Economic value of three grassland ecosystem services when managed at the regional and farm scale

Grasslands cover a major share of the world's agricultural land and their management influences ecosystem services. Spatially targeted policy instruments can increase the provision of ecosystem services by exploiting how they respond to spatial differences in environmental characteristics such as altitude, slope, or soil quality. However, most policy instruments focus on individual farms, where spatial differences are small. Here we assess the economic value of three grassland ecosystem services (i.e., forage provision, carbon sequestration, and habitat maintenance) and its variability in a Swiss region of 791 km² that consists of 19,000 farmland parcels when managed at the regional and farm scale, respectively. Our spatially explicit bio-economic simulation approach combines biophysical information on grassland ecosystem services and their economic values. We find that in our case study region, spatial targeting on a regional scale management increases the economic value of ecosystem services by 45% compared to targeting at farm scale. We also find that the heterogeneity of economic values coming from prices and willingness to pay estimates is higher than the economic gains from spatial targeting that make use of the spatial difference in environmental characteristics. This implies that heterogeneity in prices and/or societal demand of these three ecosystem services is more important for grassland management than spatial heterogeneity in our case study region. The here applied framework allows for an ex-ante assessment of economic gains from spatial targeting and thus provides basic information for the implementation of incentive mechanisms addressing the nexus of food production and ecosystem service provision in grasslands.