3 How to motivate change? Investigating incentives for land management change in the BBB
3.1 Types of incentives
Individual landholders respond to a variety of incentives when making decisions about land management( Wills, 1997). Markets are based on private property rights and are the most widely used mechanism for signaling incentives to individuals in western society. Markets signal value through prices. Through the market, landowners are rewarded for land uses that produce marketable outputs( such as cattle production for beef) but not for other socially valued products such as the maintenance or enhancement of public goods( in this case, managing land processes to minimise the runoff of total suspended solids( TSS) onto the GBR). When the market fails to supply a good to the level that is socially desirable, market failure is said to have occurred and government intervention through changing the incentives that landholders face may be justified( Murtough, 2002). Government intervention is only justifiable if it is welfare enhancing and the benefits of the intervention outweigh the costs( see Coggan, Whitten, and Bennett( 2010) and Coggan( 2012)).
Incentives for intervention can be divided into three distinct categories: 1. Non-financial; 2. Financial; and 3. Regulatory.
Non-financial incentives are measures designed to improve the flow of information and corresponding signals and incentives without providing any direct financial payment to landholders. Non-financial incentives include information provision through extension or one-off training, programs that seek to lubricate an existing market such that it provides a financial incentive( a regional body or other entity operating as a broker in an existing market to reduce the administration costs of engaging in a market and gaining private financial gain) and measures that seek to reward landholders who are doing the right thing already.
Financial incentives: are designed to directly alter the structure of financial pay-offs to land managers and are usually specifically intended to substitute for missing monetary signals that are generated within markets for other goods and services. Depending on the allocation of property rights, financial incentives can be seen as a financial reward / compensation for the provision of the public good( in this case the property rights are considered to be held by the landholder which is referred to a beneficiary pays) or a fine for impacting on property rights held by the public( polluter pays). Financial incentives can be managed through a market-based instrument( MBI) or through a non-competitive process such as flat rate grants.
18 | Landholders driving change: Exploring new incentives