design and administer, therefore it is advised that expert assistance is brought in to review the potential costs and benefits, design and pilot such a scheme.
Apx Table C. 7 Strengths and challenges of stewardship payments
Strengths
� Pays for outcomes and so pays for more than one action
� Can be used to pay for outcomes over time
Challenges
� Deciding on duty of care over which stewardship is rewarded
� Deciding on the correct level of payment � Budget to facilitate payments
� As it is fixed price, does not utilize the heterogeneity of the landscape and landholder cost to get the greatest bang for the buck
� May not engage with landholders who do not usually engage
Apx Table C. 8 Strengths and challenges of a competitive tender
Strengths
� Pays for outcomes( so can be used to make payments over time)
� Reveals the cost for landholders to conduct activities
� Potential to be a more cost-effective approach to allocating a fixed budget than a fixed price scheme
� Informs landholders of the public benefit of land management
� The competitive process may be of interest to landholders who have not engaged with
Challenges
� Need many sellers to be competitive( which is not the case if the tender was only available in BBB, would need to be much broader across GBR catchments)
� Need to generate a benefits index to assess offers for value for money
� Design and implementation of such a scheme can be complicated which can generate high transaction costs to design, implement and administer
� Need to consider if paying over time or one-off payments for one off action
� Need to enforce management plan to maintain value( can be linked to payments) and be clear about management responsibility
� For gully issues in the BBB time-periods need to be long in some cases to generate benefits
C. 2.3
Cap and trade
A cap and trade style incentive is a polluter pays financial incentive but enables flexibility and innovation by creating a cap on the total level of an activity that can take place and allocates rights to emit to this cap to market participants. Participants can then buy and sell emission rights according to their needs. This style of incentive is best applied when there is a clear emission target that must be met. A cap and trade scheme requires administration by an agency that has the authority to set and enforce an emission cap and allocate and enforce rights to emit as well as the conditions under which trade can take place and how rights will be monitored and enforced.
Reef credits is a cap and trade style incentive being considered for the BBB. There are many institutional components that are being worked through for this scheme.
84 | Landholders driving change: Exploring new incentives