Tasmanian landowner preferences for conservation incentive programs: A latent class approach

Abstract

An empirical model of landowners’ conservation incentive program choice is developed in which information about landowners’ socio-economic and property characteristics and their attitudes, is combined with incentive program attributes. In a Choice survey landowners were presented with the choice of two incentive programs modelled as 'bundles of attributes’ mimicking a voluntary choice scenario. Landowner behaviour and decision and the type of conditions and regulations they preferred were analyzed.

Based on choice survey data, landowner heterogeneity was accounted for using a latent class approach to estimate the preference parameters. Three latent classes of landowners with different attitudes to the role and outcome of establishing conservation reserves on private land were identified: multi-objective owners; environment owners; and production owners.

Only a small proportion of landowners, mostly environment owners, would voluntarily join a program. Although compensation funding contributed to voluntary program choice for multi-objective owners and environment owners, welfare losses were around 4000 AUD per hectare, which is less than the average agricultural land value in Tasmania.

Landowners for whom compensation funding contributed to voluntary program choice were also most likely to set aside land for conservation without payment. This raises the possibility that the government’s compensation expenditure could potentially be either reduced or re-allocated to landowners who will not voluntarily take conservation action. Increasing participation in conservation incentive programs and minimizing the welfare losses associated with meeting conservation targets may be best achieved by offering programs that allow flexibility in terms of legal arrangements and other program attributes.

Introduction

Australia possesses flora and fauna that are both highly endemic and has great species richness compared to many other parts of the world. However, much of Australia’s rich biodiversity is threatened with extinction due to habitat loss or the degradation of habitat quality. As over 60 percent of land in Australia is managed by private landholders (Productivity Commission, 2001) many threatened ecosystems occur on private land.

Incentive programs for private forest conservation have existed in Australia for more than two decades (Figgis, 2004). Incentives currently comprise grants (including management and stewardship payments), subsidies, tax relief, rate relief, offset payments, development incentives, the creation of environmental markets, and market-based incentives (e.g. James, 1997, Bateson, 2001, Comerford and Binney, 2004, Department of Environment and Water Resources, 2006). Most conservation incentive programs in Australia are voluntary and in joining a program landowners will generally restrict the use of the land by legal agreements or other means (CSIRO Wildlife and Ecology, 2001).

Tasmanian incentive programs have added significantly to biodiversity conserved on privately owned land.⁴ Landowners in this State were paid, approximately one-third of the estimated market price, to secure covenants on 180 properties in 2005 (Smith, 2001, Department of Primary Industries and Water, n.d.). Nevertheless, in some regions more than 80 percent of land with conservation value remains unprotected and programs routinely fail to meet enrolment targets (Department of Environment and Water Resources, 2007). Targets are not being met even though there is flexibility in the amount of compensation that may be offered and available funds have not reached their limit. Considering the overall budget is adequate and the fact there is no evidence of a landowner waiting list, indications are that other landowner decision variables play a role. This has resulted in considerable debate not only about the design of programs but also around the question of whether landowners should be forced to protect land for conservation in order to achieve stated policy and conservation objectives. Due to the Australian constitution, even legislative or forced conservation in Australia would require some compensation to be paid to landowners. The option of forcing landowner entry into conservation incentive programs has already been considered in some Australian States (e.g. Stoneham et al., 2000). But before implementing compulsory schemes and to ensure Australian conservation targets will be met in the future, understanding landowners’ preferences for incentive program attributes is likely to become increasingly relevant.

Participation in incentive programs is dependent on many variables that can be loosely grouped into four areas: program characteristics; landowner characteristics; property and business characteristics; and landowner attitude (e.g. Ervin and Ervin, 1982, Esseks and Kraft, 1986, Purvis et al., 1989, Cooper and Keim, 1996, Drost et al., 1996). Some studies have considered one or more of these four groups of variables, but none have systematically considered all four together as is undertaken in this current research.

Our general aim is to investigate landowner preferences for conservation incentive program attributes to better understand the contribution of the different program attributes to the decision to voluntarily join conservation programs. We also focus our investigation on the contribution of latent attitudes to the role of conservation on private land to the likelihood of joining conservation incentive programs. The outcomes of the study are intended to provide information that is useful in the development of new incentive programs and thus ensuring conservation targets are met in the future.

The existing literature within each of the four groups of variables that contribute to landowner participation in incentive programs is reviewed below.