Assessing the cost-effectiveness of a biodiversity conservation policy: A bio-econometric analysis of Natura 2000 contracts in forest

•We assess the cost-effectiveness of Natura 2000 contracts in forest areas in France•We jointly estimate a cost function for biodiversity conservation and a forest production set•We find that biodiversity conservation and timber production are strongly substitutable•Biodiversity conservation contracts are characterized by increasing returns to scale•Private forest owners are the most cost-effective for biodiversity conservation

In France, the implementation of the EU biodiversity conservation policy within the Natura 2000 network combines regulatory tools and voluntary contracting. In this article, we empirically assess the cost-effectiveness of Natura 2000 contracts in forest areas. We simultaneously estimate a cost function for biodiversity conservation and the production set of biodiversity output and timber, while controlling for conservation measures. We show strong substitutability between biodiversity conservation and timber production. Estimate results on the cost-elasticity of biodiversity conservation also suggest the possibility of more ecologically ambitious contracts with lower average costs. Results also show that public owners are able to bear higher opportunity costs than private owners. Our findings may help to formulate policy recommendations in terms of contracts' targeting, likely to enhance the cost-effectiveness of the incentive scheme.