Combinatorial auctions for procuring agri-environmental services: a review of some design issues

Iftekhar, Sayed; Hailu, Atakelty; Lindner, Bob

doi:10.1080/14486563.2012.678573

Cited by 12 publications

(13 citation statements)

References 31 publications

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“…Reverse auctions promise to procure environmental benefits cost-effectively by paying farmers to use beneficial management practices (BMPs) where the environmental return on investment is highest (Hellerstein, Higgins and Roberts 2015;Latacz-Lohmann and Schilizzi 2005;Hill et al 2011;Iftekhar, Hailu and Lindner 2012). In a reverse auction, program administrators solicit bids for the lowest payment that farmers would require to adopt a BMP.…”

mentioning

confidence: 99%

Too Burdensome to Bid: Transaction Costs and Pay‐for‐Performance Conservation

Palm-Forster

Swinton²,

Lupi³

et al. 2016

American J Agri Economics

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The authors thank Todd Redder, Chelsie Boles, and Joe DePinto at Limnotech for support with biophysical modeling to predict phosphorus runoff abatement. John Kerr, Cloé Garnache, and Carson Reeling offered suggestions and insights that greatly improved this article. Jason Roehrig (Defiance County SWCD) and Kim Bowles (Fulton County SWCD) were instrumental in conducting the Tiffin Watershed BMP Auctions. We thank the land managers who participated in the Tiffin Watershed BMP Auctions and those who completed the follow-up questionnaire. We also thank Erin Wenk and Kaylee Zajac for help with data input.

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mentioning

confidence: 99%

Too Burdensome to Bid: Transaction Costs and Pay‐for‐Performance Conservation

Palm-Forster

Swinton²,

Lupi³

et al. 2016

American J Agri Economics

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“…Combinatorial auctions have the potential to improve incentive programs aimed at conserving nature. Although these auctions have been used to allocate significant economic assets, there are not many examples of real‐world implementation in relation to environmental services (Iftekhar et al ). Well‐designed auctions would improve the flexibility of current auctions and performance.…”

Section: Resultsmentioning

confidence: 99%

“…The only implementation of a full‐fledged combinatorial design in agriculture was to lease marine aquaculture sites by the Department of Primary Industries in Australia (DPI ). Readers are referred to Iftekhar et al (, ) and references therein for relevant discussions on implementation of combinatorial auction designs for conservation.…”

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confidence: 99%

Does It Pay to Increase Competition in Combinatorial Conservation Auctions?

Iftekhar

Hailu

Lindner

2014

Canadian J Agri Economics

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Conservation auctions allow landholders to propose conservation projects and associated payments (bids) for consideration by a conservation agency. Recently, the application of iterative combinatorial auction designs has been proposed to improve outcomes of conservation auctions. In combinatorial auctions, landholders are allowed to offer projects each of which involves activities aimed at providing one or multiple services. An iterative format allows bidders the opportunity to gradually explore the type of projects they want to offer, with this process being facilitated through price feedback provided based on intermediate auction round results. Auction designs vary with the type of feedback and respond differently to market conditions. At present there is a lack of information about their performance in markets with varying degrees of competition (in terms of number of bidders and level of target). Therefore, using an agent‐based simulation model, we evaluate a number of iterative auction designs. We observe that a higher degree of competition leads to a higher auction efficiency. In a high competition environment, efficiency outcomes tend to be less sensitive to auction design choices. Therefore, an auctioneer could enjoy freedom in design choice if adequate competition could be ensured. In weak competition environments, however, some auction designs perform better than others.

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“…However, combinatorial auctions can be complex and have high transaction costs. One method could be a compromise between running 'all or nothing' project selection approach and a combinatorial auction (Iftekhar et al 2012b). The bidding behaviour of individual landholders is likely to be different in different markets.…”

Section: Introductionmentioning

confidence: 99%

Can partial project selection improve conservation auction performances?

Iftekhar

Tisdell

Sprod

2018

Australasian Journal of Environmental Management

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Conservation auctions often follow an 'all or nothing' bid selection approach, which restricts selection of the most suitable parts of a submitted project. The problem with 'lumpy' (or all-or-nothing) project selection has been identified in the literature as a major problem in conservation policy; however, the extent of the problem has been rarely quantified. Using an actual conservation tender dataset from Tasmania, the effect of the approach was estimated. This study finds that with a relatively small budget, the cost-effectiveness loss could be as high as one-quarter. To avoid such problem, a partial bid selection could be applied, which could improve the targeting of environmental programs while being administratively less complicated for environmental planners to implement compared to a combinatorial bidding. The basic principle of a partial bid selection is to invite a single project from each landholder with the option for the environmental planning agency to partially select sections of the offer lands that maximise achievement of the agency's policy objectives. In the case of a partial selection, the landholders are paid a bonus (in inverse proportion of actual selection) to compensate for their potential loss of economies of scale and economies of scope. A sensitivity analysis with different bid and ecological value correction factors shows that when the corrections are low, the partial selection approach could be more cost-effective than an 'all or nothing' approach. The results indicate that agencies should consider alternative project selection approaches with better targeting capabilities.

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Combinatorial auctions for procuring agri-environmental services: a review of some design issues

Cited by 12 publications

References 31 publications

Too Burdensome to Bid: Transaction Costs and Pay‐for‐Performance Conservation

Too Burdensome to Bid: Transaction Costs and Pay‐for‐Performance Conservation

Does It Pay to Increase Competition in Combinatorial Conservation Auctions?

Can partial project selection improve conservation auction performances?

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