Published online by Cambridge University Press: 29 February 2020
Having laid the foundation of economic policy analysis in Chapters 9 and 10, Chapter 11 presents literature examples of incentive design. The art of incentive design is to offer agents (land users) financial incentives so that it is in their own interest to carry out conservation measures with an effort, at those sites and at those times, so that biodiversity is conserved cost-effectively. This chapter starts with the problems of asymmetric information and moral hazard. The following sections discuss the difference between budget-effectiveness and cost-effectiveness, introducing conservation auctions as alternatives to conservation payments, addressing the problem of incentivising the creation of habitat heterogeneity in a landscape, and lastly outlining the functioning of the agglomeration bonus that incentivises the provision of spatially agglomerated habitat for species.