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Limitation of the Reverse Auctions for Payment for Environmental Services (PES) and Targeting Mix

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  • Suranjit, K

Abstract

Theoretically reverse auction creates the competitive market where environmental service (ES) providers are induced to offer their service price which signals their opportunity cost whereas, targeting payment is basically based on the notions of optimal cost-benefit. Targeted payment would be either a very specific (direct) or holistic (indirect) one. In this essay, I argue that although targeted Payments for Environmental Services (PES) may increase the transaction cost it could avoid some loopholes of the reverse-auction since it focuses more on the pre-implement assessment and feasibility studies and comparatively it becomes more effective as well as sustainable. Moreover, a reverse auction with targeting mix may increase its effectiveness as well. Hence, this essay focuses on the necessity for incorporating the proper targeting variables in PES policy modelling.

Suggested Citation

  • Suranjit, K, 2016. "Limitation of the Reverse Auctions for Payment for Environmental Services (PES) and Targeting Mix," MPRA Paper 121438, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:121438
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    Keywords

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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