Implementing Reverse Auctions with Screening Criteria to Provide Ecosystem Services (original) (raw)
Related papers
Adapting auctions for the provision of ecosystem services at the landscape scale
Ecological Economics, 2011
Auctions, or competitive tenders, can overcome information asymmetries to efficiently allocate limited funding for ecosystem services. Most auctions focus on ecosystem services on individual properties to maximise the total amount provided. However, for many services it is not just the total quantity but their location in the landscape relative to other sites that matters. For example, biodiversity conservation may be much more effective if conserved sites are connected. Adapting auctions to address ecosystem services at the landscape scale requires an auction mechanism which can promote coordination while maintaining competition. Multi-round auctions, in which bidding is spread over a number of rounds with information provided between rounds on the location of other bids in the landscape, offer an approach to cost effectively deliver landscape-scale ecosystem services. Experimental economic testing shows these auctions deliver the most cost effective environmental outcomes when the number of rounds is unknown in advance, which minimises rent-seeking behaviour. It also shows that a form of bid-improvement rule facilitates coordination and reduces rent seeking. Where the biophysical science is well developed, such auctions should be relatively straightforward to implement and participate in, and have the potential to provide significantly better outcomes than standard 'one-shot' tenders.
Spatially contiguous land management: a sealed bid auction format
HAL (Le Centre pour la Communication Scientifique Directe), 2019
Ecosystem services are deteriorating. It is essential to develop economic instruments that promote the production of ecosystem services. Conservation agencies use, among other things, payment systems for ecosystem services that remunerate private landowners to adopt proenvironmental practices on their spatially contiguous lands. Iterative or sealed bidding procedures are well suited to provide efficient incentive systems. Experiments have shown the superiority of iterative auctions. In order to better understand the processes implemented, we propose here to analyze the strategies of the landowners in the case of sealed bids auction format.
ECOSEL: An auction mechanism for forest ecosystem services
2010
This paper describes the foundations of a market mechanism that was designed to stimulate more efficient provisions of forest ecosystem services to society. The proposed tool is a competitive multi-unit public goods subscription game of incomplete information. A conceptual and mathematical characterization of the game is followed by an illustrative example where Pareto-efficient bundles of timber, carbon and mature forest habitat services of a real forest are used in a simulated bidding game. Attractive features of the mechanism include the use of multi-criteria optimization to ensure only the most cost-efficient bundles of ecosystem services are offered for bidding, and that it does not rely on regulatory control or on complex valuation exercises that are otherwise needed in alternative methods such as the cap-and-trade scheme.
An auction mechanism for the optimal provision of ecosystem services under climate change
Journal of Environmental Economics and Management, 2018
The provision of many ecosystem services depends on the spatial pattern of land use across multiple landowners. Even holding land use constant, ecosystem service provision may change through time due to climate change. This paper develops an auction mechanism that implements an optimal solution for providing ecosystem services through time with multiple landowners who have private information about the net benefits of alternative uses of their land. Under the auction, each landowner has a dominant strategy to truthfully reveal their private information. With this information a regulator can then implement the optimal landscape pattern, which maximizes the present value of net benefits derived from the landscape, following the rules of the auction mechanism. The auction can be designed as a subsidy auction that pays landowners to conserve or a tax auction where landowners pay for the right to develop. Our mechanism optimizes social adaptation of ecosystem management to climate change.
Ecosystem Services Auctions: The Last Decade of Research
Forests, 2021
Auctions offer potential cost-effectiveness improvements over other mechanisms for payments for ecosystem services (PES) contract allocation. However, evidence-based guidance for matching design to application is scarce and research priorities are unclear. To take stock of the current state of the art, we conducted a systematic review and thematic content analysis of 56 peer-reviewed journal articles discussing ES auctions published in the last decade. Auctions were approached from three overlapping perspectives: mechanism design, PES, and policy analysis. Five major themes emerged: (1) performance, including measures like cost-effectiveness and PES criteria like additionality; (2) information dynamics like price discovery and communication effects; (3) design innovations like risk-integrating and spatially coordinated mechanisms; (4) contextual variables like policy context and cultural values; and (5) participation factors. Additional attention from policymakers and continued effo...
Adverse Selection in Conservation Auctions: Theoretical and Experimental Results
This paper evaluates land preservation and conservation programs by examining the performance of a discriminative auction that is often used to select parcels in the U.S. The paper hypothesizes that the auction is unlikely to be cost effective because an information asymmetry introduces adverse selection. Experiments are used to examine the extent of adverse selection and compare it to a baseline where no programs exist. Then, we examine the ability of two mechanisms to correct the incentive problem. The results show that adverse selection is likely to exist in conservation auctions (achieving just 60.7% of total possible social efficiency in the experiments) and that a mechanism can sort types so as to improve cost effectiveness with respect to the specific information asymmetry (90-92% of total social surplus). However, the mechanisms involve large transfers and the experiments show that a simple externalitycorrecting tax can achieve more cost effectiveness (99.4% of social efficiency) with lower transfers. This is an important result for policy because recent trends are focused on expanding fiscally costly auctions rather than taxes. The result also is surprising and important for researchers because there is little intuition as to why the tax resolves the selection problem.
2014
Procurement auctions are one of several policy tools available to incentivise the provision of ecosystem services and biodiversity conservation. Successful biodiversity conservation often requires a landscape-scale approach and the spatial coordination of participation, for example in the creation of wildlife corridors. In this paper, we use a laboratory experiment to explore two features of procurement auctions in a forest landscape—the pricing mechanism (uniform vs. discriminatory) and availability of communication (chat) between potential sellers. We modify the experimental design developed by Reeson et al. (2011) by introducing uncertainty (and hence heterogeneity) in the production value of forest sites as well as an automated, endogenous stopping rule. We find that discriminatory pricing yields to greater environmental benefits per government dollar spent, chiefly due to better coordination between owners of adjacent plots. Chat also facilitates such coordination but also seem...
Procurement auctions are one of several policy tools available to incentivise the provision of ecosystem services and biodiversity conservation. Successful biodiversity conservation often requires a landscape-scale approach and the spatial coordination of participation, for example in the creation of wildlife corridors. In this paper, we use a laboratory experiment to explore two features of procurement auctions in a forest landscape: the pricing mechanism (uniform vs. discriminatory) and availability of communication (chat) between potential sellers. We modify the experimental design developed by Reeson et al. (2011) by introducing uncertainty (and hence heterogeneity) in the production value of forest sites as well as an automated, endogenous stopping rule. We find that discriminatory pricing yields to greater environmental benefits per government dollar spent, chiefly because it is easier to construct long corridors. Chat also facilitates such coordination but also seems to encourage collusion in sustaining high prices for the most environmentally attractive plots. These two effects offset each other, making chat neutral from the viewpoint of maximizing environmental effect per dollar spent.
Coordination and Strategic Behaviour in Landscape Auctions
2012
Designing a conservation auction where bidders know the ecological value of their land poses challenges for policy makers because bidders will tend to increase their asking price. This is known as strategic behaviour, and it is particularly prevalent in sequential auction settings. The tender process ceases to be competitive when strategic behaviour occurs, eroding the efficiency advantages of an auction. To overcome this problem, contract options can be designed such that early winners are restricted in their efforts to strategically manipulate auction outcomes. Simply offering multi-period contracts could achieve this goal if participants need to wait for their contracts to expire before they can change their asking price.