Harnessing private benefits for public good : a political economy of statutory covenants and their effectiveness in protecting conservation values on private land

Abstract

There are a number of private and public benefits to be derived from protecting private land. In theory, when the net public benefits of protection outweigh the net private benefits, society may intervene to increase the amount of land, and therefore conservation values protected. In practice, four constraints - immeasurability of costs and benefits, organisational costs, transaction costs and the presence of free-riders - limit successful action and suggest that state intervention may be justified. Since 1977 state protection of conservation values on private land in New Zealand has relied on the institution of statutory covenants. A statutory covenant is a voluntary agreement between a private landowner and a representative of the State, to restrict the use of a particular area of land and so protect its existing qualities. Through analysis of the arrangement of statutory covenants, it is suggested that the orientation of the covenanting organisations, the covenants, and the additional incentives offered to augment their use, have limited the effectiveness of statutory covenants in protecting private land. In particular, (1) present arrangements exclude certain sectors of the landowning community, (2) landowners gaining access to covenants may reap an economic rent, the size of which is not known by the covenanting organisation, and (3) covenanting organisations, which have limited information regarding the opportunity costs of providing covenants, may have little incentive to operate efficiently in protecting private land. It is suggested that a more flexible arrangement of covenants, with separate, private covenanting organisations negotiating different terms of covenanting with different landowners, has the potential to harness the private benefits of protection and provide a cost-effective mechanism of protecting public conservation values on private land.