3.2.8 Nesting, stacking and path dependencies of current and future incentives
Incentives are never introduced in a policy vacuum. New incentives need to be assessed in terms of how they interact / nest with current and future policies and programs. In the case of the BBB, it is recommended that incentive schemes build on the success of the BMP programs and do not compromise the effectiveness of these existing programs or produce unintended and perverse results. Land management is also underpinned by regulation.
Current policies and programs may rule out the introduction of some incentives and / or make others more attractive( if existing schemes reduce transaction costs of implementing and administering new incentives, for example). Future goals also need to be considered when choosing and implementing new incentives and conducting the groundwork to operationalize incentives( such as setting up systems which enable the measurement of cause and effect). The introduction of some incentives may support the implementation of other incentive approaches in the future( extension may be the best approach to bring in new landholders initially and build support for other incentives, such as a competitively allocated stewardship payment or credit trading markets, in the future). Alternatively, the selection of an incentive mix now may make the implementation of other incentive mixes cost prohibitive in the future. At the same time, it is a good idea to asses if there are any current policies and programs that work against the goals of the new incentive or impede the effectives of the new incentive. This is often referred to as removing perverse incentives.
SEE RECOMMENDATIONS 3, 4 and 5 in Section 4.
3.2.9 Can the benefits be maintained through time?
The environmental benefits derived from incentives need to be maintained through time. This is particularly the case when financial payments are made to landholders. Maintaining benefits through time is typically managed through a land management agreement or contract but the method of maintaining benefits should be matched to the level of investment, as well as the history of landholder engagement.
At the top end of the investment spectrum are financial payments to landholders. If large sums are paid to landholders, then payments should be linked to the initial signing of an agreement / contract and then linked to the achievement of certain milestones through time. As discussed in section 3.2.6, whilst a payment linked to an outcome is the best possible way to ensure benefits are maintained through time, for outcomes with long time lags, such as sediment reduction, payments may be better linked to achievable input milestones so as to not reduce participation. Regardless, establishing land management agreements or contracts that run for a period of time to see benefits is critical to maintaining benefits. LDC will need to think about the need for contracts, length of time for contracts, and the method to ensure compliance to contracts taking risk and uncertainty prolific in the natural environment into consideration.
Landholders driving change: Exploring new incentives | 39