摘要：This paper addresses the problem of how to optimally structure economic incentives forlandowners to enhance bio-diversity protection on private lands and to cooperate with EndangeredSpecies legislation. It is motivated by two observations relating to regulation under asymmetricinformation. Firstly, even if landowners are compensated for regulatory losses to reduce perverseincentives for species conservation, any compensation scheme that may be adopted must anticipatepossible strategic behavior on part of the landowners. Secondly, compensation payments on the basis ofthe opportunity cost of the land do not guarantee the protection of the most valuable habitats, when theowners have private information on the habitat value of their lands. The problem of optimally structuredincentive schemes and the existing knowledge on regulation under asymmetric information has not yetbeen formally explored in the ESA literature. The paper applies a standard principal-agent framework todesign a compensatory contract scheme, which induces landowners to reveal privately held informationon conservation value of their land and to self-select a contract according to their underlying marginalconservation costs.
