How do incentive-based environmental policies affect environment protection initiatives of farmers? An experimental economic analysis using the example of species richness

a r t i c l e i n f o To address ongoing biodiversity losses, the use of incentive-based nature protection policies is increasingly recommended. In the present paper, we examine how action and result-oriented agricultural policy measures affect the species protection initiatives of real agricultural managers. To do so, we use a computer-based economic experiment involving a multi-period individual business simulation game. Our results indicate that action-oriented measures do not have any impacts on farmers' initiatives to protect species. In contrast to action-oriented policy measures, result-oriented measures with identical profit effect significantly increase these initiatives. Although risk-averse farmers are less willing to participate in result-oriented measures than non-risk-averse farmers, in general, risk aversion does not influence farmers' species protection initiatives. Furthermore, the species protection initiatives are influenced by the opportunity costs of species protection. In 1992, the Convention on Biological Diversity (CBD) was signed in Rio de Janeiro, in which 168 member states committed to conserve biodiversity. Despite this agreement, biological diversity is still decreasing at an alarming rate (Zabel and Engel, 2010). Since a substantial amount of biodiversity losses may be due to agricultural activities (Hails, 2002; Tscharntke et al., 2005), agriculture plays an important role in conserving biodiversity. The provision of ecosystem services, such as biodiversity , partially depends on farm management (Dale and Polasky, 2007; Power, 2010; Hanley et al., 2012). In order to preserve ecosystems and to address ongoing biodiversity losses, scientists increasingly recommend the use of incentive-based conservation policies (Kroeger and Casey, 2007; Ulber et al., 2011). A typical instrument of the European Union (EU) to remuner-ate ecological services in agriculture is agri-environmental programs, anchored in the Common Agricultural Policy (CAP) since 1992. Within such programs, farmers receive payments for implementing specific agri-environmental measures. The major part of the existing agri-environmental measures aims to remunerate the provider of the ecological service, i.e. the farmer, for implementing specified land-use measures that are expected to lead to an improvement of ecological conditions (Engel et al., 2008; Gibbons et al., 2011; Hanley et al., 2012). This concept is also referred to as action-oriented remuneration (AOR). However, many studies on systematic evaluation of agri-environmental measures reveal that agri-environmental measures do not have the expected effects, show only moderate effects, or even lead to negative effects (Kleijn et al. design of European agri-environmental measures still lacks the necessary effectiveness and efficiency. The next financial period of the CAP …