An Iterative Auction for Spatially Contiguous Land Management: An Experimental Analysis
AbstractTackling the problem of ecosystem services degradation is an important policy challenge. Different types of economic instruments have been employed by conservation agencies to meet this challenge. Notable among them are Payment for Ecosystem Services (PES) schemes that pay private landowners to change land uses to pro-environmental ones on their properties. This paper focuses on a PES scheme - an auction for the cost-efficient disbursal of government funds for selection of spatially contiguous land management projects. The auction is structured as an iterative descending price auction where every bid is evaluated on the basis of a scoring metric - a benefit cost ratio. The ecological effectiveness and economic efficiency of the auction is tested with data generated from lab experiments. These experiments use the information available to the subjects about the spatial goal as the treatment variable. Analysis indicates that the information reduces the cost-efficiency of the auction. Experience with bidding also has a negative impact on auction efficiency. The study also provides an analysis of the behavior of winners and losers at the final auction outcome as well as during the entire lifetime of the auction. Winners and losers are found to have significantly different behavior in this analysis. Behavior is also found to be significantly affected by the treatments as well.
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Bibliographic InfoPaper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2011-19.
Date of creation: Dec 2011
Date of revision:
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Postal: Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA
Phone: +44 (0)1786 467473
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Web page: http://www.econ.stir.ac.uk/
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Spatial Contiguity; experiments Ecosystem Services; Conservation Aucti ons;
Other versions of this item:
- Banerjee, Simanti & Shortle, James S. & Kwasnica, Anthony M., 2011. "An Iterative Auction for Spatially Contiguous Land Management: An Experimental Analysis," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103220, Agricultural and Applied Economics Association.
- NEP-AGR-2012-02-01 (Agricultural Economics)
- NEP-ALL-2012-02-01 (All new papers)
- NEP-EXP-2012-02-01 (Experimental Economics)
- NEP-PPM-2012-02-01 (Project, Program & Portfolio Management)
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