Conference Agenda

Market-based approaches to land conservation have become more prevalent and increasingly varied in recent years. A long-running trend away from fee simple acquisitions toward conservation easements has recently given way to more temporary payments for ecosystem services (PES) contracts including ``habitat leases'' and other flexible arrangements. This paper analyses the choice among possible contracts facing a conservationist who wishes to purchase additional conservation on private working land. We consider three different contractual arrangements: fee-simple acquisition, conservation easements, and PES. Our baseline result is that it is never optimal for the conservationist to purchase the land because some combination of easements and PES can always achieve any given level of conservation at a lower cost than outright acquisition. However, ownership may dominate in the presence of significant monitoring costs, especially in cases where the conservationist wishes to substantially reduce input usage relative to the landowner's optimum. Our model also provides important insights about when permanent easements are worthwhile relative to engaging in repeated temporary PES schemes. We find that the probability of development does not affect the choice of whether to pursue an easement. Rather, the key determinants of the desirability of easements are the conservation damages from land development (the benefit of the easement) and the added value to the landowner of developing (the cost of the easement).