Can Compensation Schemes Work?

By John Murphy
Last updated 6 Mar 2010


In 1891 the Cape Act for the Preservation of Game of 1886 was broadened to the British South African Territories, while the following year the Sabie Game Reserve, later to become the Kruger National Park, was formally created. The British colonial authorities that pioneered these early attempts to preserve the wild game of Africa may have returned to their home shores, and the big game hunters of the empire have been largely replaced by camera yielding tourists, but since this time conservationists have striven to prevent the loss of Africa’s natural habitat and the charismatic species that define the continent in the mind of many people across the world (Adams, 2009). 

For generations the network of protected areas and national parks that span sub-Saharan Africa formed the basis of conservation planning with policies using the principle of strictly enforcing laws prohibiting human intrusion into protected areas. However, as the human population continues to grow on the continent and the pressure on natural resources increases many conservationists have argued that we now need to focus our attention on not only protecting designated parks and reserves but also the significant amount of fauna and flora that exists outside the boundaries of protected areas. (Redford & Sanderson, 2000).

Furthermore, the increasing influence of actors from outside the traditional conservation community, such as human rights charities and development agencies, and the consolidation of efforts to increase levels of democracy and good governance across Africa have encouraged the view that conservationists need to engage the ordinary African citizen in conservation policy and implementation. This means that new, innovative initiatives have needed to be devised so that conservation is seen to not only benefit wildlife but also the people who often share their environment with Africa’s great charismatic species (Matheka, 2008). 

The new era of conservation policies have seen a heavy emphasis being placed on engaging with rural communities whose cooperation in preserving natural habitat is regarded by many conservationists as crucial if we are to be successful in halting the decline of biodiversity in Africa. However, there have thus far been many varying opinions as to how the objective of working with communities can be best achieved (Adams, 2003). 

This article will explore the efforts of conservationists to address one of the most challenging issues in African biodiversity conservation, that of finding a way of encouraging rural communities to tolerate the presence of lions (Panthera leo) and other predators. Specifically, we shall examine the policy of paying compensation to pastoralist communities who have lost livestock to lion predation as a means of discouraging them from taking retaliatory measures, which usually involves pastoralists killing lions and other predators by either poisoning, snaring or spearing the animals (Maclennan, 2007). 

Compensation Conservation

The policy of providing compensation to pastoralists, ranchers or farmers for the loss of their livestock to predators has been tried in several countries in recent decades, probably the most well known example is that of the compensation scheme enacted in North America following the reintroduction of wolves (Canus lupus) into Yellowstone National Park (Nyhus et. al., 2005).  Similar schemes have followed in Europe, Africa and Asia as conservationists have sought to protect both predators such as snow leopards (Uncia uncia) and crop damaging herbivores like the Asian elephant (Elephas maximus) (Mishra et. al., 2003).   

At face value the basic principle behind compensation schemes is quite simple. If livestock owners and farmers are compensated for the cost they incur as a result of the behaviour of wild animals then they will be much less likely to seek to remove those wild animals. This will then help in preventing the decline of these species and may eventually help support an actual increase in their numbers. As National Park Director of the U.S. National Park Service William Penn Mott said following the reintroduction of wolves to Yellowstone National Park:

"The single most important action conservation groups could take to advance Yellowstone wolf restoration would be to develop a fund to compensate ranchers for any livestock losses caused by wolves. Economics makes ranchers hate the wolf. Pay them for their losses and you’ll buy tolerance and take away their only legitimate reason to oppose wolf recovery." (Nyhus et. al., 2005)

In reality, however, the implementation of compensation schemes has been far from simple or clear cut. Many issues have arisen relating to the practical implementation of schemes. Questions inevitably arise such as how payments should be made? How should payments rates be established? Can funding for compensation schemes be sustained? (Zabel & Holm-Muller, 2008) 

However, before becoming embroiled in these issues we shall first examine how these compensation schemes have been adapted in order to stop the alarming decline in lion numbers in Africa. Our main focus will be the initiatives undertaken in Kenya’s Maasailand by a team of conservationists who have established several innovative conservation programmes on a communally owned group ranch which lies in the heart of the world famous Amboseli-Tsavo ecosystem which hosts part of the continents largest free-ranging, contiguous lion population (IUCN, 2006). 

The Amboseli-Tsavo ecosystem, which lies in southern Kenya’s Kajiado district, along with the neighbouring Serengeti-Mara Ecosystem and Maasai Steppe covers an area of over 200,000 km2. It is estimated that up to 20 per cent Africa’s wild lion population may be found here (Maclennan et. al., 2009).  Of particular interest to conservationists is the area of land that lies between the protected areas of Amboseli National Reserve* and Tsavo National Park as during the wet season this area acts as a migratory corridor for herds of zebra (Equus burchelli) and wildebeest (Connochaetes taurinus), key prey for lions, as they disperse into the area from Amboseli (Maclennan, 2009).  However, as the corridor is not a strictly protected area, and is in fact home to Maasai communities, the wildlife in this region comes into direct contact with human activity. Increasingly this has led to human-animal conflict and the loss of lions through poisoning and retaliatory killings as local pastoralists blame them for the loss of livestock (Hazzah, Mulder & Frank, 2009). 

*  The process of Amboseli National Park being re-designated as a national reserve began in 2005 at the bequest of President Mwai Kibaki

The Mbirikani Predator Compensation Fund

In response to the ongoing killing of lions concerned conservationists and tourist lodge owners have taken up the challenge to try and prevent these killings as it is feared, in the not too distant future, that a failure to do so will see lions disappear from the region altogether (Hazzah, Mulder & Frank, 2009). 

Operating in the Mbirikani Group ranch, a communally owned ranch of roughly 1,200 km2 and populated by 10,000 largely semi-nomadic pastoralists who derive the majority of their household income from livestock sales,  the Mbirikani Predator Compensation Fund (MCPF) was established by Richard Bonham and Thomas Hill of the Maasailand Preservation Trust (MPT) in 2003 (Maclennan, 2009). 

Following negotiations with members of the Mbirikani Group Ranch (MGR) committee, who represent the interests of pastoralists, and the MPT an agreement was put in place detailing the terms and conditions for the compensation scheme. As part of the deal it was decided that the cost of funding for the scheme would be divided 70/30 between the MPT and the MGR committee, with the first compensation payments being allocated in 2003 (Maclennan, 2009).  

The MPT works closely with conservation biologists from a sister project, the Kilimanjaro Lion Conservation Project (KLCP), whose members includes lion conservationist Dr. Laurence Frank. Dr Frank leads a team of young, energetic conservation biologists who work closely with the Maasai to try and better understand the reasons for human-wildlife conflict and ultimately resolve this clash for the benefit of all ( accessed 28/02/2010).  

In devising the compensation scheme the MPT have tried to take into consideration the nuanced relationship between the Maasai, conservationists and wildlife authorities in general and, of course, wildlife. A second but vital consideration is the limited funds available. 

Payments are made for livestock that have been killed on or within 1.5 km of MGR so long as claims have been made within 24 hours of the kill. In addition, claimants are expected to provide evidence of their loss. This can either be in the form of a carcass or at least some form of physical evidence such as spoors or drag marks. If the claimant is successful then a promissory note is issued with actual payments of cash being made on a bi-monthly basis. Unsuccessful claimants, who can be fined if the verification officer feels they are making a false claim, can lodge an appeal to the MGR advisory committee who may decide to review their claim and ask for compensation to be paid (Maclennan, 2009).  

Because the ultimate goal driving the scheme is to reduce conflict between humans and lions by as much as possible an attempt was made to incorporate an incentive element into the structure of the compensation fund. Research conducted by the KLCP found that many Maasai practiced poor livestock husbandry with bomas poorly maintained, and on some occasions, livestock were left to stray unprotected. This almost inevitably brings livestock into contact with predators especially during times of the year when wild game may be scarce. Thus, in order to try and encourage pastoralists to improve their livestock husbandry a penalty clause was included in the scheme (Maclennan, 2009). 

When verification officers, who consist of members of both the KLCP and Maasai, go to inspect a claim for damages they assess the circumstances under which the predation of livestock took place. If they feel that the livestock owner was negligent in their care for their animals, for instance by keeping a poorly maintained boma or by allowing their livestock to wander unprotected especially overnight, then the verification officer will withhold a percentage of the compensation payment. The maximum penalty can be 50 per cent of the payment otherwise due (Maclennan, 2009). 

A second penalty imposed relates to when lions or other protected game such as elephants are actually illegally killed by pastoralists. When this is found to have occurred, and the culprits can be identified, a fine will be imposed on whoever has carried out the illegal act. Furthermore all pastoralists who live in the area where the killing occurred will have any compensation payments due to them or subsequently arising suspended for the two month period in which the killing of the animal occurred. The rationale being that by engaging an element of collective punishment the pastoralists will be less likely to resort to killing lions for fear of reaping the wrath of their fellow kinsmen who have also to bear the cost of any illegal killing (Maclennan, 2009).  

Initial signs of Success?

The Mbirikani Predator Compensation Fund has only been in operation for a relatively short period of time. It is just entering its seventh year of operation this spring but early evaluation of the project undertaken by Ian Maclennan, a biologist from Oxford University who works with the KLCP, suggests that there are signs that the scheme is succeeding in reducing the amount of lions killed in retaliatory attacks. In the years prior to the compensation schemes initiation there were as many as 24 recorded lion kills, while during the first four years of the scheme at least 65 lions were killed on neighbouring ranches. On the Mbirikani Group Ranch, however, there has been a significant reduction in recorded lions kills. Although not completely halted, studies conducted by Maclennan and his team from 2004 to 2008 record only four lion kills. This reduction gives some reason to believe that the compensation scheme is making a difference to the Maasai’s relationship with predators in the area (Maclennan, 2009).  

Following this early success plans are now afoot to expand the compensation scheme to the ranches bordering Mbirikani. Today compensation schemes have been established on Mbirikani, Olglului, and Kuku group ranches covering an area of 4,000 km2. This expansion of compensation schemes will hopefully allow for lion numbers in the region to at the very least stabilise and eventually possibly recover as maturing lions who leave prides to make their own way in life do not have to face the added pressure of revenge attacks from disgruntled herdsmen (Maclennan, 2009).  

The Mbirikani Predator Conservation scheme appears to be bearing some promising fruit but it is just one example of a project that has been operating for a relatively short period of time. The projects operators themselves freely admit that there still remains a considerable journey to travel on the road to reconciling pastoralists and predators. 

Leela Hazzah, a conservationist who works with the Amboseli Predator Project (APP) and has spent several years living with the Maasai, has found that the attitude of many Maasai to predators such as lions still remains somewhat ambiguous. For example, having conducted studies with Maasai pastoralists Hazzah found that it was difficult to identify a straight forward pattern in attitudes towards lions. Many different issues seemed to be affecting the responses to her questions such as the relative wealth of respondents, their exposure to livestock loss, the broader political and economic situation at any given time, and even the religious observance of respondents seemed to effect how pastoralists reacted to predators killing livestock and the responses that they felt were justified. Perhaps a key finding to emerge from Hazzah’s studies of Maasai attitudes was that despite 88 per cent of respondents receiving compensation for losses to predators, less than half of those compensated said they approved of the compensation programme (Hazzah, Mulder & Frank, 2009).  

In order to get a broader perspective on conservation compensation schemes we will now have to review some of the observations that have been made about such schemes in general and highlight some of the criticisms that have been directed towards these initiatives as well as considering some suggestions that may improve the success rate of compensation conservation. 

Sustainable Funding in a World of Moral Hazards and Perverse Incentives

Projects such as the Mbirikani Predator Compensation Fund have attracted the interest of the world’s media and have raised the profile of such schemes (MacSweeney, 2009).  But a higher public profile has also increased the level of scrutiny applied to projects. Inevitably criticisms have subsequently emerged ranging from questions regarding the practical implementations of compensation programmes, such as how can they sustain long term funding, to more nuanced questions relating to whether such projects actually promote the desired behaviour in stakeholders (Nyhus et. al., 2005).  

In a world in the grip of wide scale economic uncertainty one of the most obvious questions to be raised regarding compensation projects is how they can be sustained over the long term. The majority of programmes need to operate in what is commonly referred to as the developing world but due to the high levels of poverty both on an individual and national level few of the countries that fall into this category are likely to be in a position to fund compensation schemes in the medium to long term. That also assumes that they have the resources to even begin funding schemes in the first place. 

This means that funding is likely to be sourced from private contributions to conservation projects either from partnerships with tourism operators, such as happens on the Mbirikani project, or from international non-governmental organisations such as the World Wildlife Fund for Nature (WWF), who themselves largely depend on the altruistic donations of supporters in Europe and North America.

This donor dependency can impact on the sustainability of projects and this can have serious repercussions for conservation especially as the limited evidence thus far available suggests that compensation funds may not make that much difference to an underlying perception of lions and other predators as little more than an expensive, removable nuisance. If this is indeed the case, then one must assume that if funding of compensation payments run into difficulties the killing of predators may well resume at previous higher levels.

A second problem that is commonly identified in relation to paying for losses incurred to predators is the concept of moral hazard. Moral hazard, in this sense occurs when the payment scheme encourages farmers and livestock owners to behave in a manner that creates human-wildlife conflict in order to gain from the compensation payments. 

For example, many conservationists seek to encourage livestock owners to improve the security of their animal enclosures. But an unscrupulous pastoralist may ask as to why they should invest both the time and money in building and maintaining fences when, after all, if a cow or donkey is killed they will receive money anyway? 

Of course, as we have seen with the Mbirikani project measures can be introduced to mitigate against moral hazard by insisting that minimum livestock husbandry standards are fulfilled. The problem, however, is that livestock owners usually hold the upper hand against conservationists. For instance, they can always invoke the ultimate sanction of killing wildlife whereas the conservationist must always be able to ensure that any penalty is enough to guarantee compliancy with agreements put in place but not harsh enough to provoke the ultimate act of retaliation by livestock owners who, at the end of the day, can simply refuse to cooperate. 

A second option for tackling the issue of moral hazard has been to only pay a reduced fee for compensation rather than the full market price in the hope that the compensation will be enough to discourage retaliation while not being enough to discourage good livestock husbandry. But again this means striking a fine balance that when dealing with drastically declining wildlife populations may simply be too risky an option. 

Apart from the risk of moral hazard compensation schemes can also have the perverse outcome that they can actually add to the pressure on wildlife by encouraging people into agriculture through increasing it’s profitability by reducing the financial burden of livestock loss. Thus at a time when the pressure on natural habitat is increasing from agricultural expansion compensating for livestock loss may actually act as an agricultural subsidy thereby further reducing the habitat suitable for wildlife (Nyhus et. al., 2005). 

These problems have also beset one of the principle alternatives to compensation payment funds, that of creating private insurance schemes. Once again, the logistics of operating such schemes are expensive and difficult to put into practice. Insurance schemes have been hit by the problem of verifying damage and losses in rural, hard to access environments, especially were skilled assessors are few and far between. This can result in the problem of adverse selection whereby insurance agents cannot differentiate between high and low risk customers and thus cannot provide insurance to low risk clients at a reasonable price (Nyhus et. al., 2005).  Besides which, poorer livestock owners who, as in the case of Mbirikani, reside in the most vulnerable areas to predation by wildlife are the very people who can least afford insurance cover (Maclennan, 2009).  

Any Solutions?

As we have seen compensating livestock owners for losses can be a complex process with many potential pitfalls. One of the most common proposals put forward to overcome these problems is that rather than being solely compensatory in nature funds should be allocated in the form of a reward or incentive. This view is also appealing from the perspective of trying to achieve the long term goal of promoting behaviour in agriculturists that will actually be beneficial to endangered and vulnerable species. 

Erwin Bulte and Daniel Rondeau (2005), two specialists in environmental and natural resource economics, suggest that compensation programmes could be improved by being structured to preclude adverse behaviour. For example, by making payments conditional on habitat not being converted for agricultural use or livestock numbers being limited, compensation funds could overcome some of the unintended consequences that have been discussed earlier. 

Bulte and Rondeau make the case that if we want to encourage people with financial incentives to tolerate predators then why not actually pay them when predators’ numbers increase? This would help remove the perverse incentive towards subsidising agriculture, as payments would not be directly tied to livestock loss and thus not make livestock ownership in itself more attractive, while at the same time promoting the preservation of natural habitat. 

In extreme cases where predator numbers are seriously low Bulte and Rondeau also suggest that rather than compensate for agricultural losses conservationists should seek to deliberately discourage people from engaging in agriculture as a means of livelihood by asking local or national authorities to increase taxes on agricultural output. However, this would be a rather drastic action against communities that may largely depend on subsistence agriculture and would be unlikely to improve the relationship between conservationists and communities. 

Compensation for Conservation: A Viable Option?

The majority of morally minded conservationists would today accept that a return to the original template for saving Africa’s natural habitat, that of large areas fenced off and completely free of people is undesirable, particularly as it is unlikely to be accepted by the majority of Africans or the international community. Therefore alternative solutions must be found as the amount of species whose numbers are declining is growing evermore, particularly in relation to large predators such as lions.

Paying compensation for accepting the costs of living alongside predators is one genuine alternative that has been shown, at least in the short term, to offer some potential. 

However, creating and implementing such schemes is not a straight forward process and many considerations have to be taken into account. It may be that where such schemes are adopted they will need to be tailored to suit local needs and situations. In addition, regardless of whether they operate as compensation, insurance or incentive based schemes they will all require long term sustainable funding as well as trained staff with the technical ability to implement them successfully.

Perhaps one way of achieving this would be to increase the local funding opportunities for compensation funds by promoting eco-tourism developments or even controlled trophy hunting. This would also provide extra incentives for promoting the preservation of wildlife and natural habitat while also supporting alternative sources of income for local communities thus reducing their dependency on agriculture.

At the end of the day, the natural habitat and wildlife of Africa that thrills the hearts of so many people across the world is in peril and we must consider every solution available to prevent its loss. Compensation for conservation schemes if sustainably funded and implemented correctly may offer a genuine means of achieving that goal. 


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