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The efficiency of conservation banking schemes with inter-regionally tradable credits and the role of mediators

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  • Higashida, Keisaku
  • Tanaka, Kenta
  • Managi, Shunsuke

Abstract

The notion of tradable allowance schemes for biodiversity conservation (conservation banking) has been drawing attention and the number of such schemes has been increasing over the past few decades. An increase in the number of schemes increases the need for institutional designs that incorporate inter-regional or inter-scheme trading; however, this may be difficult because of the heterogeneity of biodiversity and the variation in evaluation methodologies. Focusing on the role of environmental traders as mediators, this study considers inter-scheme or inter-regional transactions of credits experimentally and explores the possibility that mediators simultaneously encourage efficiency and conservation. Experimental results suggest that environmental traders behave as theoretically predicted and enhance efficiency by exporting credits from areas with a higher environmental biodiversity value to those with a lower value. Our results highlight the importance of institutional frameworks in allowing market mechanisms to work effectively under conservation banking schemes.

Suggested Citation

  • Higashida, Keisaku & Tanaka, Kenta & Managi, Shunsuke, 2019. "The efficiency of conservation banking schemes with inter-regionally tradable credits and the role of mediators," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 175-186.
    • Handle: RePEc:eee:ecanpo:v:62:y:2019:i:c:p:175-186
    DOI: 10.1016/j.eap.2019.02.002
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    Cited by:

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    2. Tanaka, Kenta & Matsukawa, Isamu & Managi, Shunsuke, 2020. "An experimental investigation of bilateral oligopoly in emissions trading markets," China Economic Review, Elsevier, vol. 59(C).

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    More about this item

    Keywords

    Biodiversity; Inter-regional trading; Conservation banking schemes; Tradable allowance;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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