The necessity, the points of departure, and the methodology for the remuneration of ecological goods and services are subjects in the current environmental policy. In particular, recent discussion has focused on ecological incentives as an addition to conventional instruments of nature protection. Among such incentives, eco-credits (in German: "Oekopunkte") have been gaining increasing attention. In some cases they already have reached the test stage. Due to restricted governmental funds, however, it remains questionable whether eco-credits will effectively improve the economic efficiency and ecological effectiveness of proposed incentives. In this paper, it will be argued that a bid auction, similar to a variable-rate tender procedure, would improve the efficiency and effectiveness of eco-credits. Considering eco-credits in terms of efficiency indicators, it is proposed that eco-credits be acquired according to a voluntary payment, rather than being offered at a fixed price. It is expected that buyers base their voluntary payments on their production-costs which would therefore lead to an improvement of efficiency. This paper analyzes the mechanisms of such a design and applies the concept rudimentarily to the farming industry.
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Paper provided by Universitaet Augsburg, Institute for Economics in its series Discussion Paper Series with number
223.