Creating Markets for Habitat Conservation When Habitats Are Heterogeneous

A tradable development rights (TDR)
program focusing on biodiversity conservation faces a
crucial problem defining which areas of habitat should be
considered equivalent. Restricting the trading domain to a
narrow area could boost the range of biodiversity conserved
but could increase the opportunity cost of conservation. The
issue is relevant to Brazil, where TDR-like programs are
emerging. Current regulations require each rural property to
maintain a forest reserve of at least 20 percent, but
nascent policies allow some tradability of this obligation.
The authors use a simple, spatially explicit model to
simulate a hypothetical state-level program. They find that
wider trading domains drastically reduce landholder costs of
complying with this regulation and result in environmentally
preferable landscapes.