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Buyouts and Agglomeration Bonuses in Wildlife Corridor Auctions

Author Info

Listed author(s):
  • Justin Dijk

    ()

    (VU Amsterdam and PBL Netherlands Environmental Assessment Agency, The Netherlands)

  • Erik Ansink

    ()

    (VU Amsterdam, The Netherlands)

  • Daan van Soest

    (Tilburg University, The Netherlands)

Abstract

We present a general model of bidding behavior in wildlife corridor auctions. Given (i) some spatial configuration of landowners in a landscape, (ii) the landowners’ opportunity costs, and (iii) the value of establishing the corridor, our model predicts individual landowners’ bids, overall participation rates in the auction, as well as the expected net benefits to the conservation agency. We find that market efficiency of the auction increases in the number of potential corridors. We use simulations to compare a benchmark auction with two policy scenarios in a hypothetical landscape. In one scenario, members of a winning corridor receive an agglomeration bonus. In the other scenario, we buy out a pivotal landowner (one that is part of many potential corridors) prior to the auction. Given equal budgets for the agglomeration bonus and the buyout policy, an agglomeration bonus is less efficient than a buyout for conservation agencies facing low budgets, and vice versa. A risk-averse conservation agency is however always better off using a buyout policy.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 17-036/VIII.

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Date of creation: 05 Apr 2017
Handle: RePEc:tin:wpaper:20170036
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Keywords: Wildlife corridors; procurement auctions; nature conservation;

Find related papers by JEL classification:

  • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
  • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
  • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
  • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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