Agricultural Economics Department
Document Type
Article
Date of this Version
12-18-2023
Citation
Amer J Agr Econ. 2024;106:1354–1379. DOI: 10.1111/ajae.12447
Abstract
How best to incentivize land managers to achieve conservation goals in an economically and ecologically effective manner is a key policy question that has gained increased relevance from the setting of ambitious new global targets for biodiversity conservation. Conservation (reverse) auctions are a policy tool for improving the environmental performance of agriculture, which has become well-established in the academic literature and in policy making in the US and Australia. However, little is known about the likely response of farmers to incentives within such an auction to (1) increase spatial connectivity and (2) encourage collective participation. This paper presents the first framed field experiment with farmers as participants that examines the effects of two features of conservation policy design: joint (collective) participation by farmers and the incentivization of spatial connectivity. The experiment employs farmers in China, a country making increasing use of payments for ecosystem services to achieve a range of environmental objectives. We investigate whether auction performance—both economic and ecological—can be improved by the introduction of agglomeration bonus and joint bidding bonus mechanisms. Our empirical results suggest that, compared to a baseline spatially coordinated conservation auction, the performance of an auction with an agglomeration bonus, a joint bidding bonus, or both, is inferior on two key metrics—the environmental benefits generated and cost effectiveness realized.
Comments
Open access.