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An auction mechanism for the optimal provision of ecosystem services under climate change

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  • Lewis, David J.
  • Polasky, Stephen

Abstract

The provision of many ecosystem services depends on the spatial pattern of land use across multiple landowners. Even holding land use constant, ecosystem service provision may change through time due to climate change. This paper develops an auction mechanism that implements an optimal solution for providing ecosystem services through time with multiple landowners who have private information about the net benefits of alternative uses of their land. Under the auction, each landowner has a dominant strategy to truthfully reveal their private information. With this information a regulator can then implement the optimal landscape pattern, which maximizes the present value of net benefits derived from the landscape, following the rules of the auction mechanism. The auction can be designed as a subsidy auction that pays landowners to conserve or a tax auction where landowners pay for the right to develop. Our mechanism optimizes social adaptation of ecosystem management to climate change.

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  • Lewis, David J. & Polasky, Stephen, 2018. "An auction mechanism for the optimal provision of ecosystem services under climate change," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 20-34.
    • Handle: RePEc:eee:jeeman:v:92:y:2018:i:c:p:20-34
    DOI: 10.1016/j.jeem.2018.08.014
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    2. Gerling, Charlotte & Drechsler, Martin & Keuler, Klaus & Sturm, Astrid & Wätzold, Frank, 2022. "Time to consider the timing of conservation measures: designing cost-effective agri-environment schemes under climate change," MPRA Paper 113877, University Library of Munich, Germany.
    3. Gerling, Charlotte & Drechsler, Martin & Keuler, Klaus & Leins, Johannes A. & Radtke, Kai & Schulz, Björn & Sturm, Astrid & Wätzold, Frank, 2021. "Cost-effective conservation in the face of climate change: combining ecological-economic modelling and climate science for the cost-effective spatio-temporal allocation of conservation measures in agr," MPRA Paper 105608, University Library of Munich, Germany.
    4. Oliver Schöttker & Frank Wätzold, 2022. "Climate Change and the Cost-Effective Governance Mode for Biodiversity Conservation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(2), pages 409-436, June.
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    6. Gerling, Charlotte & Wätzold, Frank, 2019. "Evaluating policy instruments for the conservation of biodiversity in a changing climate," MPRA Paper 95512, University Library of Munich, Germany.
    7. Drechsler, Martin & Wätzold, Frank & Grimm, Volker, 2022. "The hitchhiker's guide to generic ecological-economic modelling of land-use-based biodiversity conservation policies," Ecological Modelling, Elsevier, vol. 465(C).
    8. Augustynczik, Andrey Lessa Derci & Gutsch, Martin & Basile, Marco & Suckow, Felicitas & Lasch, Petra & Yousefpour, Rasoul & Hanewinkel, Marc, 2020. "Socially optimal forest management and biodiversity conservation in temperate forests under climate change," Ecological Economics, Elsevier, vol. 169(C).
    9. Gerling, Charlotte & Schöttker, Oliver & Hearne, John, 2022. "The ”climate adaptation problem” in biodiversity conservation: the role of reversible conservation investments in optimal reserve design under climate change," MPRA Paper 114812, University Library of Munich, Germany.
    10. Qunwei Wang & Cheng Cheng & Dequn Zhou, 2020. "Multi-round auctions in an emissions trading system considering firm bidding strategies and government regulations," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 25(7), pages 1403-1421, October.
    11. Gerling, Charlotte & Drechsler, Martin & Keuler, Klaus & Leins, Johannes A. & Radtke, Kai & Schulz, Björn & Sturm, Astrid & Wätzold, Frank, 2021. "Modelling the cost-effective spatio-temporal allocation of conservation measures in agricultural landscapes facing climate change," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242352, Verein für Socialpolitik / German Economic Association.

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