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This paper describes the results of an ecological-economic modelling exercise of the management of a scarce habitat, namely heather moorland. The Orkney Islands of Scotland are used to illustrate a modelling approach which could be easily applied elsewhere, and to other habitats. We describe the evolution and present condition of heather moorland on Orkney, then quantify the extent of over-grazing (leading to ecological damage) on a spatial basis. This is accomplished using a model of heather utilization and heather productivity. Critical grazing limits are then used as constraints in an economic model of farm production decisions, which enables us to quantify the minimum necessary compensation payments which farmers should be offered to offset income losses due to grazing restrictions. Such a policy is in line with European Union and UK agri-environmental policy, which typically uses payments for income forgone as a means of persuading farmers to protect environmental quality.

Ecological-economic modelling of the conservation of threatened habitats: heather moorland in the Northern Isles of Scotland