An Experimental Examination of Target Based Conservation Auctions
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Conservation auctions (CA) are typically employed to increase the provision of Ecological Goods and Services (EG&S) for achieving environmental goals. This paper exmaines the ability of a CA to meet an environmental target. Previous research on this topic used the number of contracts as a target rather than some specified environmental goal. We used experimental economic methods benchmarked to a wetlands restoration case study to examine a target constraint that must be met by bidders rather than a budget constraint. However, since no budget constraint is employed, agencies with limited resources might have to use other auction design procedures to ensure that financial outlays to pay winning bidders are not too high while meeting the target. Accordingly we utilized a reserve price experimental treatment to address this question. The research compares the various levels of budget and target approaches focusing on efficiency, environmental improvements, and rent seeking metrics.