Landowner bargaining power

Lennox, G.D., Gaston, K.J., Acs, S., Dallimer, M., Hanley, N. & Armsworth, P.R. 2013. Conservation when landowners have bargaining power: continuous conservation investments and cost uncertainty. Ecological Economics 93, 69-78.

Spatially heterogeneous costs of securing conservation agreements should be accounted forwhen prioritizing properties for conservation investment. Most researchers incorporating conservation costs into analyses have relied on estimates of landowners’ opportunity costs of accepting a conservation agreement. Implicitly assumed in such studies is therefore that thosewho“produce” biodiversity (landowners) receive none of the surplus available from trade. Instead, landowners could use their bargaining power to gain profits from conservation investments. We employ game theory to determine the surplus landowners could obtain in negotiations over conservation agreements, and the consequent effects on conservation outcomes,when enrolment decisions are governed by continuous variables (e.g. the proportion of a property to enrol). In addition, we consider how landowner uncertainty regarding the opportunity costs of other landowners affects these outcomes. Landowners’ ability to gain surplus is highly variable and reflects variation in the substitutability of different properties for achieving a specified conservation objective. The ability of landowners to obtain profits from conservation agreements results in conservation outcomes that are substantially diminished relative to when landowners accept investment at opportunity costs. Uncertainty increases landowner profits, leading to a greater diminution in conservation benefits.