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How best to incentivize land managers to achieve conservation goals in an economically and ecologically effective manner is a key policy question that has gained increased relevance from the setting of ambitious new global targets for biodiversity conservation. Conservation (reverse) auctions are a policy tool for improving the environmental performance of agriculture, which has become well‐established in the academic literature and in policy making in the US and Australia. However, little is known about the likely response of farmers to incentives within such an auction to (1) increase spatial connectivity and (2) encourage collective participation. This paper presents the first framed field experiment with farmers as participants that examines the effects of two features of conservation policy design: joint (collective) participation by farmers and the incentivization of spatial connectivity. The experiment employs farmers in China, a country making increasing use of payments for ecosystem services to achieve a range of environmental objectives. We investigate whether auction performance—both economic and ecological—can be improved by the introduction of agglomeration bonus and joint bidding bonus mechanisms. Our empirical results suggest that, compared to a baseline spatially coordinated conservation auction, the performance of an auction with an agglomeration bonus, a joint bidding bonus, or both, is inferior on two key metrics—the environmental benefits generated and cost effectiveness realized. [ABSTRACT FROM AUTHOR]

The agglomeration bonus (AB) has been advocated as an incentive mechanism to boost spatially coordinated conservation efforts, where such coordination is thought to be beneficial to achieving biodiversity or other ecological outcomes. Specifically, an AB is paid to individual landholders if their conserved habitats are spatially connected to the conserved habitats of adjacent neighbours. This paper employs a series of controlled lab experiments with agriculture students to investigate the performance of AB in budget‐constrained discriminatory‐price auctions across different landscape types. We focus on the spatial correlation of opportunity costs and environmental benefits as one potentially important aspect of the landscape. We set up a stylised agricultural landscape where the conservation agency aims to connect fragmented wildlife habitats by incentivising farmers to enrol land in a conservation programme. We investigate the effects of an AB in landscapes where opportunity costs and environmental benefits are uncorrelated, negatively correlated or positively correlated over space. We found that the benefits of an AB in improving landscape‐scale environmental outcomes were significant in the positive correlation landscape. However, the AB resulted in worse outcomes in the uncorrelated and negative landscapes. [ABSTRACT FROM AUTHOR]

Coordination incentives like the agglomeration bonus have been proposed to induce the spatial agglomeration of biodiversity conservation efforts and counter the loss and fragmentation of species habitats. Most theoretical and empirical analyses of the agglomeration bonus make unrealistic assumptions about the spatial structure of landholdings. This paper presents a spatially explicit agent-based simulation model to explore how the spatial structure of landholdings affects the performance of the agglomeration bonus. It turns out that if the number of land parcels per landowner is large and their land is spatially cohesive, a higher proportion and agglomeration of conserved land parcels can be achieved for the given budget, implying a higher level of cost-effectiveness. This also has implications for the cost-effective design of coordination incentives. The observed effects are especially high if the conservation costs vary strongly in space.

Managed retreat in the form of voluntary flood-buyout programs provides homeowners with an alternative to repairing and rebuilding residences that have sustained severe flood damage. Buyout programs are most economically efficient when groups of neighboring properties are acquired because they can then create unfragmented flood control areas and reduce the cost of providing local services. However, buyout programs in the United States often fail to acquire such efficient, unfragmented spaces, for various reasons, including long administrative timelines, the way in which buyout offers are made, desires for community cohesion, and attachments to place. Buyout programs have relied primarily on posted price mechanisms involving offers that are accepted or rejected by homeowners with little or no negotiation. In this paper, we describe four alternative strategies that have been used successfully in land-preservation agricultural–environmental contexts to increase acceptance rates and decrease fragmentation: agglomeration bonuses, reverse auctions, target constraints, and hybrid approaches. We discuss challenges that may arise during their implementation in the buyout context—transaction costs, equity and distributional impacts, unintended consequences, and social pressure—and recommend further research into the efficiency and equity of applying these strategies to residential buyout programs with the explicit goal of promoting spatial coordination. [ABSTRACT FROM AUTHOR]

Voluntary home buyouts can be an effective way to protect homeowners from severe and repeated flood risk while also benefiting the local community by creating flood control areas and reducing local infrastructure costs. Successful implementation of residential buyout programs is complicated by homeowners' (unobservable) attachment to place and community. In the presence of such preferences, standard posted price offers at fair market value are generally too low to induce a majority of homeowners to move, resulting in spatially fragmented (checkerboarded) buyout patterns, which can be troublesome from both a community and environmental perspective. To help resolve the resulting coordination problem, we experimentally test two acquisition mechanisms from the land conservation literature in the residential flood buyout context, posted price offers and reverse auctions, and pair them with two additional program features, agglomeration bonuses and target constraints (also known as provision points—a threshold required for the buyout to be implemented). Using an induced-value approach, we show that both reverse auctions and agglomeration bonuses are effective at increasing contiguity in this setting by inducing more homeowners to accept buyout offers and to move away from the neighborhood. However, reverse auctions have the advantage of being flexible enough to accommodate heterogeneity in place and community attachment. If external benefits are non-linearly increasing in the number of contiguous residential lots acquired, adding a target constraint to a reverse auction is a potential avenue for effective future buyouts. • Voluntary home buyouts can protect homeowners from severe, repeated flood risk. • Checkerboarding limits external benefits when buyouts are not spatially targeted. • We use a lab experiment to test alternative buyout mechanisms. • We find that reverse auctions and agglomeration bonuses improve contiguity. • Auctions can accommodate heterogeneity in homeowner valuations. [ABSTRACT FROM AUTHOR]

An important mechanism of species co-existence in spatially structured landscapes is the competition-colonisation trade-off which states that co-existence of competing species is possible if, all other things equal, the better competitor is the worse coloniser. The effectiveness of this trade-off for the facilitation of co-existence, however, is likely to depend on the spatial arrangement of the habitat, because too strong agglomeration of the habitat may overly benefit the strong competitor (being the poor disperser), implying extinction of the inferiour competitor, while too much dispersion of the habitat may drive the superiour competitor (being the inferiour coloniser) to extinction. In working landscapes, biodiversity conservation is often induced through conservation payments that offset the forgone profits incurred by the conservation measure. To control the spatial arrangement of conservation measures and habitats in a conservation payment scheme, the agglomeration bonus has been proposed to provide financial incentives for allocating conservation measures in the vicinity of other sites with conservation measures. This paper presents a generic spatially explicit ecological-economic simulation model to explore the ability of the agglomeration bonus to cost-effectively conserve multiple competing species that differ by their competition strengths, their colonisation rates and their dispersal ranges. The interacting effects of the agglomeration bonus and different species traits and their trade-offs on the species richness in the model landscape are analysed. Recommendations for the biodiversity-maximising design of agglomeration bonus schemes are derived.

The effectiveness of biodiversity conservation initiatives depends on their ability to maintain and restore the integrity and connectivity of ecological systems. Payments for environmental services (PES) can encourage farmers to set aside land for conservation, but landscape connectivity requires coordination among land users. Fairness in the distribution of payoffs has been shown to affect conservation efforts in response to PES, but the sources of inequality in payment allocation mechanisms can be manifold. Here we focus on the performance of conservation incentives under alternative payment modalities and levels of inequality in land ownership. We applied lab-in-the-field experiment with 384 Tanzanian farmers from two ecological corridors. Groups of participants were endowed with either equal or unequal amounts of hypothetical farmland and subsequently exposed to two treatments, namely a fixed individual payment and a fixed payment with an agglomeration bonus. Both payment modalities had positive effects on conservation, but we find no strong evidence for impact of asymmetries in landownership on conservation decisions. Overall, our results suggest that conditional payments can be effective even when land with high conservation value is unequally distributed in ecological corridors. [ABSTRACT FROM AUTHOR]

Nearly half of imperiled species (IS) listed under the US Endangered Species Act have most of their habitat on private land. Management of IS therefore relies on engaging private landowners in conservation to avoid listing and the accompanying land use restrictions. Two types of voluntary policy instruments are used to incentivize conservation on private lands: subsidies and voluntary conservation agreements with assurances (VCAAs), under which landowners implement conservation practices in return for assurance that no land use restrictions will be imposed if the practices are maintained. No prior work compares landowners' incentives for strategic behavior under these instruments. This is important because habitat quality is influenced by landscape size, connectivity, and composition. The probability that an IS becomes listed—and the economic risks facing landowners—depends endogenously on management decisions by multiple landowners. We use theoretical and experimental approaches to compare conservation effort, spatial allocation of this effort, and cost-effectiveness of species protection under each instrument when species protection requires spatially-contiguous coordination. We find that VCAAs with land use restrictions are no more effective than land use restrictions with or without subsidies in coordinating conservation effort, and they do not result in greater species protection. Land use restrictions—either alone or coupled with subsidies—improve coordination. [ABSTRACT FROM AUTHOR]

The incorporation of an agglomeration bonus payment to encourage spatial coordination in auction mechanisms to allocate payments for ecosystem services (PES) contracts has been explored as a promising innovation that could enhance the effectiveness of PES schemes. Empirical evidence on the performance of this particular design feature is scant, and almost exclusively derived from laboratory experiments using student subjects. This study reports results from a framed field experimental auction allocating PES contracts with and without agglomeration bonus payments using actual forest land owners in rural China as subjects. We find tentative evidence that, in a PES auction that provides agglomeration bonuses, subjects tend to bid less in anticipation of receiving bonus payments when their neighbours are also successful in the auction. In addition, we have mixed findings as to whether the agglomeration bonus is able to induce a bidding pattern in favour of contiguous conservation. The two sets of results convey some encouraging signals of the theoretically postulated cost-effectiveness and conservation efficacy of the agglomeration bonus. Further research from the actual field is warranted in light of the policy significance of this innovative incentive mechanism. [ABSTRACT FROM AUTHOR]

An increasing number of papers analyse the inclusion of collective/spatial conditionality constraints in agricultural policies dealing with natural resource management. In this article we theoretically assess the conditions in which employing collective conditionality constraints linked to incentives better reach the social preferences on PG provision by agriculture. We deal with this issue by using a coalition formation model to endogenize the size of the group of farmers cooperating, and investigate how it is affected by different policy schemes. We analyse and compare the following policy schemes: (1) a homogenous payment that target the whole population of farmers, (2) a coalition bonus, that incentivizes only the contributions by the coalition members, and (3) a coalition bonus associated to a MPR on the size of the coalition. The results show that formulating payments that discriminate between co-operators and free-riders, and associating to such a payment a MPR, is relatively more effective than the traditional homogenous payments. However this is true only under some (local) conditions that we theoretically derived. [ABSTRACT FROM AUTHOR]

Incentivising farmers in the context of agri-environment schemes to provide spatially-connected conservation measures is a challenging task. The idea of an agglomeration bonus – where farmers are paid a bonus on top of a spatially homogeneous payment if they provide spatially connected conservation areas – has been suggested in the literature as a possible solution. Existing literature on the agglomeration bonus focuses on its theoretical analysis whereas we provide an evaluation of an existing policy that exhibits strong features of the agglomeration bonus idea – the Swiss network bonus scheme. We present an evaluation of three conservation projects that include the network bonus scheme using the criteria of ecological effectiveness, monitoring and enforcement, cost-effectiveness and dynamic incentive effects. Given the limited amount of data available and the fact that ours is the first investigation of this policy, we carried out a qualitative, exploratory study. [ABSTRACT FROM AUTHOR]

Ising models have been applied not only to describe physical systems but also systems of interacting animals and humans. In contrast to physical entities, animal and humans exhibit more complex behaviour such as risk aversion, so that certain payoffs are, for given expected payoff, preferred to uncertain payoffs. Here I extend the classical Ising model to consider risk aversion, and show that this affects the model's stability domains: if individuals are risk averse and their choices differ by the associated risk levels, then higher coupling constants are required to sustain system states in which the riskier choice is abundant; otherwise the risky choice is accompanied (bistability) or even replaced in the system by the less risky choice. The model and results are applied to an economic incentive scheme for the conservation of biodiversity, the agglomeration bonus, that induces not only conservation measures but rewards their spatial agglomeration. Here conservation is the risky choice whose abundance in the land-use system is shown to decline if the landowners are risk-averse. • Risk aversion is included in the classical Ising model. • Risk aversion affects the stability domains of the model. • The agglomeration bonus incentivises spatially aggregated biodiversity conservation. • Risk-averse landowners under an agglomeration bonus conserve less land. [ABSTRACT FROM AUTHOR]

To counter not only the continuous loss but also the fragmentation of species habitats, coordination incentives (CI) have been proposed to incentivise the spatial aggregation of conservation efforts. An important issue is the cost-effective design of these instruments. Two main types of CI, the agglomeration bonus and the agglomeration payment, are analysed with stylised models. Their ecological effects are assessed through a metapopulation simulation model. Rather than choosing the usual approach and analysing the joint ecological-economic model, I analyse the ecological and economic sub-models separately and join the results within an economic production theory framework in which production factors (here, the proportion and aggregation of conserved land parcels) are financed under a budget- or cost constraint and generate an output (here, metapopulation viability). This decomposition of the ecological-economic analyses allows highlighting the ecological and economic trade-offs between proportion and spatial aggregation of conservation and generating a more general understanding of the budget- and cost-effectiveness of CI. Results include, among others, that the agglomeration payment is never more budget- and cost-effective than the agglomeration bonus and that in the agglomeration bonus the budget-effective level of spatial aggregation is lower than the cost-effective level. • Ecological-economic models of coordination incentives are presented. • The models are analysed within an economic production theory framework. • Scheme cost-effectiveness depends on ecological and economic parameters. • The agglomeration payment is never more cost-effective than the agglomeration bonus. [ABSTRACT FROM AUTHOR]

Agricultural producer participation and spatial coordination of land use decisions are key components for enhancing the effective delivery of ecosystem services from private land. However, inducing participation in Payment for Ecosystem Services schemes for coordinating land management choices is challenging from a policy design perspective owing to transaction costs associated with participation. This paper employs a laboratory experiment to investigate the impact of such costs on participation and land use in the context of an Agglomeration Bonus (AB) scheme. The AB creates a coordination game with multiple Nash equilibria related to alternative spatially-coordinated land use patterns. The experiment varies transaction costs between two levels (high and low), which affects the risks and payoffs of coordinating on the different equilibria. Additionally, an option to communicate is implemented between neighbors arranged on a local network to facilitate spatial coordination. Results indicate a significant difference in participation and performance under high and low transaction costs, with lower uptake and performance when transaction costs are high. These effects are, however, impacted by transaction costs faced in the past. Communication improves both AB participation rates and performance with the effect being greater for participants facing high transaction costs. [ABSTRACT FROM AUTHOR]

Two Ising models are presented, of land-use induced by conservation payment schemes. Such payments reward the application of conservation measures on private land to conserve biodiversity. To counteract the fragmentation of species habitat, coordination incentives (CI) have been proposed that reward the spatial agglomeration of conservation efforts. The two main types of CI, the agglomeration bonus (AB) and the threshold bonus (TB), are considered. Depending on their design parameters, both scheme are shown to cause bistability in the induced land-use pattern, reflecting a coordination problem faced by the individual landowners. • An Ising-type agent-based model of coordination incentives is developed. • The expected proportion of land conserved for biodiversity is calculated. • The model behaviour reflects the coordination problem of the landowners. • Attempts are made to establish references to real land-use systems. [ABSTRACT FROM AUTHOR]

Agri-environmental schemes (AES) in irrigated olive groves (IOG) in southern Spain were assessed based on farmers’ preferences toward these schemes. A choice experiment was used in this ex-ante assessment, with the inclusion of some innovative elements, such as collective participation and ecological focus areas (EFA). The results showed that farmers’ mean willingness to accept (WTA) participation in collective rather than individual AES was €124.5/ha. Their mean WTA for an additional 1% of EFA was €64.6/ha, while regarding the use of other agri-environmental practices, they showed a WTA of €6.3/ha and €114.7/ha for an additional 1% in the use of cover crops (CC) in olive grove areas and restrictive management of CC, respectively. These estimates were strongly influenced by farmers’ expectations and socio-economic characteristics, as well as farm management. We obtained that farmers’ expectations of no farm takeover reduce WTA for collective participation, whereas agricultural training and having at least a secondary-school education reduce farmers’ WTA for EFA and restrictive management of the CC, respectively. Conversely, harvesting ground olives increased farmers’ WTA for a high proportion of the area under CC. The analysis of the AES scenarios showed moderately high estimates of total WTA (€101-349/ha), especially when collective participation is required (€225-474/ha). The results supported the argument that there are efficient ways to encourage public goods provision, overcoming trade-offs with private goods provision by identifying the type of joint production.

The costs of conserving land for species generally vary in space and time. In addition, they are not exogenous to the land-use dynamics but develop endogenously. This gives rise to feedback loops because the costs determine the land use dynamics which in turn determine the costs. This cost feedback is likely to affect the effectiveness of biodiversity conservation instruments that target land use in a spatially explicit manner. In the present paper a model of a tradable permit market with agglomeration bonus is extended for the consideration of cost feedbacks such that the presence of conserved land in the neighborhood may increase or decrease the local cost. The model analysis demonstrates that the in the former case the level of spatial clustering of conserved land is reduced while in the latter case it is increased. Clustering of conserved land is important for many species and thus cost feedbacks will eventually affect the survival of species and need to be considered in the design of conservation instruments. [ABSTRACT FROM AUTHOR]

Despite the increasing interest from both policy makers and scholars in the collective management of natural resources in the rural sector, the literature has not covered many aspects of the incentives targeting collective actors. In this article, we analyze how embedding minimum participation rules in rural policies affect the distribution of benefits of a group of players that cooperate. The article applies the Shapley Value and the Nash-Harsanyi solution, two of the key solutions of cooperative game theory, to an incentive scheme in Emilia-Romagna (Italy) to support the construction of collective reservoirs for irrigation water. Results show that rules on the minimum storage capacity and on the minimum number of users affect the benefit distribution in opposite directions. The main conclusion of the article is that minimum participation rules should be carefully designed if welfare distribution is an issue. However, further studies are required to have a comprehensive assessment of minimum participation rules within rural policies. [ABSTRACT FROM AUTHOR]

Payments to compensate landowners for carrying out costly land-use measures that benefit endangered biodiversity have become an important policy instrument. When designing such payments, it is important to take into account that spatially connected habitats are more valuable for many species than isolated ones. One way to incentivize provision of connected habitats is to offer landowners an agglomeration bonus, that is, a bonus on top of payments they are receiving to conserve land if the land is spatially connected. Researchers have compared the cost-effectiveness of the agglomeration bonus with 2 alternatives: an all-or-nothing, agglomeration payment, where landowners receive a payment only if the conserved land parcels have a certain level of spatial connectivity, and a spatially homogeneous payment, where landowners receive a payment for conserved land parcels irrespective of their location. Their results show the agglomeration bonus is rarely the most cost-effective option, and when it is, it is only slightly better than one of the alternatives. This suggests that the agglomeration bonus should not be given priority as a policy design option. However, this finding is based on consideration of only 1 species. We examined whether the same applied to 2 species, one for which the homogeneous payment is best and the other for which the agglomeration payment is most cost-effective. We modified a published conceptual model so that we were able to assess the cost-effectiveness of payment schemes for 2 species and applied it to a grassland bird and a grassland butterfly in Germany that require the same habitat but have different spatial-connectivity needs. When conserving both species, the agglomeration bonus was more cost-effective than the agglomeration and the homogeneous payment; thus, we showed that as a policy the agglomeration bonus is a useful conservation-payment option. [ABSTRACT FROM AUTHOR]

Land conversion patterns can conflict with endangered species protection by fragmenting the landscape. Incentive mechanisms can help mitigate the threat of habitat fragmentation by aggregating landowner conservation decisions across the landscape. The optimal conservation strategy for endangered species can target the most connected habitat cluster as an initial starting point, and then expand the conservation patch to maximize connectivity. Herein we present an incentive mechanism, the tradable set-aside requirements (TSARs), designed to target the low cost contiguous conservation landscape and share the burden of conservation among landowners. In the lab, we examine the performance of two land use conservation policies: TSARs, and the TSARs combined with an agglomeration bonus. Evaluated by economic and biological measures of efficiency, we find that TSARs, relative to a command and control policy, increases patch size and habitat connectivity within the landscape. Additionally, combining TSARS with the agglomeration bonus increases biological efficiency (habitat connectivity and patch size within the landscape) but at a price-higher opportunity cost. TSARs with the agglomeration bonus can be more cost-effective than a TSARs only policy for species sensitive to large core habitat requirements and landscape connectivity. [ABSTRACT FROM AUTHOR]

The Agglomeration Bonus (AB) is a subsidy mechanism intended to induce adjacent landowners to coordinate environmental conservation activities. This paper explores the effects of landowner group size on spatial coordination under the AB in laboratory experiments where players are located on circular local networks. The experiments indicate a significant difference in patterns of coordination between groups. Additionally, global coordination on a single strategy is obtained in half of the groups and in the remaining half, both strategies exist giving rise to localized areas of coordinated land uses on the network. [Copyright &y& Elsevier]

Globally, much biodiversity is found on private land. Acting to conserve such biodiversity thus requires the design of policies which influence the decision-making of farmers and foresters. In this paper, we outline the economic characteristics of this problem, before reviewing a number of policy options, such as conservation auctions and conservation easements. We then discuss a number of policy design problems, such as the need for spatial coordination and the choice between paying for outcomes rather than actions, before summarizing what the evidence and theory developed to date tell us about those aspects of biodiversity policy design which need careful attention from policy-makers and environmental regulators. [ABSTRACT FROM PUBLISHER]

This paper examines an experiment conducted to explore a voluntary incentive mechanism, the agglomeration bonus, designed to protect endangered species and biodiversity by reuniting fragmented habitat across private land. The goal is to maximize habitat protection and minimize landowner resentment. The agglomeration bonus mechanism pays an extra bonus for every acre a landowner retires that borders on any other retired acre. The mechanism provides incentive for non-cooperative landowners to voluntarily create a contiguous reserve across their common border. A government agency''s role is to target the critical habitat, to integrate the agglomeration bonus into the compensation package, and to provide landowners the unconditional freedom to choose which acres to retire. The downside with the bonus, however, is that multiple Nash equilibria exist, which can be ranked by the level of habitat fragmentation. Our lab results show that a no-bonus mechanism always created fragmented habitat, whereas with the bonus, players found the first-best habitat reserve. Once pre-play communication and random pairings were introduced, players found the first-best outcome in nearly 92% of play. [Copyright &y& Elsevier]

Payments for ecosystem services (PES) can encourage land owners to manage their land in a biodiversity-friendly way. To increase the effectiveness of PES for biodiversity conservation, incentives could be set to reach a minimum size of conservation area and a suitable spatial connectivity between conserved areas. However, little knowledge exists about which incentives most likely generate such landscape patterns since threshold effects and spatial connectivity have been mostly considered separately. Therefore, we present results from a framed field experiment with Indonesian oil palm farmers and compare the effectiveness between two conditional group payment schemes: In the first one, the size threshold payment, payments are made if at least three farmers in the group conserve. In the second one, an agglomeration payment, payments are made if at least three farmers with bordering land engage in conservation. Our results suggest that both PES designs are similarly effective in the absence of communication. Under both, communication increases conservation outcomes in the case of previous successful coordination and is ineffective in the case of previous coordination failure. Yet, for individuals who are reluctant to conserve, communication only increases conservation outcomes under the size threshold payment. We further discuss potential welfare implications of our results. [ABSTRACT FROM AUTHOR]

Conventional agri-environmental schemes (AES) have been criticized for failing to exploit conservation synergies that could be obtained from spatial coordination of conservation efforts. Understanding the design and implementation of novel incentive mechanisms explicitly designed to boost spatial coordination of conservation efforts is, therefore, of critical importance. We conducted the first systematic review of such incentives ('Spatial Coordination Incentives'), including Agglomeration Bonus, Threshold Bonus, and Threshold Payments. The review aims to investigate these incentives' performance and identify the underlying factors affecting their performance. An extensive bibliographic search was carried out and 55 papers were included in the final analysis. Most papers (89%) are theoretical and experimental studies. Real-world applications of these incentives are rare. The theoretical and empirical evidence suggests that these incentives could potentially promote participation, spatial coordination, and environmental effectiveness. However, the results remain a subject of debate in experimental studies. Performance variation is attributed to scheme design features and contextual factors. We highlight the areas where future work would be most warranted to further validate the performance of these incentives. Insights gained from the review provide important implications for the emerging field of conservation science and ongoing efforts to improve the design of AES for better landscape-scale management. • Systematic review of incentives mechanisms for spatial coordination in conservation. • A moderate number of analytical and experimental studies. • Real-world applications are rare. • Both design features and contextual factors influence their performance. • Key knowledge gaps and priority areas for future work are identified. [ABSTRACT FROM AUTHOR]

The environmental benefits from Payment for Ecosystem Services (PES) schemes can often be enhanced if private land managers are induced to enrol land in a spatially coordinated manner. One incentive mechanism which has been proposed to achieve such spatial coordination is the agglomeration bonus, a two-part payment scheme which offers a pecuniary (financial) reward for decisions that lead to greater spatial coordination of enrolled land. However, farmers respond to a range of motives when deciding whether to participate in such schemes, including non-pecuniary motives such as a concern for the environment or social comparisons. This study implements a de-contextualised laboratory experiment to test the effectiveness of the agglomeration bonus when non-pecuniary motives are explicitly incorporated into the decision-making environment. We capture intrinsic preferences for the public good dimension of environmental improvement through a real donation to environmental charities and examine the relative impact of a group-ranking nudge. The experimental results show that the agglomeration bonus does indeed improve participation and spatial coordination when non-pecuniary motives are accounted for, but that its performance is not enhanced by the nudge. • We consider a decontextualized spatial coordination experimental game • We use donations to environmental charities to mimic environmental benefits of PES • We test if a ranking nudge improves the performance of the agglomeration bonus (AB) • The AB enhances spatial coordination when non-pecuniary motivations are accounted for • We find no significant effect of a group-ranking nudge on spatial coordination [ABSTRACT FROM AUTHOR]

The Agglomeration Bonus has been shown to be a potentially successful policy to reunite fragmented habitat and increase conservation enrollment in laboratory testbed experiments. Yet, one key criticism has been that land prices have been assumed exogenous and fixed in these experiments. In the field, voluntary conservation enrollment by landowners will likely affect the value of the surrounding land. This endogeneity of land values suggests a discrepancy between results from laboratory experiments and true landowner decisions under a given policy. We address this concern by using an experimental design that accounts for the endogenous effect on surrounding land values from habitat conservation based on estimated returns from an actual landscape in eastern Wyoming as a case study. We show that without incorporating endogenous land values, traditional laboratory experiments likely will underestimate the amount of habitat fragmentation resulting from basic conservation policies without Agglomeration Bonuses. We also find that a low-cost Agglomeration Bonus can work to reunite this fragmented habitat, even under endogenous land value conditions. Our research indicates that through voluntary conservation decisions by private landowners, a more cost effective Bonus scheme can create contiguous habitat across privately held land, even when incorporating realistic endogenous land values. • Land value endogeneity impacts conservation decisions. • Agglomeration Bonuses elicit coordination across land value endogeneity assumptions. • A lower cost Agglomeration Bonus can achieve desired conservation goals. [ABSTRACT FROM AUTHOR]