Agglomeration bonus and endogenous group formation

Agglomeration bonus schemes are envisioned to incentivize the connectivity of habitat conservation across landowners. Assuming full cooperation among landowners at landscape scale, bulk literature theoretically finds that agglomeration more cost effective in achieving biodiversity than spatially homogenous payments. However, it may be rational for not cooperate all together but, rather, within smaller groups. Here, we analyze effectiveness when such partial is allowed, is, endogenously chosen. We introduce a explicit ecological-economic model coalition formation game assess how form stable structures and this affects under wide range (i) degrees spatial autocorrelation, (ii) bonuses flat-rate payments, (iii) species dispersal rates, (iv) coordination costs. find payments only low public expenditures. This condition identified if assumed. find, however, never emerges hence an assumption leads overestimation schemes. Moreover, increases autocorrelation rate decrease. Finally, costs do affect scheme but they have implications its design because their impact on formation.