Species conservation and the principal–agent problem

Principal–agent problems occur in contract or management contexts. They arise out of the agent's desire to imperfectly follow the principal's preferences despite being under the authority of the principal. Principal–agent problems may be present in biodiversity recovery programmes. A principal–agent model is constructed where rewards and sanctions are based on the change in a species status. An optimal contract is derived but it is then argued that this contract will be impossible to implement. Principal–agent problems may impose costs to recovery programmes both in terms of lower odds of persistence and the mix of species prioritised. Three institutional devices; ecosystem management, agent selection mechanisms and attaching economic returns to the change in species status may offset some of these costs.