Auctioning biodiversity conservation contracts: an empirical analysis

Effective Targeting of Agricultural Policies

“…Fraser and Fraser (2006) examine the implications of information asymmetries for agri-environmental policies. Information asymmetries raise contract design issues manifested as adverse selection, moral hazard and observability (Stoneham, 2003;Stoneham et al, 2004).…”

“…When information on compliance costs and the value of outcomes is imperfect because of information asymmetry, uncertainties or missing prices, a competitive bidding process can be used, when appropriate, to select participants. In these conditions, auctions allow for an efficient allocation of funds to achieve policy objectives (Latacz-Lohmann and Van der Hamsvoort, 1998;Stoneham et al, 2004). Auction mechanisms can be designed to reveal hidden information from farmers, in particular about prices, to develop contracts between government and farmers.…”

“…Examples of targeted policies implemented using auctions provide useful insights. According to an analysis of biodiversity conservation contracts in Victoria (Australia) by Stoneham et al (2004), there are several factors influencing the performance of auctions. These are choices about auction format, contract design, specification of biodiversity preferences, choices concerning communication with landholders, skills required to successfully run an auction and timing of activities.…”

Domestication of payments for ecosystem services New evidence from the Andes

“…Conservation tenders provide a framework through which farmers apply for conservation contracts by identifying the cost of delivering specific conservation services via a conservation activity predefined by the conservation agency acting as service purchaser, (Latacz-Lohmann and van der Hamsvoort 1997;Latacz-Lohmann and Schilizzi 2005;Stoneham et al 2007). The idea is to award conservation contracts to those land users who can provide conservation services at least cost and thus would require lower compensation payments.…”

“…It has been acknowledged that substantial efficiency gains can be realized when the targeting of conservation payments accounts for the conservation costs of land users (Babcock 1996(Babcock 1997Ferraro 2003;Naidoo and Rickets 2006;Chen et al 2010). At the same time conservation tenders are a means to create values, through the awarding of conservation contracts, for those agricultural conservation services that generate public good characteristics (Latacz-Lohmann and van der Hamsvoort 1998; Stoneham et al 2007).…”