Designing a Procurement Auction for Reducing Sedimentation: A Field Experiment in Indonesia
AbstractThe setting of this study is a watershed in Lampung, Indonesia where soil erosion has broad implications for both on-site and off-site environmental damage. The strategy to engage farmers in environmental protection initiative is through the Payment for Environmental Services (PES) scheme. A key condition of PES is transparency regarding the conditions under which incentives or rewards can be granted. Balanced information and the power of transaction are the basis for any environmental service (ES). A contract procurement auction is an alternative mechanism for extracting information from ES providers on levels of payments or incentives that will cover their costs when joining a conservation program. This study tested the application of a procurement auction method to reveal hidden information on the opportunity costs of supplying environmental services. The result show that a seal-bid, multiple round second-price Vickrey auction with a uniform price can be applied where most of the auction participants have a low education level, low asset endowment, small plot size and where market-based competitiveness is not common. It reveals too that farmers' bids to be involved in conservation contracts is more dependent on their learning process during the auction than observable factors such as their socioeconomic background, their awareness of conservation and their social capital state. Finally, it shows that introducing procurement auction as a market-based approach to rural communities does not harm their social relationships and is an applicable method in a rural setting.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Economy and Environment Program for Southeast Asia (EEPSEA) in its series EEPSEA Research Report with number rr2010042.
Date of creation: Apr 2010
Date of revision: Apr 2010
Contact details of provider:
Postal: c/o IDRC, 22 Cross Street, #02-55, South Bridge Court, Singapore 048421
Phone: 6438 4844
Fax: 65 6438 7877
Web page: http://www.eepsea.net
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-18 (All new papers)
- NEP-CTA-2010-06-18 (Contract Theory & Applications)
- NEP-ENV-2010-06-18 (Environmental Economics)
- NEP-EXP-2010-06-18 (Experimental Economics)
- NEP-SEA-2010-06-18 (South East Asia)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Ajayi, Oluyede C. & Jack, B. Kelsey & Leimona, Beria, 2012. "Auction Design for the Private Provision of Public Goods in Developing Countries: Lessons from Payments for Environmental Services in Malawi and Indonesia," World Development, Elsevier, vol. 40(6), pages 1213-1223.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Arief Anshory yusuf).
If references are entirely missing, you can add them using this form.