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Optimisation and the selection of conservation contracts

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  • Stefan Hajkowicz
  • Andrew Higgins
  • Kristen Williams
  • Daniel P. Faith
  • Michael Burton

Abstract

This paper explores alternative techniques for the selection of conservation contracts under competitive tendering programs. Under these programs, purchasing decisions are often based on the benefits score and cost for proposed projects. The optimisation problem is to maximise the aggregate benefits without exceeding the budget. Because the budget rarely permits all projects to be funded, there is a binary choice problem, known in the operations research published work as a knapsack problem. The decision-maker must choose which projects are funded and which are not. Under some circumstances, the knapsack problem can be unsolvable because computational complexity increases exponentially with the number of projects. This paper explores the use of several decision rules for solving the optimisation problem including the use of advanced meta-heuristics. It is shown that commonly applied techniques for project selection may not be providing the optimal solution. Improved algorithms can increase the environmental programs benefits and staying within budget. The comparison of algorithms is based on real data from the Western Australian Conservation Auction. Copyright 2007 CSIRO Journal compilation 2007 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd .

Suggested Citation

  • Stefan Hajkowicz & Andrew Higgins & Kristen Williams & Daniel P. Faith & Michael Burton, 2007. "Optimisation and the selection of conservation contracts," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(1), pages 39-56, March.
    • Handle: RePEc:bla:ajarec:v:51:y:2007:i:1:p:39-56
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    File URL: http://hdl.handle.net/10.1111/j.1467-8489.2007.00345.x
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    1. Katherine Reichelderfer & William G. Boggess, 1988. "Government Decision Making and Program Performance: The Case of the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(1), pages 1-11.
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    4. Martello, Silvano & Pisinger, David & Toth, Paolo, 2000. "New trends in exact algorithms for the 0-1 knapsack problem," European Journal of Operational Research, Elsevier, vol. 123(2), pages 325-332, June.
    5. Pisinger, David, 1999. "An exact algorithm for large multiple knapsack problems," European Journal of Operational Research, Elsevier, vol. 114(3), pages 528-541, May.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. 252 – Ranking environmental projects 18: Simplifications
      by David Pannell in Pannell Discussions on 2013-08-26 20:00:14

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    1. Latacz-Lohmann, U. & Schilizzi, S. & Breustedt, G., 2012. "Auctioning outcome-based conservation contracts," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 47, March.
    2. Reeson, Andrew F. & Rodriguez, Luis C. & Whitten, Stuart M. & Williams, Kristen & Nolles, Karel & Windle, Jill & Rolfe, John, 2011. "Adapting auctions for the provision of ecosystem services at the landscape scale," Ecological Economics, Elsevier, vol. 70(9), pages 1621-1627, July.
    3. Connor, Jeffery D. & Ward, John R. & Bryan, Brett, 2008. "Exploring the cost effectiveness of land conservation auctions and payment policies," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(3), pages 1-17.
    4. Frans P. Vries & Nick Hanley, 2016. "Incentive-Based Policy Design for Pollution Control and Biodiversity Conservation: A Review," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 687-702, April.
    5. Iho, Antti & Lankoski, Jussi & Ollikainen, Markku & Puustinen, Markku & Lehtimäki, Jonne, 2014. "Agri-environmental auctions for phosphorus load reduction: experiences from a Finnish pilot," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), April.
    6. Ozgoc-Caglar, C. Derya & Farnsworth, Richard L., 2008. "A Multiple Criteria Decision System to Improve Performance of Federal Conservation Programs," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 5986, Australian Agricultural and Resource Economics Society.
    7. Bachev, Hrabrin & Yovchevska, Plamena & Mitova, Dilyana & Toteva, Desislava & Mitov, Anton, 2013. "Еко-Управление В Българското Селското Стопанство [Environmental Management in Bulgarian Agriculture]," MPRA Paper 52202, University Library of Munich, Germany.
    8. Andeltová, Lucie & Catacutan, Delia C. & Wünscher, Tobias & Holm-Müller, Karin, 2019. "Gender aspects in action- and outcome-based payments for ecosystem services—A tree planting field trial in Kenya," Ecosystem Services, Elsevier, vol. 35(C), pages 13-22.
    9. Pannell, David J. & Gibson, Fiona L., 2014. "Testing metrics to prioritise environmental projects," Working Papers 163211, University of Western Australia, School of Agricultural and Resource Economics.
    10. Brett Bryan & Jeffery Connor et al, 2005., 2005. "Catchment Care - Developing an Auction Process for Biodiversity and Water Quality Gains. Volume 1 - Report," Natural Resource Management Economics 05_004, Policy and Economic Research Unit, CSIRO Land and Water, Adelaide, Australia.
    11. Banerjee, Simanti & Kwasnica, Anthony M & Shortle, James S, 2011. "An Iterative Auction for Spatially Contiguous Land Management: An Experimental Analysis," Stirling Economics Discussion Papers 2011-19, University of Stirling, Division of Economics.
    12. Pengfei Liu, 2021. "Balancing Cost Effectiveness and Incentive Properties in Conservation Auctions: Experimental Evidence from Three Multi-award Reverse Auction Mechanisms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(3), pages 417-451, March.
    13. Schilizzi, Steven & Breustedt, Gunnar & Latacz-Lohmann, Uwe, 2011. "Does tendering conservation contracts with performance payments generate additional benefits?," Working Papers 100883, University of Western Australia, School of Agricultural and Resource Economics.
    14. Latacz-Lohmann, Uwe & Schilizzi, Steven & Breustedt, Gunnar, 2011. "Auctioning Outcome-Based Conservation Contracts," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114523, German Association of Agricultural Economists (GEWISOLA).
    15. Vanessa M Adams & Robert L Pressey & Natalie Stoeckl, 2014. "Estimating Landholders’ Probability of Participating in a Stewardship Program, and the Implications for Spatial Conservation Priorities," PLOS ONE, Public Library of Science, vol. 9(6), pages 1-12, June.
    16. Jeffery D. Connor & John R. Ward & Brett Bryan, 2008. "Exploring the cost effectiveness of land conservation auctions and payment policies ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(3), pages 303-319, September.
    17. Williams, Kristen J. & Reeson, Andrew F. & Drielsma, Michael J. & Love, Jamie, 2012. "Optimised whole-landscape ecological metrics for effective delivery of connectivity-focused conservation incentive payments," Ecological Economics, Elsevier, vol. 81(C), pages 48-59.

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