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Quantifying the Benefits of Conservation Auctions


  • Uwe Latacz-Lohmann
  • Steven Schilizzi


summary Most EU conservation schemes offer a single, fixed payment for compliance with a predetermined set of management prescriptions. Alternatively, the conservation tasks could be put up for tender: landholders are invited to bid competitively for a limited number of conservation contracts. Theory suggests that bidding reduces over-compensation and increases the cost-effectiveness of conservation contracting. There is, to date, little evidence about the cost-effectiveness gains of such conservation auctions vis-à-vis the more traditional fixed-payment schemes, and what evidence does exist appears inconclusive. Building on available theory, this work uses controlled laboratory experiments to investigate the budgetary and the economic performance of conservation auctions. The experiments were carried out in two countries to check for robustness of results. We find that conservation auctions outperform the more traditional fixed-price schemes in the one-shot setting: one unit of environmental benefit paid at a fixed rate would have cost 10 to 60 per cent more than the auction, depending on the fixed-rate benchmark chosen. With identical repetition, however, the auction quickly loses its edge, making it possible for the auction to be outperformed by an equivalent fixed-rate programme. Our results suggest that previous estimates of conservation auction performance have been far too optimistic. Copyright The Agricultural Ecomomics Society and the European Association of Agricultural Economists 2007.

Suggested Citation

  • Uwe Latacz-Lohmann & Steven Schilizzi, 2007. "Quantifying the Benefits of Conservation Auctions," EuroChoices, The Agricultural Economics Society, vol. 6(3), pages 32-39, December.
  • Handle: RePEc:bla:eurcho:v:6:y:2007:i:3:p:32-39

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    References listed on IDEAS

    1. Muhammad, Andrew & Seale, James L. & Meade, Birgit Gisela Saager & Regmi, Anita, 2011. "International Evidence on Food Consumption Patterns: An Update Using 2005 International Comparison Program Data," Technical Bulletins 184306, United States Department of Agriculture, Economic Research Service.
    2. Silvia Coderoni & Laura Valli & Maurizio Canavari, 2015. "Climate Change Mitigation Options in the Italian Livestock Sector," EuroChoices, The Agricultural Economics Society, vol. 14(1), pages 17-24, April.
    3. Rafael Oliveira Silva & Luis Gustavo Barioni & Dominic Moran, 2015. "Greenhouse Gas Mitigation through Sustainable Intensification of Livestock Production in the Brazilian Cerrado," EuroChoices, The Agricultural Economics Society, vol. 14(1), pages 28-34, April.
    4. Hugo Valin & Ronald D. Sands & Dominique van der Mensbrugghe & Gerald C. Nelson & Helal Ahammad & Elodie Blanc & Benjamin Bodirsky & Shinichiro Fujimori & Tomoko Hasegawa & Petr Havlik & Edwina Heyhoe, 2014. "The future of food demand: understanding differences in global economic models," Agricultural Economics, International Association of Agricultural Economists, vol. 45(1), pages 51-67, January.
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    Cited by:

    1. Offermann, Frank & Nieberg, Hiltrud & Hecht, Judith, 2008. "Potential of differentiated payment levels based on standard cost approaches: A case study of selected rural development measures in Germany," 82nd Annual Conference, March 31 - April 2, 2008, Royal Agricultural College, Cirencester, UK 36866, Agricultural Economics Society.
    2. 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.

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