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Spatially Coordinated Conservation Auctions: A Framed Field Experiment Focusing on Farmland Wildlife Conservation in China

Author

Listed:
  • Liu, Zhaoyang
  • Banerjee, Simanti
  • Cason, Timothy N.
  • Hanley, Nick
  • Liu, Qi
  • Xu, Jintao
  • Kontoleon, Andreas

Abstract

This paper presents a framed field experiment from China studying a spatially coordinated (SC) auction mechanism for the allocation of agri-environmental contracts, which pay farmers to change their agricultural practices to provide environmental benefits. The SC auction is designed to maximise a metric of environmental benefit that depends both on site-specific environmental values and benefits due to spatial coordination of conserved patches, subject to a budget constraint. We investigate whether auction performance can be improved by the introduction of agglomeration bonus (AB) and joint bidding (JB) mechanisms. The AB is a bonus payment awarded to neighbouring farmers who bid individually but receive agrienvironmental contracts simultaneously. The JB mechanism allows neighbouring farmers to bid jointly and provides a bonus payment for successful joint bids. We conducted experimental SC auctions with a total of 432 Chinese farmers randomly assigned to one of four treatments which differed in whether the AB and JB mechanisms were adopted, following a two-by-two full factorial experimental design. Our empirical results suggest that the SC auction has similar environmental performance regardless of whether an AB is provided, although cost-effectiveness is 1 slightly higher when AB is not provided. Moreover, introducing the JB mechanism into the SC auction leads to lower environmental performance and lower cost-effectiveness. Finally, the AB mechanism achieves higher environmental performance than the JB mechanism but has similar cost-effectiveness.

Suggested Citation

  • Liu, Zhaoyang & Banerjee, Simanti & Cason, Timothy N. & Hanley, Nick & Liu, Qi & Xu, Jintao & Kontoleon, Andreas, 2023. "Spatially Coordinated Conservation Auctions: A Framed Field Experiment Focusing on Farmland Wildlife Conservation in China," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334572, Agricultural Economics Society - AES.
    • Handle: RePEc:ags:aesc23:334572
    DOI: 10.22004/ag.econ.334572
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