Contract design from a landowner perspective

Author

Stine Wamberg Broch and Suzanne Elizabeth Vedel

Scandinavian Forest Economics: Proceedings of the Biennial Meeting of the Scandinavian Society of Forest Economics, 6-9, issue 42

Abstract: There is a political goal in Denmark to increase the amount of forest from 12 % to 20-25 % of the land area and approximately 63 % of the land area is farmland which is mainly privately owned. Therefore, political goals with regard to afforestation cannot be satisfactorily reached on state owned areas alone and afforestation has been subsidized in Denmark since 1990. Due to private property rights and the possible conflict with public interest in nature, methods are needed to induce incentives for afforestation on private land. Contracts between the state and landowners are a common way to do this. Often monetary incentives are used as the primary way to heighten the acceptance rate of the contracts, however, little is known with regard to the effect of other attributes. This paper present a proposal of a planned study where we would like to investigate the effects of: main purpose of the afforestation, value of the option to denounce contract, size of afforested area and timing of the compensation. Data will be gathered through a Choice Experiment investigation (CE). The CE method is chosen since it allows us to investigate both quantitative and qualitative attributes at various levels.

Keywords: Contracts; afforestation; choice experiment; attributes; landowner; contract theory; adverse selection.; Community/Rural/Urban Development; Consumer/Household Economics; Land Economics/Use (search for similar items in EconPapers)
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