance payment scheme was developed and implemented in Sweden. Performance 
payments are monetary or in-kind payments made by a paying agency to indi-
viduals or groups, conditional on specific conservation outcomes (ALBERS  & 
FERRARO 2006). Performance payments are made on a strict quid pro quo basis 
depending on the level of conservation outcome. Their focus is completely on the 
outcome, the actions that led to the conservation outcome are not relevant. This 
conditionality concept gives the paying agency the possibility to pay exactly and 
solely for the conservation goal it strives for. 
In 1996, the Swedish government implemented this new performance payment 
strategy as policy measure to attain and maintain stable populations of wolverines 
(Gulo gulo), lynx (Lynx lynx), and wolves (Canis lupus) within the country. Wol-
verines, which are listed as vulnerable on the IUCN red list of endangered species 
(MUSTELID SPECIALIST GROUP 1996), and lynx roam the wilderness areas in the 
northern parts of Sweden. They share the premises with semi-domesticated rein-
deer (Rangifer tarandus tarandus) that are herded by the indigenous Sami people. 
Especially during the winter months, both carnivore species prey on reindeer 
(PERSSON 2005; DANELL ET AL. 2006). 
The performance payments are made by the Swedish state to Sami villages 
contingent on the number of carnivore reproductions that are certified on the vil-
lages’ reindeer grazing grounds. The payments are made irrespective of actual 
predation incidents. Incentives to apply optimal levels of livestock protection are 
not distorted and consequently the scheme does not give rise to moral hazard. 
Furthermore, there are no problems with time lags since payments are made for 
carnivore offspring, i.e. while the animals are too young to cause damage. The 
height of the payment is determined according to the monetary damage that the 
offspring are expected to cause throughout their lifetime. The transaction costs 
connected to counting and verifying the number of carnivore reproductions may, 
however, be substantial. 
In Sweden, once the money is paid, the Sami villages have the authority to de-
cide on the use and internal distribution of the money (REGERINGENS  PROP. 
2000/01:57). Theoretically, a village needs to solve two probems: (i) determine 
the number of carnivores that will optimize its overall welfare (dependent on the  
3 
amount of payment per reproduction) and (ii) make sure that no village member 
has incentives to deviate from this level. 
If payments are set high enough to assure full conservation, the internal distri-
bution scheme needs to create a situation in which each individual’s utility is 
higher if carnivores are conserved compared to a situation in which carnivores are 
killed. Otherwise, incentives to reduce the number of damage causing carnivores 
may arise. Less potential parent animals in one year naturally reduces the likeli-
hood to obtain offspring and performance payments for these offspring in the next 
year. Illegal poaching of carnivores is an issue in Sweden. In a longtime study of 
more than 200 radio-marked wolverines, 60% of adult mortality was ascribed to 
illegal poaching (this included sure and likely cases of illegal poaching) (PERSSON 
2007). Research carried out between 1996 and 2002 on 245 radio-collared lynx in 
Sweden and Norway revealed that 46% of adult mortality was attributable to sure 
and probable illegal poaching (ANDRÉN ET AL. 2006). Great caution must be taken 
not to superficially and indiscriminately accuse all reindeer herders of illegal 
poaching. Concerning attitudes toward carnivores, reindeer herders are a hetero-
geneous group. Although most may not have any connection whatsoever to 
poaching activities, a review of recent verdicts on illegal poaching found that 
there were reindeer herders among the culprits (FORSBERG & KORSELL 2005). 
3  Internal management of payments 
The main research question of our empirical work was whether the Sami villages 
in Sweden have set up common pool regimes to manage the distribution of the 
payments toward collective action in conservation and whether there are interde-
pendencies between the villages’ structural characteristics and their modalities of 
distributing the money. From a thorough analysis of several long enduring com-
mon pool resource management systems around the world Ostrom extracted seven 
design principles for institutional arrangements (OSTROM  1990). These design 
principles are hypothesized to make long endurance of a resource management 
system more probable. In first results, we identified three of the principles in the 
Swedish case study. 
An important principle is the establishment of clear boundary rules. In Swe-
den, these are provided, both in a geographical sense as well as in respect to the 
group of people. The Sami are organized in villages with clearly defined geo-
graphical borders. Explicit laws have been formulated on how to assign the per-
formance payments if a carnivore reproduces in a border region between villages 
(NATURVÅRDSVERKET 2004). Additionally, only Sami people are allowed to en-
gage in reindeer husbandry. 
The design principle ‘minimal recognition of right to organize’ is met since the 
villages have full rights to manage, use, and distribute the performance payments  
4 
in whatever way they believe is best (REGERINGENS PROP. 2000/01:57). Their 
decisions on the use of the money cannot be overruled. 
To collect data on a further design principle ‘congruence between appropria-
tion and provision of inputs’ we sent a questionnaire to the village heads of the 51 
Sami villages. 21 (41%) questionnaires were returned. Since prey is not extremely 
abundant, maintaining herds of semi-domestic reindeer can be interpreted as pro-
vision of input for carnivore conservation (PEDERSEN ET AL. 1999). The data re-
veals that in most villages where individual members’ reindeer herds are not 
equally affected by carnivore attacks, at least a share of the money is directly 
apportioned to individuals. If money is paid out to individuals, it is always dis-
tributed proportionally to the number of animals a herder owns. Though this may 
not be totally congruent with damage to individual herders, it has the advantage of 
low transaction costs. Also, the unequal distribution of attacks usually only per-
tains to winter pastures. In summer, all animals graze in one large flock. The loss 
of reindeer each herder suffers during the summer months is likely to be propor-
tional to the number of his animals. Supposedly, the number of reindeer an indi-
vidual owns is chosen as second best measurement unit for the winter months as 
well. The majority of the villages in which all herders are equally affected by 
carnivore attacks do not distribute money directly to individuals but rather spend 
it on the communities’ common expenses. 
The presence of these first three design principles already gives some indica-
tion that prospects for the endurance of common pool resource management sys-
tems are promising in Sami villages. 
Concerning interdependencies between the villages’ structural characteristics 
and money distribution modalities, the data from the questionnaire revealed that 
small villages with 10 or less reindeer enterprises use significantly more of their 
performance payments for community expenses than villages with more reindeer 
enterprises. This finding is in line with the theory of the effects of group size on 
collective action. 
4  Discussion of scheme transferability 
Whether a performance payment scheme is likely to be a viable solution for wild-
life-livestock conflicts in other parts of the world will be an interesting question 
for further research. Deciding on how to allocate the performance payments may 
prove to be the most intricate problem. Payments for a defined conservation out-
come should be made to those who are responsible for the outcome. In general 
there are two possibilities to allocate the payments: they can either be distributed 
to individuals or to groups of people, e.g. communities.  
Making payments to an individual can be reasonable if the payment recipient 
is the person who indisputably has the greatest influence on the defined conserva-
tion outcome. The advantage of this approach is that it circumvents the prisoner’s  
5 
dilemma of collective action. In the carnivore conservation context, discerning 
who is responsible for the conservation outcome is likely to be cumbersome. Land 
titles can serve as a convenient linking dimension, i.e. a land owner is rewarded 
for carnivore offspring on his plot. However, this can only be an expedient solu-
tion if private properties are large enough to comprise the territories of several 
carnivores and changes of conservation outcome can be directly attributed to the 
respective land owner. 
Tying payments to individuals’ properties could be a major problem in devel-
oping countries with weak institutions and uncertain property rights (FERRARO & 
KISS 2002). Under such circumstances there is concern that local elites could take 
advantage of the unclear property rights situation and claim land titles on common 
land, thereby excluding less influential poor livestock owners, who eventually are 
more vulnerable to livestock losses. Area based direct payments for environ-
mental services schemes have been confronted with situations where elites mus-
cled out poor, less influential people (LANDELL-MILLS & PORRAS 2002; PAGIOLA 
ET AL. 2005). Thus, in cases of densely populated areas with small plots or un-
clear property rights, paying groups of people for performance outcomes may be 
more practical. 
The Swedish case study exemplified this approach. Each village is empowered 
to design a money distribution scheme that is well adapted to its particular situa-
tion. The money may be distributed to individuals or invested in community pro-
jects that are beneficial to the whole group. 
The institutional settings in other regions of the world may be less fitting for 
the installation of community payment schemes. In particular, group boundaries 
may be less well defined which could give rise to welfare magnet problems, i.e. 
people explicitly move to the community in hope of benefiting from the payment 
scheme. Nevertheless, for some regions, performance payments may be an inter-
esting alternative to conventional ex-post compensation.  
6 
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Compensation and Predator Conservation: Limitations of Compensation.

Compensation for damage caused by bears and wolves in the European Union: Experiences from LIFE-Nature projects.

Direct Payments to Conserve Biodiversity.

Economics of Biodiversity Conservation in Developing Countries. In

Female wolverine (Gulo gulo) reproduction: reproductive costs and winter food availability.

Governing the Commons: The Evolution of Institutions for Collective Action.

Gulo gulo. In: IUCN

Illegal jakt på rovdjur: En förstudie. Brottsförebyggande rådet,

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Livestock predation by endangered African wild dogs (Lycaon pictus) in northern Kenya.

Living Amidst Large Wildlife: Livestock and Crop Depredation by Large Mammals in the Interior Villages of Bhadra Tiger Reserve, South India.

Naturvårdsverkets författningssamling (NFS 2004:17): Naturvårdsverkets föreskrifter och allmänna råd om inventering samt bidrag och ersättning för rovdjursförekomst i samebyar.

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Policies for reducing human-wildlife conflict: a Kenya case study.

Silver bullet or fools’ gold? A global review of markets for forest environmental services and their impact on the poor. Instruments for sustainable private sector forestry series. International Institute for Environment and Development,

Space use by Eurasian lynx in relation to reindeer migration.

Survival rates and causes of mortality in Eurasian lynx (Lynx lynx) in multi-use landscapes.

The damage-conservation interface illustrated by predation on domestic livestock in central Italy.

The impact of human-wildlife conflict on human lives and livelihoods. In

Winter lynx Lynx lynx predation on semi-domestic reindeer Rangifer tarandus in northern Sweden.

Wolf Damage Compensation Schemes in Spain.

Performance payments for carnivore conservation in Sweden

Performance payments for carnivore conservation in Sweden

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