IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v124y2016icp36-48.html
   My bibliography  Save this article

Buying spatially-coordinated ecosystem services: An experiment on the role of auction format and communication

Author

Listed:
  • Krawczyk, Michał
  • Bartczak, Anna
  • Hanley, Nick
  • Stenger, Anne

Abstract

Procurement auctions are one of several policy tools available to incentivise the provision of ecosystem services and biodiversity conservation. Successful biodiversity conservation often requires a landscape-scale approach and the spatial coordination of participation, for example in the creation of wildlife corridors. In this paper, we use a laboratory experiment to explore two features of procurement auctions in a forest landscape: the pricing mechanism (uniform vs. discriminatory) and availability of communication (chat) between potential sellers. We modify the experimental design developed by Reeson et al. (2011) by introducing uncertainty (and hence heterogeneity) in the production value of forest sites as well as an automated, endogenous stopping rule. We find that discriminatory pricing yields to greater environmental benefits per government dollar spent, chiefly because it is easier to construct long corridors. Chat also facilitates such coordination but also seems to encourage collusion in sustaining high prices for the most environmentally attractive plots. These two effects offset each other, making chat neutral from the viewpoint of maximizing environmental effect per dollar spent.

Suggested Citation

  • Krawczyk, Michał & Bartczak, Anna & Hanley, Nick & Stenger, Anne, 2016. "Buying spatially-coordinated ecosystem services: An experiment on the role of auction format and communication," Ecological Economics, Elsevier, vol. 124(C), pages 36-48.
    • Handle: RePEc:eee:ecolec:v:124:y:2016:i:c:p:36-48
    DOI: 10.1016/j.ecolecon.2016.01.012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800916301276
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecolecon.2016.01.012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Steven Schilizzi & Uwe Latacz-Lohmann, 2007. "Assessing the Performance of Conservation Auctions: An Experimental Study," Land Economics, University of Wisconsin Press, vol. 83(4), pages 497-515.
    2. Reeson, Andrew F. & Rodriguez, Luis C. & Whitten, Stuart M. & Williams, Kristen & Nolles, Karel & Windle, Jill & Rolfe, John, 2011. "Adapting auctions for the provision of ecosystem services at the landscape scale," Ecological Economics, Elsevier, vol. 70(9), pages 1621-1627, July.
    3. Atakelty Hailu & Sophie Thoyer, 2010. "What Format for Multi-Unit Multiple-Bid Auctions?," Computational Economics, Springer;Society for Computational Economics, vol. 35(3), pages 189-209, March.
    4. Jeannette Brosig & Joachim Weimann & Axel Ockenfels, 2003. "The Effect of Communication Media on Cooperation," German Economic Review, Verein für Socialpolitik, vol. 4(2), pages 217-241, May.
    5. Bochet, Olivier & Page, Talbot & Putterman, Louis, 2006. "Communication and punishment in voluntary contribution experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 60(1), pages 11-26, May.
    6. Schilizzi, Steven & Latacz-Lohmann, Uwe, 2007. "Assessing the performance of conservation auctions: an experimental study," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 10436, Australian Agricultural and Resource Economics Society.
    7. Bartelt, Paul E. & Klaver, Robert W. & Porter, Warren P., 2010. "Modeling amphibian energetics, habitat suitability, and movements of western toads, Anaxyrus (=Bufo) boreas, across present and future landscapes," Ecological Modelling, Elsevier, vol. 221(22), pages 2675-2686.
    8. Cason, Timothy N. & Gangadharan, Lata & Duke, Charlotte, 2003. "A laboratory study of auctions for reducing non-point source pollution," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 446-471, November.
    9. Timothy N. Cason & Lata Gangadharan, 2005. "A Laboratory Comparison of Uniform and Discriminative Price Auctions for Reducing Non-point Source Pollution," Land Economics, University of Wisconsin Press, vol. 81(1).
    10. Simanti Banerjee & Frans P. de Vries & Nick Hanley & Daan P. van Soest, 2014. "The Impact of Information Provision on Agglomeration Bonus Performance: An Experimental Study on Local Networks," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(4), pages 1009-1029.
    11. Daniel Balliet, 2010. "Communication and Cooperation in Social Dilemmas: A Meta-Analytic Review," Journal of Conflict Resolution, Peace Science Society (International), vol. 54(1), pages 39-57, February.
    12. Uwe Latacz-Lohmann & Carel Van der Hamsvoort, 1997. "Auctioning Conservation Contracts: A Theoretical Analysis and an Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 407-418.
    13. Bamière, Laure & David, Maia & Vermont, Bruno, 2013. "Agri-environmental policies for biodiversity when the spatial pattern of the reserve matters," Ecological Economics, Elsevier, vol. 85(C), pages 97-104.
    14. Ferraro, Paul J., 2008. "Asymmetric information and contract design for payments for environmental services," Ecological Economics, Elsevier, vol. 65(4), pages 810-821, May.
    15. Vogt, Nora & Reeson, Andrew F. & Bizer, Kilian, 2013. "Communication, competition and social gift exchange in an auction for public good provision," Ecological Economics, Elsevier, vol. 93(C), pages 11-19.
    16. Nick Hanley & Simanti Banerjee & Gareth D. Lennox & Paul R. Armsworth, 2012. "How should we incentivize private landowners to ‘produce’ more biodiversity?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 28(1), pages 93-113, Spring.
    17. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
    18. Ben-Ner, Avner & Putterman, Louis, 2009. "Trust, communication and contracts: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 106-121, May.
    19. Parkhurst, Gregory M. & Shogren, Jason F., 2007. "Spatial incentives to coordinate contiguous habitat," Ecological Economics, Elsevier, vol. 64(2), pages 344-355, December.
    20. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    21. Cong, Rong-Gang & Wei, Yi-Ming, 2010. "Auction design for the allocation of carbon emission allowances: uniform or discriminatory price?," MPRA Paper 112210, University Library of Munich, Germany.
    22. Banerjee, Simanti & Kwasnica, Anthony M. & Shortle, James S., 2012. "Agglomeration bonus in small and large local networks: A laboratory examination of spatial coordination," Ecological Economics, Elsevier, vol. 84(C), pages 142-152.
    23. Ruben N. Lubowski & Michael J. Roberts, 2005. "How Cost-Effective Are Land Retirement Auctions? Estimating the Difference between Payments and Willingness to Accept in the Conservation Reserve Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1239-1247.
    24. John Rolfe & Jill Windle & Juliana McCosker, 2009. "Testing and Implementing the Use of Multiple Bidding Rounds in Conservation Auctions: A Case Study Application," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(3), pages 287-303, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rommel, Jens & Anggraini, Eva, 2018. "Spatially explicit framed field experiments on ecosystem services governance," Ecosystem Services, Elsevier, vol. 34(PB), pages 201-205.
    2. Attallah, May & Abildtrup, Jens & Stenger, Anne, 2022. "Non-monetary incentives for sustainable biomass harvest: An experimental approach," Resource and Energy Economics, Elsevier, vol. 69(C).
    3. Panchalingam, Thadchaigeni & Jones Ritten, Chian & Shogren, Jason F. & Ehmke, Mariah D. & Bastian, Christopher T. & Parkhurst, Gregory M., 2019. "Adding realism to the Agglomeration Bonus: How endogenous land returns affect habitat fragmentation," Ecological Economics, Elsevier, vol. 164(C), pages 1-1.
    4. François Bareille & Matteo Zavalloni & Davide Viaggi, 2023. "Agglomeration bonus and endogenous group formation," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(1), pages 76-98, January.
    5. Zhaoyang Liu & Simanti Banerjee & Timothy N. Cason & Nick Hanley & Qi Liu & Jintao Xu & Andreas Kontoleon, 2024. "Spatially coordinated conservation auctions: A framed field experiment focusing on farmland wildlife conservation in China," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(4), pages 1354-1379, August.
    6. Smith, Gregory & Day, Brett, 2018. "Addressing the Collective Action Problem in Multiple-purchaser PES: An Experimental Investigation of Negotiated Payment Contributions," Ecological Economics, Elsevier, vol. 144(C), pages 36-58.
    7. Md Sayed Iftekhar & Uwe Latacz-Lohmann, 2017. "How well do conservation auctions perform in achieving landscape-level outcomes? A comparison of auction formats and bid selection criteria," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(4), pages 557-575, October.
    8. 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.
    9. Justin Dijk & Erik Ansink & Daan van Soest, 2017. "Buyouts and Agglomeration Bonuses in Wildlife Corridor Auctions," Tinbergen Institute Discussion Papers 17-036/VIII, Tinbergen Institute.
    10. Nguyen, Chi & Latacz-Lohmann, Uwe, 2023. "Assessing the performance of agglomeration bonus in budget-constrained conservation auctions," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334544, Agricultural Economics Society - AES.
    11. Ferré, Marie & Engel, Stefanie & Gsottbauer, Elisabeth, 2018. "Which Agglomeration Payment for a Sustainable Management of Organic Soils in Switzerland? – An Experiment Accounting for Farmers' Cost Heterogeneity," Ecological Economics, Elsevier, vol. 150(C), pages 24-33.
    12. Chi Nguyen & Uwe Latacz‐Lohmann & Nick Hanley, 2024. "Landscape‐level determinants of the performance of an agglomeration bonus in conservation auctions," Journal of Agricultural Economics, Wiley Blackwell, vol. 75(2), pages 592-616, June.
    13. Sheremet, Oleg & Ruokamo, Enni & Juutinen, Artti & Svento, Rauli & Hanley, Nick, 2018. "Incentivising Participation and Spatial Coordination in Payment for Ecosystem Service Schemes: Forest Disease Control Programs in Finland," Ecological Economics, Elsevier, vol. 152(C), pages 260-272.
    14. Nguyen, Chi & Latacz-Lohmann, Uwe & Hanley, Nick & Schilizzi, Steven & Iftekhar, Sayed, 2022. "Spatial Coordination Incentives for landscape-scale environmental management: A systematic review," Land Use Policy, Elsevier, vol. 114(C).
    15. Simanti Banerjee & Timothy N. Cason & Frans P. de Vries & Nick Hanley, 2021. "Spatial Coordination and Joint Bidding in Conservation Auctions," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(5), pages 1013-1049.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frans P. Vries & Nick Hanley, 2016. "Incentive-Based Policy Design for Pollution Control and Biodiversity Conservation: A Review," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 687-702, April.
    2. Simanti Banerjee & Anthony Kwasnica & James Shortle, 2015. "Information and Auction Performance: A Laboratory Study of Conservation Auctions for Spatially Contiguous Land Management," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(3), pages 409-431, July.
    3. Zhaoyang Liu & Jintao Xu & Xiaojun Yang & Qin Tu & Nick Hanley & Andreas Kontoleon, 2019. "Performance of Agglomeration Bonuses in Conservation Auctions: Lessons from a Framed Field Experiment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 843-869, July.
    4. Nick Hanley & Simanti Banerjee & Gareth D. Lennox & Paul R. Armsworth, 2012. "How should we incentivize private landowners to ‘produce’ more biodiversity?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 28(1), pages 93-113, Spring.
    5. Simanti Banerjee & Timothy N. Cason & Frans P. de Vries & Nick Hanley, 2021. "Spatial Coordination and Joint Bidding in Conservation Auctions," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(5), pages 1013-1049.
    6. Marc N. Conte & Robert M. Griffin, 2017. "Quality Information and Procurement Auction Outcomes: Evidence from a Payment for Ecosystem Services Laboratory Experiment," American Journal of Agricultural Economics, John Wiley & Sons, vol. 99(3), pages 571-591, April.
    7. Paul, Laura A. & McGranaghan, Christina & Siders, A.R. & Dineva, Polina K. & Palm-Forster, Leah H. & Messer, Kent D., 2024. "Addressing coordination problems in residential buyouts: Experimental evidence for managed retreat in the face of climate change-related threats," Journal of Economic Behavior & Organization, Elsevier, vol. 226(C).
    8. Zhaoyang Liu & Simanti Banerjee & Timothy N. Cason & Nick Hanley & Qi Liu & Jintao Xu & Andreas Kontoleon, 2024. "Spatially coordinated conservation auctions: A framed field experiment focusing on farmland wildlife conservation in China," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(4), pages 1354-1379, August.
    9. Reeson, Andrew F. & Rodriguez, Luis C. & Whitten, Stuart M. & Williams, Kristen & Nolles, Karel & Windle, Jill & Rolfe, John, 2011. "Adapting auctions for the provision of ecosystem services at the landscape scale," Ecological Economics, Elsevier, vol. 70(9), pages 1621-1627, July.
    10. Iftekhar, M.S. & Tisdell, J.G., 2014. "Wildlife corridor market design: An experimental analysis of the impact of project selection criteria and bidding flexibility," Ecological Economics, Elsevier, vol. 104(C), pages 50-60.
    11. Laura Brown & Elizabeth Troutt & Cynthia Edwards & Brian Gray & Wanjing Hu, 2011. "A Uniform Price Auction for Conservation Easements in the Canadian Prairies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(1), pages 49-60, September.
    12. Boxall, Peter C. & Perger, Orsolya & Packman, Katherine & Weber, Marian, 2017. "An experimental examination of target based conservation auctions," Land Use Policy, Elsevier, vol. 63(C), pages 592-600.
    13. Rolfe, John & Whitten, Stuart & Windle, Jill, 2017. "The Australian experience in using tenders for conservation," Land Use Policy, Elsevier, vol. 63(C), pages 611-620.
    14. 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.
    15. Bamière, Laure & David, Maia & Vermont, Bruno, 2013. "Agri-environmental policies for biodiversity when the spatial pattern of the reserve matters," Ecological Economics, Elsevier, vol. 85(C), pages 97-104.
    16. Gregory M. Parkhurst & Jason F. Shogren & Thomas Crocker, 2016. "Tradable Set-Aside Requirements (TSARs): Conserving Spatially Dependent Environmental Amenities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 719-744, April.
    17. Justin Dijk & Erik Ansink, 2018. "Conservation auctions, collusion and the endowment effect," Tinbergen Institute Discussion Papers 18-093/VIII, Tinbergen Institute.
    18. Holmes, William B., 2017. "Environmental services auctions under regulatory threat," Land Use Policy, Elsevier, vol. 63(C), pages 584-591.
    19. Bruno Wichmann & Peter Boxall & Scott Wilson & Orsolya Pergery, 2017. "Auctioning Risky Conservation Contracts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(4), pages 1111-1144, December.
    20. Marie Ferré & Stefanie Engel & Elisabeth Gsottbauer, 2023. "External validity of economic experiments on Agri‐environmental scheme design," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(3), pages 661-685, September.

    More about this item

    Keywords

    Conservation auctions; Spatial coordination; Chat in experiments; Discriminatory and uniform auctions; Biodiversity conservation; Provision of ecosystem services;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:124:y:2016:i:c:p:36-48. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.