Conservation Auctions: Application and Challenges in Developing Countries

Keywords

Conservation Auction, Conservation Tenders, Procurement of Conservation Contracts, Kenya, Payments for Ecosystem Services, Forest

Countries

Kenya

Summary

Payments for ecosystem services (PES) are an increasingly popular market-based instrument to preserve ecosystems and their services. Ensuring the efficiency of PES schemes is important for the future success of PES schemes. In this respect, it is an important task for buyers of ecosystem services to reduce producer surpluses by making payments that are aligned with actual provision costs. Conservation auctions can help reduce surpluses through competitive bidding. While auctions are being applied successfully in developed countries such as the US and Australia, their use in developing countries is limited to few examples of pilot research. The objective of this project therefore is to assess the applicability of auctions in the context of rural areas in the developing world and test the efficiency of alternative auctions designs.

Methodology

We apply economic experiments in the laboratory and field. Study area is the Kapingazi watershed close to Embu, about 130 km North of Nairobi, Kenya. We test the influence of i. various degrees of information disclosure (service scores and targeting criteria) as well as ii. performance based vs. action based payments on auction efficiency. In a field trial, reforestation contracts are auctioned as a proxy for PES contracts. Laboratory results from Germany are compared to those in Kenya.

Main Cooperation Partners

Agroforestry Center (ICRAF)

Main Funding Partners

German Federal Ministry for Economic Cooperation and Development (BMZ) through Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)

Further information

Doctoral Dissertation Projects:

“The Role of Risk and Trust in Conservation Auctions for Performance Based Payments for Environmental Services and the Cost Effectiveness Implications: Experiments in Rural Kenya”

Duration of the Project

1.11.2011 – 30.10.2013