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Competition-Based Environmental Policy: An Analysis of Farmland Preservation in Maryland

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  • John K. Horowitz
  • Lori Lynch
  • Andrew Stocking

Abstract

Policy makers have turned to competition- based voluntary-enrollment programs as a cost-effective way to achieve preferred land uses. This paper studies bidder behavior in an innovative auction-based program in which farmers compete to sell and retire the right to develop their land. We derive a reduced-form bidding model that includes private and common values. This model allows us to estimate the role of bidder competition, winner’s curse correction, and the underlying distribution of private values. We estimate that the auction enrolled as many as 3,000 acres (12%) more than a take-it or- leave-it offer would have enrolled for the same budgetary cost

Suggested Citation

  • 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.
  • Handle: RePEc:uwp:landec:v:85:y:2009:i:4:p:555-575
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    Cited by:

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    2. Banerjee, Simanti & Conte, Marc N., 2017. "Balancing Complexity and Rent-Seeking in Multi-Attribute Conservation Procurement Auctions: Evidence from a Laboratory Experiment," 2018 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2018, Philadelphia, Pennsylvania 266293, Agricultural and Applied Economics Association.
    3. Marc N. Conte & Robert Griffin, 2019. "Private Benefits of Conservation and Procurement Auction Performance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 759-790, July.
    4. Rabotyagov, Sergey S. & Lin, Sonja, 2013. "Small forest landowner preferences for working forest conservation contract attributes: A case of Washington State, USA," Journal of Forest Economics, Elsevier, vol. 19(3), pages 307-330.
    5. 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), pages 1-17, April.
    6. Amin, M.G. Mostofa & Karsten, Heather D. & Veith, Tamie L. & Beegle, Douglas B. & Kleinman, Peter J., 2018. "Conservation dairy farming impact on water quality in a karst watershed in northeastern US," Agricultural Systems, Elsevier, vol. 165(C), pages 187-196.
    7. 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.
    8. Edmund M. Balsdon, 2012. "Property Value Capitalization and Municipal Open Space Referenda," Land Economics, University of Wisconsin Press, vol. 88(2), pages 201-232.
    9. Xiaojie Chen & Jing Wang, 2021. "Quantitatively Determining the Priorities of Regional Ecological Compensation for Cultivated Land in Different Main Functional Areas: A Case Study of Hubei Province, China," Land, MDPI, Open Access Journal, vol. 10(3), pages 1-21, March.
    10. Chakrabarti, Anwesha & Liu, Pengfei & Swallow, Stephen K., 2018. "Implementing Reverse Auctions with Screening Criteria to Provide Ecosystem Services," 2018 Annual Meeting, August 5-7, Washington, D.C. 274046, Agricultural and Applied Economics Association.
    11. Holzer, Jorge & DePiper, Geret & Lipton, Douglas, 2017. "Buybacks with costly participation," Journal of Environmental Economics and Management, Elsevier, vol. 85(C), pages 130-145.
    12. Xin Yang & Fan Zhang & Cheng Luo & Anlu Zhang, 2019. "Farmland Ecological Compensation Zoning and Horizontal Fiscal Payment Mechanism in Wuhan Agglomeration, China, From the Perspective of Ecological Footprint," Sustainability, MDPI, Open Access Journal, vol. 11(8), pages 1-15, April.
    13. Choi, Pak-Sing & Espínola-Arredondo, Ana & Muñoz-García, Félix, 2018. "Conservation procurement auctions with bidirectional externalities," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 559-579.

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    More about this item

    JEL classification:

    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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