How financial compensation changes forest owners' willingness to set aside productive forest areas for nature conservation in Denmark

Agri-environmental schemes' ability to increase the provision of environmental goods has been questioned because such schemes may pay landowners for something they would have done anyway. Contributing to this discussion, the aim of this paper is to investigate how financial compensation changes forest owners' declared willingness to set aside productive forest areas for nature conservation. The study is based on a survey of forest owner attitudes and ownership objectives in Denmark. First, it was analyzed how forest owners' declared willingness to set aside productive forest area for nature conservation changed when they were offered financial compensation. The majority of forest owners (64%) increased their willingness to set aside forest when offered financial compensation, whereas for others, compensation resulted in no change or, for a few respondents, even decreased the willingness. Hence, financial compensation may help to increase the provision of environmental goods but it is necessary to be aware of groups not motivated by financial incentives. Secondly, a binary logit model showed that the greatest likelihood of financial compensation increasing the motivation for setting aside forest is observed for owners who are young, female, live in the western part of Denmark and own farmland. Policy makers can use such information to target subsidy schemes at particular groups.