Our overall intent is to provide much needed information and perspective on this important
new conservation trend in terms of both theory and practice. Hopefully, the discussion will also
entice other researchers to focus attention on private parks, leading to additional and deeper
economic
analyses. Finally,
the information
should be useful wherever biodiversity remains threatened, wherever conservationists are looking
for new partners, and wherever private reserves are being established, which includes most of the
industrialized and developing world.
2. Theoretical framework
Bennett 1995 offers a tripartite theoretical jus- tification for private sector conservation initia-
tives. Reasons include ameliorating a government failure i.e. compensating for government’s appar-
ent undersupply of protected areas, reducing free-riding i.e. not ‘crowding out’ altruistic en-
deavors, and encouraging joint supply of public goods i.e. landowners supplying indirect, non-use
values that benefit society at large.
Economists have started paying increased at- tention to the myriad non-market values provided
by protected areas in addition to traditional mar- ket values. A formula for calculating the total
value of a park appears in Fig. 1. Note that passive or non-use values are an important part of
the equation, and that provision of these benefits can come not just from state-owned parks, but
from private ones as well. In the equation, be- quest value represents the value of keeping a
resource intact for one’s heirs Krutilla, 1967. Option value refers to the value of the option to
make use of the resource in the future Weisbrod, 1964. Quasi-option value is the value of the
future information protected by preserving a re- source Arrow and Fisher, 1974; Henry, 1974;
Fisher and Hanemann, 1983. Existence value em- bodies the value conferred by assuring the sur-
vival of a resource Krutilla, 1967; Pearce and Turner, 1990.
Given this suite of public and private benefits, how might landowners decide how much land to
protect? Fig. 2 shows how landowners might allo- cate resources. The figure is derived from two
sources in particular Edwards, 1995; Chapman, 1997, and is based on the assumption that a
producer is willing to produce to the point at which the marginal cost of provision of one extra
unit is equal to the marginal benefit derived from one extra unit. If landowners take into account
only their own benefits MB
L
, rather than the marginal benefit to society MB
S
, they will pro- tect Q
L
, which falls short of the area society would want protected Q
S
. On a theoretical level, the global proliferation of conservation incentive
programs represents society’s attempt to compen- sate landowners for this externality.
Fig. 1. Total environmental and economic value of natural areas.
Fig. 2. Costs and benefits of protecting natural areas on private lands.
minimum area of Q
M1
, whereas a jaguar might require a minimum of Q
M2
Fig. 2. Even small private reserves, therefore, may be sufficiently
large to maintain viable populations of certain species. What matters most are management
objectives and connectivity to other protected ar- eas.
Finally, landowner decisions concerning the amount of land to protect do not occur in a
vacuum and can be affected by larger trends. This is especially true for reserves that have an eco-
tourism business. For example, ecotourism re- serves can be in what Yu et al. 1997 described as
a classic free rider situation. Given the small amount of land needed to stage a hike in the
woods, and the fact that most tourists are inca- pable of recognizing ecological damage in a re-
serve, owners do not really need to maintain a large or ecologically intact park. Instead, they can
rely on a country’s conservation reputation to bring a steady stream of paying visitors, regard-
less of conditions in their own reserves.
3. Methods
