Journal of Forest Economics > Vol 19 > Issue 2

Landowners’ conservation motives and the size of information rents in environmental bidding systems

Artti Juutinen, artti.juutinen@metla.fi , Erkki Mäntymaa, Markku Ollikainen
 
Suggested Citation
Artti Juutinen, Erkki Mäntymaa and Markku Ollikainen (2013), "Landowners’ conservation motives and the size of information rents in environmental bidding systems", Journal of Forest Economics: Vol. 19: No. 2, pp 128-148. http://dx.doi.org/10.1016/j.jfe.2012.12.001

Publication Date: 0/4/2013
© 0 2013 Artti Juutinen, Erkki Mäntymaa, Markku Ollikainen
 
Subjects
 
Keywords
BiodiversityCompetitive biddingInformation rentsPayments for ecosystem servicesVoluntary participation
 

Share

Download article
In this article:
Introduction 
Approach to information rents 
Data and parametric forest rent functions 
Results 
Econometric analysis of the determinants of rental payments 
Discussion and conclusions 

Abstract

We examine landowners’ conservation motives, conservation costs and information rents in environmental bidding systems designed for forestry with the help of Faustmann and Hartman models and data from Finnish conservation program. We show that the Faustmann landowners receive information rents, on average 55% of the rental payments. For the Hartman landowners the high conservation costs of old stands result in low information rents; they are only 13% of the rental payments. This estimate omits amenity benefits the landowners derive from their forests; accounting for these benefits would increase information rents dramatically. Despite the high information rents, landowners’ conservation motives decrease the rental payment required for participation in the conservation program. Hence, landowners’ conservation motives give governments a great opportunity to allocate conservation contracts in a more cost effective way, thereby extracting larger benefits for scarce conservation funds.

DOI:10.1016/j.jfe.2012.12.001