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Private Benefits of Conservation and Procurement Auction Performance

Author

Listed:
  • Marc N. Conte

    (Fordham University)

  • Robert Griffin

    (Stanford University
    University of Massachusetts, Dartmouth)

Abstract

Payment-for-ecosystem services programs may use auctions to procure ecosystem services for cost-effective conservation. Conservation practices that generate private benefits (e.g., on-site benefits of erosion prevention) can reduce the effective cost of participation for landowners, and the inclusion of these services in the auction scoring criteria could increase overall cost-effectiveness for the buyer. However, the potential cost-effectiveness gain of including these private-benefit conservation practices may not be fully realized, as increased heterogeneity in the net cost of participation may reduce competition. Our induced-value laboratory experiment explores the impact of heterogeneous private benefits of conservation on auction cost-effectiveness when conservation practice choice is endogenous to offer formation. Heterogeneity in the private benefits of conservation across the landscape generates variation in competition levels across bidders that can lead to increased rent-seeking by bidders with substantial private benefits.

Suggested Citation

  • 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.
    • Handle: RePEc:kap:enreec:v:73:y:2019:i:3:d:10.1007_s10640-019-00333-y
    DOI: 10.1007/s10640-019-00333-y
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    More about this item

    Keywords

    Bid preferences; Ecosystem services; Heterogeneous bidders; Laboratory experiment; Procurement auction;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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