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Do farmers value the environment? Evidence from a conservation reserve program auction

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  • Vukina, Tomislav
  • Zheng, Xiaoyong
  • Marra, Michele
  • Levy, Armando

Abstract

The paper uses data from one Conservation Reserve Program (CRP) auction to elicit farmers' attitudes toward the environment by analyzing their bids. The CRP pays farmers to remove chosen plots of land from agricultural production and put them to a conservation use. An interesting aspect of this auction is that winners are determined by a combination of low bids and environmental scores of individual plots. Using decision theoretic approach to model this auction we show that farmers condition their bids on the strength of their environmental scores and that they value environmental benefits, especially those that increase future soil productivity of their land.

Suggested Citation

  • Vukina, Tomislav & Zheng, Xiaoyong & Marra, Michele & Levy, Armando, 2008. "Do farmers value the environment? Evidence from a conservation reserve program auction," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1323-1332, November.
    • Handle: RePEc:eee:indorg:v:26:y:2008:i:6:p:1323-1332
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    Cited by:

    1. John K. Horowitz & Lori Lynch & Andrew Stocking, 2009. "Competition-Based Environmental Policy: An Analysis of Farmland Preservation in Maryland," Land Economics, University of Wisconsin Press, vol. 85(4), pages 555-575.
    2. Vedel, Suzanne Elizabeth & Jacobsen, Jette Bredahl & Thorsen, Bo Jellesmark, 2015. "Forest owners' willingness to accept contracts for ecosystem service provision is sensitive to additionality," Ecological Economics, Elsevier, vol. 113(C), pages 15-24.
    3. Jacobs, Keri L. & Thurman, Walter N. & Marra, Michele C., 2011. "How Farmers Bid Into the Conservation Reserve Program: An Empirical Analysis of CRP Offers Data," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103675, Agricultural and Applied Economics Association.
    4. Hellerstein, Daniel & Higgins, Nathaniel, 2010. "The Effective Use of Limited Information: Do Bid Maximums Reduce Procurement Cost in Asymmetric Auctions?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(2), April.
    5. Keri L. Jacobs & Walter N. Thurman & Michele C. Marra, 2014. "The Effect of Conservation Priority Areas on Bidding Behavior in the Conservation Reserve Program," Land Economics, University of Wisconsin Press, vol. 90(1), pages 1-25.
    6. Rabotyagov, Sergey S. & Valcu, Adriana M. & Campbell, Todd D. & Jha, Manoj K. & Gassman, Philip W. & Kling, Catherine L., 2012. "Using a coupled simulation-optimization approach to design cost-effective reverse auctions for watershed nutrient reductions," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124656, Agricultural and Applied Economics Association.
    7. Juutinen, Artti & Mäntymaa, Erkki & Ollikainen, Markku, 2013. "Landowners’ conservation motives and the size of information rents in environmental bidding systems," Journal of Forest Economics, Elsevier, vol. 19(2), pages 128-148.
    8. Kits, Gerda J. & Adamowicz, Wiktor L. & Boxall, Peter C., 2014. "Do conservation auctions crowd out voluntary environmentally friendly activities?," Ecological Economics, Elsevier, vol. 105(C), pages 118-123.
    9. Di Corato, Luca & Dosi, Cesare & Moretto, Michele, 2015. "Multidimensional auctions for long-term procurement contracts under the threat of early exit: the case of conservation auctions," Working Paper Series 2015:6, Swedish University of Agricultural Sciences, Department Economics.
    10. Chang, Hung-Hao & Boisvert, Richard N., 2009. "The Conservation Reserve Program, Off-Farm Work, and Farm Household Technical Efficiencies," Working Papers 57034, Cornell University, Department of Applied Economics and Management.
    11. Messer, Kent D. & Duke, Joshua M. & Lynch, Lori & Li, Tongzhe, 2017. "When Does Public Information Undermine the Efficiency of Reverse Auctions for the Purchase of Ecosystem Services?," Ecological Economics, Elsevier, vol. 134(C), pages 212-226.

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