Chemical leasing business models: a contribution to the effective risk management of chemical substances.

Chemicals indisputably contribute greatly to the well-being of modern societies. Apart from such benefits, however, chemicals often pose serious threats to human health and the environment when improperly handled. Therefore, the European Commission has proposed a regulatory framework for the Registration, Evaluation and Authorization of Chemicals (REACH) that requires companies using chemicals to gather pertinent information on the properties of these substances. In this article, we argue that the crucial aspect of this information management may be the honesty and accuracy of the transfer of relevant knowledge from the producer of a chemical to its user. This may be particularly true if the application of potentially hazardous chemicals is not part of the user's core competency. Against this background, we maintain that the traditional sales concept provides no incentives for transferring this knowledge. The reason is that increased user knowledge of a chemical's properties may raise the efficiency of its application. That is, excessive and unnecessary usage will be eliminated. This, in turn, would lower the amount of chemicals sold and in competitive markets directly decrease profits of the producer. Through the introduction of chemical leasing business models, we attempt to present a strategy to overcome the incentive structure of classical sales models, which is counterproductive for the transfer of knowledge. By introducing two models (a Model A that differs least and a Model B that differs most from traditional sales concepts), we demonstrate that chemical leasing business models are capable of accomplishing the goal of Registration, Evaluation and Authorization of Chemicals: to effectively manage the risk of chemicals by reducing the total quantity of chemicals used, either by a transfer of applicable knowledge from the lessor to the lessee (Model A) or by efficient application of the chemical by the lessor him/herself (Model B).

Designing cost-effective payments for conservation measures to generate spatiotemporal habitat heterogeneity.

Many endangered species depend on certain types of agricultural or other forms of human land use. To conserve such species, schemes are set up in which land users receive payments for voluntarily managing their land in a biodiversity-enhancing manner. We developed a model-based framework for designing cost-effective payment schemes that generate spatiotemporal habitat heterogeneity to maximize the survival of multiple species under budget constraints. The framework integrates ecological and economic knowledge and consists of the derivation of an ecological benefit function and a budget function that are then combined to determine the cost-effective degree of spatiotemporal habitat heterogeneity. The ecological benefit function considers the timing of conservation measures, the induced habitat dynamics, and different degrees of substitutability among species. The budget function considers that the conservation agency may lack information about land users' individual conservation costs and personal attitudes and that land users can choose among different conservation measures. We applied the framework to a case study of grassland management, where the survival of three endangered species protected by the EU Habitats Directive depends on different types of land use. The lack of information available to the agency and the choice options of land users reduced the amount of conservation that can be financed with a given budget. Neglecting such findings may lead to an overestimation of the benefits of conservation programs.