Developing incentives and economic mechanisms for in situ biodiversity conservation in agricultural landscapes

The main focus of this paper is agrobiodiversity and its effects on agricultural production within agricultural landscapes. The interest is to shed light about the fundamental causes of agrobiodiversity loss by focusing upon the institutional or meso-economic environment that mediates farmers’ decentralized decisions. Since the main causes of farmers’ decisions to ‘disinvest’ in agrobiodiversity as an asset lie in the incentives offered by current markets and other institutions, the solution to the problem also lies in corrective institutional design. This paper discusses the institutional issues involved in establishing market-like mechanisms for agrobiodiversity conservation. Three steps are highlighted in such process: demonstration (valuation), capture and sharing of conservation benefits (mechanism design). This information is then used to examine the potential success of nascent market creation incentive mechanisms for biodiversity conservation, including: (i) payments/rewards for ecosystem services, (ii) direct compensation payments, (iii) land use development rights, and (iv) auctions for biodiversity conservation. The potential gains to society from their use with regard to agrobiodiversity conservation are discussed and some illustrative examples involving their application in different parts of the world are also described.