Economic assessment of rewilding versus agri-environmental nature management

Policies aiming at improving biodiversity often consist of costly agri-environmental schemes, i.e. subsidized grazing or mowing of semi-natural areas. However, these practices have widely been found to be insufficient to mitigate biodiversity loss. Rewilding, i.e. restoring natural processes in self-sustaining biodiverse ecosystems, has been proposed as an alternative and is hypothesized to be a more cost-efficient approach to promote biodiversity conservation. Rewilding requires the availability of large natural areas which are not allocated for farming, forestry, and infrastructure to avoid potential conflicts over the use of the area. We perform an ex-ante private cost-benefit analysis of the establishment of four large nature reserves for rewilding in Denmark. We analyse the economic effects of changing from summer grazing in nature areas in combination with cultivated fields and forestry to the establishment of nature reserves in four case areas. We consider two scenarios involving conversion of agriculture and forestry areas into natural areas in combination with either extensive year-round cattle grazing or rewilding with wild large herbivores. In two case areas, it appears possible to establish large nature areas without incurring extra costs. Additionally, rewilding further reduces costs compared to year-round cattle grazing. Two opposing effects were dominant: increased economic rent occurred from the shift from summer grazing to year-round grazing or rewilding, while cessation of agriculture and forestry caused opportunity costs.