Three-Stage Tradable Set-Aside Requirements, Interdependent Values, and Biodiversity Production on Private Lands

Mark D. Agee and Thomas D. Crocker

Abstract

We propose a static three-stage incentive-compatible, budget-balanced, execution-contingent mechanism for a regulator to allocate biodiversity-protection responsibilities across a landscape mosaic with multiple value-interdependent owners. The mechanism motivates owners to truthfully report their opportunity costs of protection to the regulator and comply with their assigned habitat protection responsibilities. (JEL D71, Q57)

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