Voluntary incentive design for endangered species protection

Herein we examine the theory and practical limits of designing a voluntary incentive scheme to protect endangered species on private land. We consider both an ay-ante scheme, in which a contract to the landholder depends only on what the landholder reports, and an ay-post scheme, in which a contract to the landholder depends on reports from all landowners. Except in special cases, the ex-ante scheme never implements the full information allocation, and can actually set aside too much land. In contrast, expected habitat size under the ex-post scheme is smaller than both the ex-ante and full information allocations. (C) 2001 Elsevier Science (USA).