WP3: Insuring Biodiversity

Prof. Dr. Martin Quaas, Sophie Harzer

German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig, University of Leipzig 

Just as grassland yield, the magnitude of non-marketable ES that grasslands provide to the benefit of society at large, are uncertain, particularly under changing environmental conditions. However, in the usual market system, farmers do not receive economic benefits from producing these services. Here, we study under which conditions and to what extent social insurance is provided by two approaches to remunerate the provision of plant species diversity, namely community-supported agriculture (CSA), and risk-adapted payments for ecosystem services (PES).                                                                                                                                                                        

Task 3.1 and 3.2: CSA provides social insurance if households – in their double role as consumers of farm products and citizens caring for the state of the natural environment – take part of the risk in the supply of marketable ES in return to non-marketable ES, especially biodiversity maintenance. To study the potential social insurance character of CSA we (a) measure household preferences over agricultural products, biodiversity maintenance and risk by adopting a series of discrete choice experiments, standard incentivized experiments and the collection of sociodemographic characteristics, and (b) develop a microeconomic model of household decision making under multidimensional risk preferences.

Task 3.3: Risk-adapted PES schemes would be a new form of social insurance, if society provides payments for biodiversity protection that have an insurance function for farmers, and explore this idea by means of a dynamic principal-agent-model. We finally study interactions of different PES schemes with CSA and under which circumstances PES and CSA are complements or substitutes for (a) maintenance of biodiversity and (b) risk reduction for farmers in face of climate extreme events.