Land for biodiversity conservation - To buy or borrow?

The conservation of endangered species and habitats frequently requires a certain type of land use which, however, leads to opportunity costs compared to profit-maximising land-use. In such a setting biodiversity conservation organisations have two main options: (1) The 'buy alternative' where they buy the area of interest and either carry out the necessary land-use measures themselves or hire firms to do so, or (2) the 'borrow alternative' where they 'borrow' the land for conservation from private landowners who agree to carry out biodiversity-enhancing land-use measures over a certain period while the conservation organisation compensates them for their opportunity costs. Comparing both alternatives raises the question of budget efficiency, i.e. which alternative will lead to a higher level of biodiversity conservation for a given financial resources? In this paper we present a conceptual ecological-economic model, and then apply the model to analyse how changes in ecological and economic parameters influence the relative efficiency performance of the two alternatives.