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Designing frameworks to deliver unknown information to support market‐based instruments

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  • Mark Eigenraam
  • Loris Strappazzon
  • Nicola Lansdell
  • Craig Beverly
  • Gary Stoneham

Abstract

This article reports on an Australian auction to procure multiple environmental outcomes: EcoTender. EcoTender uses a Catchment Modelling Framework (CMF) to estimate the impact landholder actions have on carbon, terrestrial biodiversity, aquatic function (water quality and quantity), and saline land area. This framework solves the problem of linking paddock‐scale land use and management to catchment‐scale environmental outcomes. This is the first time a market‐based instrument has been fully integrated from desk to field with a biophysical model for the purchase of multiple environmental outcomes. A multiple outcome auction provides several new economic and scientific challenges. This article discusses the EcoTender approach to incorporating agency preferences, modeling the joint production of environmental outcomes and reporting environmental scores. Results indicate that linking EcoTender to the carbon market reduced the cost of procuring the environmental goods by 26%. Further, preliminary estimates show that the environmental gains from scoring the joint production of multiple outcomes are between 30% and 50% to the agency.

Suggested Citation

  • Mark Eigenraam & Loris Strappazzon & Nicola Lansdell & Craig Beverly & Gary Stoneham, 2007. "Designing frameworks to deliver unknown information to support market‐based instruments," Agricultural Economics, International Association of Agricultural Economists, vol. 37(s1), pages 261-269, December.
    • Handle: RePEc:bla:agecon:v:37:y:2007:i:s1:p:261-269
    DOI: 10.1111/j.1574-0862.2007.00250.x
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    References listed on IDEAS

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    7. Loris Strappazzon & Arthur Ha & Mark Eigenraam & Charlotte Duke & Gary Stoneham, 2003. "Efficiency of alternative property right allocations when farmers produce multiple environmental goods under the condition of economies of scope," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(1), pages 1-27, March.
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    Cited by:

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    2. Marjan van den Belt & Daniella Blake, 2015. "Investing in Natural Capital and Getting Returns: An Ecosystem Service Approach," Business Strategy and the Environment, Wiley Blackwell, vol. 24(7), pages 667-677, November.
    3. R. Quentin Grafton, 2010. "How to Increase the Cost-effectiveness of Water Reform and Environmental Flows in the Murray-Darling Basin," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 17(2), pages 17-40.
    4. Chan, Kai M.A. & Satterfield, Terre & Goldstein, Joshua, 2012. "Rethinking ecosystem services to better address and navigate cultural values," Ecological Economics, Elsevier, vol. 74(C), pages 8-18.
    5. John Rolfe & Romy Greiner & Jill Windle & Atakelty Hailu, 2011. "Testing for allocation efficiencies in water quality tenders across catchments, industries and pollutants: a north Queensland case study," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(4), pages 518-536, October.
    6. Glebe, Thilo W., 2011. "Tendering conservation contracts: Should information on environmental benefits be disclosed or concealed?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114625, European Association of Agricultural Economists.
    7. Stoneham, Gary & O'Keefe, Andrew & Eigenraam, Mark & Bain, David, 2012. "Creating physical environmental asset accounts from markets for ecosystem conservation," Ecological Economics, Elsevier, vol. 82(C), pages 114-122.
    8. Pirard, Romain & Lapeyre, Renaud, 2014. "Classifying market-based instruments for ecosystem services: A guide to the literature jungle," Ecosystem Services, Elsevier, vol. 9(C), pages 106-114.
    9. Rolfe, John & Whitten, Stuart & Windle, Jill, 2017. "The Australian experience in using tenders for conservation," Land Use Policy, Elsevier, vol. 63(C), pages 611-620.

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