Addionality and Economic Incentives to Sustainable Agriculture in Alberta
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Incentivizing desirable practices – that is, rewarding private actions that generate ecosystem goods and services and other public goods, while penalizing private actions that produce negative externalities – is a critical component in sustainable policy (Defries & Nagendra, 2017). Financial incentives to landowners, both positive and negative, can be cost-effective mechanisms for achieving environmental outcomes (Pannell, 2008).
A key feature of many compensation or credit schemes is that payments to landowners are made only for “additional” benefits, and that no payments are due for actions or practices which would have been carried out even in the absence of the scheme (Horowitz & Just, 2013). The rationale for the “additionality” requirement is that the purpose of compensation is to induce a change in private behaviour. On the other hand, failure to compensate landowners who already engage in best practices can be regarded as unfair. It may also be argued that additionality perversely incentivizes such landowners to abandon best practices in order to gain eligibility for compensation.
- Compile a catalogue of existing direct and indirect incentives for best management agricultural practices in Alberta
- Analyze existing research into additionality, as well as previous experience with additionality in Alberta and in other Canadian provinces
- Assess the policy implications of additionality, and in particular, the efficiency and equity of additionality/alternative baselines or policy-mixes for structuring incentives to private landowners
Project Period: (One year) Call for Proposals in May 2017 with project completion by October 2018.
Proposed Budget: A maximum of $40,000. Funding for further research may be available in subsequent years depending on the potential policy implications and the proposed approach.
- Pannell, D. J. (2008). Public Benefits, Private Benefits, and Policy Mechanism Choice for Land-Use Change for Environmental Benefits. Land Economics, 84(2), 225-240.
- Horowitz, J. K., & Just, R. E. (2013). Economics of Additionality for Environmental Services from Agriculture. Journal of Environmental Economics and Management, 66(1), 105-122.
- DeFries, R., & Nagendra, H. (2017). Ecosystem management as a wicked problem. Science (New York, N.Y.), 356(6335), 265-270.