Forest Owners’ Acceptance of Incentive Based Policy Instruments in Forest Bio diversity Conservation – A Choice Experiment Based Approach

Finland has launched a new policy programme (METSO) to enhance conservation of forest biodiversity. In non-industrial private forests, the policy is based on economic incentives and voluntarism on the part of forest owners. While biodiversity conservation is the main target of the policy, social acceptability is considered to be of great importance. This study examined the factors that affect the acceptability of biodiversity conservation contracts among private forest owners, and the amount of compensation needed to keep the forest owners at least as well off as before the contract. Choice experiment method was used to analyse the data that were collected by surveying 3000 Finnish private forest owners. Analysing separately those respondents who were willing to enter into a conservation contract allowed an assessment of the impact of forest owners’ heterogeneity on compensation amount. The results show how the welfare of forest owners shifts when the contract terms are changed. In a base scenario the forest owner was assumed to be the initiator of the contract that would require only small patches of forest to be protected, and would also bind new forest owners over its duration of ten years. For all respondents, the average demand for compensation would be around 224 euros annually. When those always choosing the “no additional conservation” alternative were excluded, the average welfare impact of the base scenario was positive.