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Research article - Peer-reviewed, 2010

Policy design for a multifunctional landscape

Gren, Ing-Marie; Bishop, Kevin


Landscapes consisting of several elements, such as wetlands and forests, are multifunctional in nature and produce both market and non-market goods. The need for policies arises from the existence of non-market ecosystem services that are not traded and thereby generally not subject to economic trade-offs in landowner decision making. An efficient incentive scheme for producing both types of goods would require policy designed for each non-market good. However, this may result in high transaction costs, possibly giving second-best solutions a comparative advantage when only one non-market good is regulated. This paper demonstrates that in the Hovran catchment area in mid Sweden, which produces the non-market goods water quality, biodiversity, and scenic beauty, compensation payments for biodiversity production alone provide almost maximum total net value of all market and non-market goods. On the other hand, payments for providing scenic beauty in the form of open landscape may result in lower total net value than no compensation payment at all, due to a negative impact on water quality.


Arable landscape; Market and non-market goods; Policies; Second-best incentive schemes

Published in

Regional Environmental Change
2010, Volume: 10, number: 4, pages: 339-348

    SLU Authors

    • Sustainable Development Goals

      SDG6 Clean water and sanitation

      UKÄ Subject classification

      Environmental Sciences related to Agriculture and Land-use
      Agricultural Science
      Social Sciences
      Landscape Architecture
      Economics and Business

      Publication Identifiers


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