Impacts of human behaviour in agri-environmental policies: How adequate is homo oeconomicus in the design of market-based conservation instruments?

Abstract

Models of human-environment systems frequently employ the model of rational behaviour in which a rational, perfectly informed and self-interested homo oeconomicus maximises individual utility. This model has been criticised with regard to its adequacy in models of social-ecological systems, because other motives exist beyond profit maximisation that affect land-use decisions. The question arises what consequences do these other motives have on the design and performance of environmental policy instruments. For this, two existing generic models of agri-environmental schemes are expanded to consider alternative landowner behaviours: agents make mistakes in their search for the profit-maximising land-use decision, are inequity-averse and care about the profits of their neighbours, and are influenced by their neighbours' decisions. In the analyses even large deviations from the model of homo oeconomicus have generally only a small or moderate effect on the cost-effective design and the level of cost-effectiveness of the two agri-environmental schemes. With the models being rather simplistic, the results should not be used for specific policy advice but to point out and argue that the model of homo oeconomicus should not be abandoned prematurely, but its scope in environmental policy advice needs to be assessed more thoroughly both empirically and theoretically.