Adapting auctions for the provision of ecosystem services at the landscape scale

By Andrew F Reeson, Luis C. Rodriguez, Stuart Whitten, Kristen Jennifer Williams, Karel Nolles, Jill Windle, John Rolfe. 2011

117 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Management, Monitoring, Policy and Law, Management Science and Operations Research

View Paper: https://www.semanticscholar.org/paper/876536ae180c9ea7377407541256b44c7305f5fb

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. S. Engel
2. Gareth D. Lennox
3. N. Hanley
4. P. Armsworth
5. Simanti Banerjee
6. Sven Wunder
7. C. Spash
8. R. Turner

In Management, Monitoring, Policy and Law

1. S. Engel
2. N. Hanley
3. Simanti Banerjee
4. C. Spash
5. Sven Wunder
6. R. Turner

In Management Science and Operations Research

1. S. Engel
2. N. Hanley
3. P. Armsworth

Citations in the corpus

• The Devil in the Detail: A Practical Guide on Designing Payments for Environmental Services (2016, background): “A more sophisticated way to include spatial interactions in targeting is combinatorial auctions (Reeson et al., 2011).”
• How should we incentivize private landowners to ‘produce’ more biodiversity? (2012, background): “…space, since the biodiversity pay-off per euro also varies; and/or that the awarding of conservation contracts would partly depend on spatially-varying ecological benefit functions (conservation metrics), such as are used in Australia for scoring bids (Oliver et al, 2005; Reeson et al, 2011).”
• Improving the link between payments and the provision of ecosystem services in agri-environment schemes (2014, unknown): “However, Windle et al. (2009) and Reeson et al. (2011) warned that, where such systems operate via auctions, they may be exploited by land owners, located in strategic positions, who may be able to demand high payments for their involvement, reducing the efficiency of the scheme.”