Incentives for Spatially Coordinated Land Conservation: A Conditional Agglomeration Bonus Mechanism

The agglomeration bonus literature has not recognized the potential of conditional agreements to overcome the informational requirements, particularly those of landowners, necessary to induce spatially coordinated land conservation. The model presented in this paper shows that the net social benefits produced by a conditional agglomeration bonus program are at least as large as those produced by a traditional uniform subsidy whenever the benefit function exhibits threshold effects and the uniform and CAB subsidies are equal. This result requires no assumptions about the information available to landowners. A regulator’s informational requirements are limited to the shape of the benefit function.