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Abstract
This model explicitly incorporates the
dynamic aspects of conservation programs with
incomplete compliance and it allows landholders’
behaviour to change over time. We find that incomplete
and instrument-specific enforcement can have a
significant impact on the choice between subsidy
schemes and reserves for conservation policies. The
results suggest that it is useless to design a conservation
scheme for landholders if the regulator is not prepared
to explicitly back the program with a monitoring and
enforcement policy. In general, the regulator will prefer
to use compensation payments, if the cost of using
government revenues is sufficiently low, the
environmental benefits are equal, and the cost efficiency
benefits exceed the (possible) increase in inspection
costs. If the use of government funds is too costly, the
reserve-type instruments will be socially beneficial.