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Do farmers value the environment? Evidence from a conservation reserve program auction

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  • Vukina, Tomislav
  • Zheng, Xiaoyong
  • Marra, Michele
  • Levy, Armando

Abstract

The paper uses data from one Conservation Reserve Program (CRP) auction to elicit farmers' attitudes toward the environment by analyzing their bids. The CRP pays farmers to remove chosen plots of land from agricultural production and put them to a conservation use. An interesting aspect of this auction is that winners are determined by a combination of low bids and environmental scores of individual plots. Using decision theoretic approach to model this auction we show that farmers condition their bids on the strength of their environmental scores and that they value environmental benefits, especially those that increase future soil productivity of their land.

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  • Vukina, Tomislav & Zheng, Xiaoyong & Marra, Michele & Levy, Armando, 2008. "Do farmers value the environment? Evidence from a conservation reserve program auction," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1323-1332, November.
    • Handle: RePEc:eee:indorg:v:26:y:2008:i:6:p:1323-1332
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    1. Cattaneo, Andrea & Lankoski, Jussi E. & Ollikainen, Markku, 2009. "Green auctions versus uniform agri-environmental payments under heterogeneous conditions," 2009 Conference, August 16-22, 2009, Beijing, China 51678, International Association of Agricultural Economists.
    2. Xiaohong Deng & Zhongmin Xu, 2015. "Green Auctions and Reduction of Information Rents in Payments for Environmental Services: An Experimental Investigation in Sunan County, Northwestern China," PLOS ONE, Public Library of Science, vol. 10(3), pages 1-15, March.
    3. Wallander, Steven & Aillery, Marcel & Hellerstein, Daniel & Hand, Michael S., 2013. "The Role of Conservation Programs in Drought Risk Adaptation," Economic Research Report 262224, United States Department of Agriculture, Economic Research Service.
    4. Jacobs, Keri L. & Thurman, Walter N. & Marra, Michele C., 2011. "How Farmers Bid Into the Conservation Reserve Program: An Empirical Analysis of CRP Offers Data," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103675, Agricultural and Applied Economics Association.
    5. Wallander, Steven & Hellerstein, Daniel M. & Johnsen, Reid, 2018. "Cost Effectiveness of Conservation Auctions Revisited: The Benefits of Information Rents," 2018 Annual Meeting, August 5-7, Washington, D.C. 274457, Agricultural and Applied Economics Association.
    6. LI, Liqing & Ando, Amy W. & Kirwan, Barrett E., 2017. "The Impact of Conservation Programs on Local Employment: A Case of Conservation Reserve Program," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259195, Agricultural and Applied Economics Association.
    7. Rabotyagov, Sergey S. & Valcu, Adriana M. & Campbell, Todd D. & Jha, Manoj K. & Gassman, Philip W. & Kling, Catherine L., 2012. "Using a coupled simulation-optimization approach to design cost-effective reverse auctions for watershed nutrient reductions," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124656, Agricultural and Applied Economics Association.
    8. Hellerstein, Daniel & Higgins, Nathaniel, 2010. "The Effective Use of Limited Information: Do Bid Maximums Reduce Procurement Cost in Asymmetric Auctions?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(2), pages 1-17, April.
    9. Di Corato, Luca & Dosi, Cesare & Moretto, Michele, 2018. "Multidimensional auctions for long-term procurement contracts with early-exit options: The case of conservation contracts," European Journal of Operational Research, Elsevier, vol. 267(1), pages 368-380.
    10. Juutinen, Artti & Mäntymaa, Erkki & Ollikainen, Markku, 2013. "Landowners’ conservation motives and the size of information rents in environmental bidding systems," Journal of Forest Economics, Elsevier, vol. 19(2), pages 128-148.
    11. Di Corato, Luca & Dosi, Cesare & Moretto, Michele, 2015. "Multidimensional auctions for long-term procurement contracts under the threat of early exit: the case of conservation auctions," Working Paper Series 2015:6, Swedish University of Agricultural Sciences, Department Economics.
    12. John K. Horowitz & Lori Lynch & Andrew Stocking, 2009. "Competition-Based Environmental Policy: An Analysis of Farmland Preservation in Maryland," Land Economics, University of Wisconsin Press, vol. 85(4), pages 555-575.
    13. Messer, Kent D. & Duke, Joshua M. & Lynch, Lori & Li, Tongzhe, 2017. "When Does Public Information Undermine the Efficiency of Reverse Auctions for the Purchase of Ecosystem Services?," Ecological Economics, Elsevier, vol. 134(C), pages 212-226.
    14. Dakuan Qiao & Lei Luo & Xingqiang Zheng & Xinhong Fu, 2022. "External Supervision, Face Consciousness, and Pesticide Safety Use: Evidence from Sichuan Province, China," IJERPH, MDPI, vol. 19(12), pages 1-16, June.
    15. Lankoski, Jussi, 2015. "Cost-effectiveness of Alternative Payment and Auction Designs for Biodiversity Conservation in Agriculture," 2015 Conference, August 9-14, 2015, Milan, Italy 212031, International Association of Agricultural Economists.
    16. Keri L. Jacobs & Walter N. Thurman & Michele C. Marra, 2014. "The Effect of Conservation Priority Areas on Bidding Behavior in the Conservation Reserve Program," Land Economics, University of Wisconsin Press, vol. 90(1), pages 1-25.
    17. Vedel, Suzanne Elizabeth & Jacobsen, Jette Bredahl & Thorsen, Bo Jellesmark, 2015. "Forest owners' willingness to accept contracts for ecosystem service provision is sensitive to additionality," Ecological Economics, Elsevier, vol. 113(C), pages 15-24.
    18. Yu, Zhenning & Yao, Lan & Wu, Mengya, 2020. "Farmers’ attitude towards the policy of remediation during fallow in soil fertility declining and heavy metal polluted area of China," Land Use Policy, Elsevier, vol. 97(C).
    19. Pratt, Bryan & Wallander, Steven, 2022. "Cover Practice Definitions and Incentives in the Conservation Reserve Program," USDA Miscellaneous 323862, United States Department of Agriculture.
    20. Pratt, Bryan & Wallander, Steven, 2022. "Cover Practice Definitions and Incentives in the Conservation Reserve Program," Economic Information Bulletin 327358, United States Department of Agriculture, Economic Research Service.
    21. Marc N. Conte & Robert M. Griffin, 2017. "Quality Information and Procurement Auction Outcomes: Evidence from a Payment for Ecosystem Services Laboratory Experiment," American Journal of Agricultural Economics, John Wiley & Sons, vol. 99(3), pages 571-591, April.
    22. Kits, Gerda J. & Adamowicz, Wiktor L. & Boxall, Peter C., 2014. "Do conservation auctions crowd out voluntary environmentally friendly activities?," Ecological Economics, Elsevier, vol. 105(C), pages 118-123.
    23. Chang, Hung-Hao & Boisvert, Richard N., 2009. "The Conservation Reserve Program, Off-Farm Work, and Farm Household Technical Efficiencies," Working Papers 57034, Cornell University, Department of Applied Economics and Management.
    24. Peter C. Boxall, 2018. "Evaluation of Agri†Environmental Programs: Can We Determine If We Grew Forward in an Environmentally Friendly Way?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 66(2), pages 171-186, June.

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