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The Cost-effectiveness of Biodiversity Management: A Comparison of Farm Types in Extensively Farmed Areas of Scotland

The cost-effectiveness of biodiversity management of heather, herb-rich grassland and wetland habitats is compared between different farm types in the context of the Environmentally Sensitive Area (ESA) scheme in Scotland. Biodiversity is measured at two spatial levels. Costs to the public exchequer of habitat management are compared with private costs to the farmer. Biodiversity and cost are combined in cost-effectiveness ratios. Biodiversity, cost and cost-effectiveness differentials are found between farm types for all three habitats. Farms incur negligible opportunity costs in the management of all three habitats, implying farmer retention of compensating ESA management payments. It is concluded that greater account of biodiversity and cost characteristics of entrants to agri-environmental schemes would increase the costeffectiveness and transparency of schemes, and assist towards scheme assessment at the individual farm level.