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Designing frameworks to deliver unknown information to support market-based instruments

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  • Mark Eigenraam
  • Loris Strappazzon
  • Nicola Lansdell
  • Craig Beverly
  • Gary Stoneham

Abstract

This article reports on an Australian auction to procure multiple environmental outcomes: "EcoTender". EcoTender uses a Catchment Modelling Framework (CMF) to estimate the impact landholder actions have on carbon, terrestrial biodiversity, aquatic function (water quality and quantity), and saline land area. This framework solves the problem of linking paddock-scale land use and management to catchment-scale environmental outcomes. This is the first time a market-based instrument has been fully integrated from desk to field with a biophysical model for the purchase of multiple environmental outcomes. A multiple outcome auction provides several new economic and scientific challenges. This article discusses the EcoTender approach to incorporating agency preferences, modeling the joint production of environmental outcomes and reporting environmental scores. Results indicate that linking EcoTender to the carbon market reduced the cost of procuring the environmental goods by 26%. Further, preliminary estimates show that the environmental gains from scoring the joint production of multiple outcomes are between 30% and 50% to the agency. Copyright 2007 International Association of Agricultural Economists.

Suggested Citation

  • Mark Eigenraam & Loris Strappazzon & Nicola Lansdell & Craig Beverly & Gary Stoneham, 2007. "Designing frameworks to deliver unknown information to support market-based instruments," Agricultural Economics, International Association of Agricultural Economists, vol. 37(s1), pages 261-269, December.
  • Handle: RePEc:bla:agecon:v:37:y:2007:i:s1:p:261-269
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    References listed on IDEAS

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    1. Just, Richard E & Antle, John M, 1990. "Interactions between Agricultural and Environmental Policies: A Conceptual Framework," American Economic Review, American Economic Association, vol. 80(2), pages 197-202, May.
    2. Stoneham, Gary & Chaudhri, Vivek & Ha, Arthur & Strappazzon, Loris, 2003. "Auctions for conservation contracts: an empirical examination of Victoria’s BushTender trial," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 0(Issue 4), pages 1-24.
    3. Gary Stoneham & Vivek Chaudhri & Arthur Ha & Loris Strappazzon, 2003. "Auctions for conservation contracts: an empirical examination of Victoria's BushTender trial," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(4), pages 477-500, December.
    4. Wu, JunJie & Skelton-Groth, Katharine, 2002. "Targeting conservation efforts in the presence of threshold effects and ecosystem linkages," Ecological Economics, Elsevier, vol. 42(1-2), pages 313-331, August.
    5. Loris Strappazzon & Arthur Ha & Mark Eigenraam & Charlotte Duke & Gary Stoneham, 2003. "Efficiency of alternative property right allocations when farmers produce multiple environmental goods under the condition of economies of scope," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(1), pages 1-27, March.
    6. Wu, JunJie & Boggess, William G., 1999. "The Optimal Allocation of Conservation Funds," Journal of Environmental Economics and Management, Elsevier, vol. 38(3), pages 302-321, November.
    7. Strappazzon, Loris & Ha, Arthur & Eigenraam, Mark & Duke, Charlotte & Stoneham, Gary, 2003. "Efficiency of alternative property right allocations when farmers produce multiple environmental goods under the condition of economies of scope," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 0(Issue 1), pages 1-27.
    8. Babcock, Bruce A. & Lakshminarayan, P. G. & Wu, J. & Zilberman, David, 1997. "Targeting Tools for the Purchase of Environmental Amenities," Staff General Research Papers Archive 5220, Iowa State University, Department of Economics.
    9. James S. Shortle & James W. Dunn, 1986. "The Relative Efficiency of Agricultural Source Water Pollution Control Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 668-677.
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    Cited by:

    1. Chan, Kai M.A. & Satterfield, Terre & Goldstein, Joshua, 2012. "Rethinking ecosystem services to better address and navigate cultural values," Ecological Economics, Elsevier, vol. 74(C), pages 8-18.
    2. repec:eee:ecoser:v:9:y:2014:i:c:p:106-114 is not listed on IDEAS
    3. John Rolfe & Romy Greiner & Jill Windle & Atakelty Hailu, 2011. "Testing for allocation efficiencies in water quality tenders across catchments, industries and pollutants: a north Queensland case study," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(4), pages 518-536, October.
    4. Glebe, Thilo W., 2011. "Tendering conservation contracts: Should information on environmental benefits be disclosed or concealed?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114625, European Association of Agricultural Economists.
    5. R. Quentin Grafton, 2010. "How to Increase the Cost-effectiveness of Water Reform and Environmental Flows in the Murray-Darling Basin," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 17(2), pages 17-40.
    6. Stoneham, Gary & O'Keefe, Andrew & Eigenraam, Mark & Bain, David, 2012. "Creating physical environmental asset accounts from markets for ecosystem conservation," Ecological Economics, Elsevier, vol. 82(C), pages 114-122.

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