Journal of Forest Economics19 (2013) 128–148 Contentslists availableat SciVerseScienceDirect Journal of Forest Economics j o u r n a l h o m e p a g e : w w w . e l s e v i e r . d e / j f e Landowners’conservationmotives and the size of information rents in environmental bidding systems Artti Juutinen a,b,c,∗ , Erkki Mäntymaa a , Markku Ollikainen d a FinnishForest Research Institute, Finland b ThuleInstitute, University of Oulu,Finland c Department of Economics, University of Oulu,Finland d Department of Economics and Management, University of Helsinki, Finland a r t i c l e i n f o Articlehistory: Received7 June 2011 Accepted6 December 2012 Keywords: Biodiversity Competitivebidding Information rents Paymentsfor ecosystemservices Voluntary participation a b s t r a c t We examinelandowners’conservation motives, conservation costs and information rents in environmentalbidding systemsdesigned for forestry with the help of Faustmannand Hartman models and data from Finnish conservationprogram.We show that the Faust- mann landowners receiveinformation rents,on average 55%of the rental payments.For the Hartman landowners the high conserva- tion costs of old stands result in low information rents; they are only 13%of the rental payments. This estimateomits amenity ben- efits the landowners derivefrom their forests;accountingfor these benefitswould increase informationrentsdramatically. Despitethe high informationrents,landowners’conservation motivesdecrease the rental payment required for participation in the conservation program. Hence, landowners’ conservationmotives give govern- ments a great opportunity to allocate conservation contracts in a more cost effective way, thereby extracting larger benefits for scarceconservationfunds. ©2012 Departmentof Forest Economics, Swedish University of Agricultural Sciences, Umeå. Published by Elsevier GmbH. All rights reserved. Introduction The problem of commons is pervasive in lands-use related industries such as agriculture and forestry. While the provision of environmental public goods is typically suboptimal, the negative ∗ Correspondingauthor at: Finnish Forest Research Institute,P.O. Box 413, FIN-90014, University of Oulu, Finland. Tel.: +358 408015341. E-mail address: artti.juutinen@metla.fi (A. Juutinen). 1104-6899/$– seefront matter ©2012Departmentof ForestEconomics, SwedishUniversity of Agricultural Sciences, Umeå.Publishedby ElsevierGmbH. All rights reserved. http://dx.doi.org/10.1016/j.jfe.2012.12.001