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

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

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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