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14 - Auctioning biodiversity conservation contracts: an empirical analysis

Published online by Cambridge University Press:  11 August 2009

Gary Stoneham
Affiliation:
Chief Economist Economics and Policy Research Branch, Department of Primary Industries, Victoria, Australia
Vivek Chaudhri
Affiliation:
Associate Professor Department of Management, Monash University, Australia
Loris Strappazzon
Affiliation:
Principal Economist Economics Branch, Division of Agriculture, Department of Natural Resources and Environment, Victoria, Australia
Arthur Ha
Affiliation:
Senior Economist Economics & Policy Research Branch, Department of Primary Industries, Victoria, Australia
Andreas Kontoleon
Affiliation:
University of Cambridge
Unai Pascual
Affiliation:
University of Cambridge
Timothy Swanson
Affiliation:
University College London
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Summary

Introduction

A century ago in Australia, food and fibre were scarce relative to the supply of habitat. Today the opposite could be argued. Governments now face the problem of encouraging landholders to provide public goods, such as habitat conservation, in the face of an economic environment that facilitates the production of private goods. Governments, both in Australia and overseas, have used a wide range of policy mechanisms to influence private land management including fixed-price grants, tax incentives and voluntary schemes. Latacz-Lohmann and Van der Hamsvoort (1997) propose, however, that auctioning conservation contracts as a means of creating markets for public goods has many theoretical advantages. They argue that competitive bidding, compared with fixed-rate payments, can significantly increase the cost-effectiveness of conservation contracting because of the cost revelation advantages of bidding processes.

In this chapter we explain how the now extensive economic literature on auction and contract design, and new approaches to measuring habitat quality, can be incorporated into a practical field trial conducted under the name of BushTender©. Results from two pilots conducted in two different regions of Victoria, Australia, are presented and discussed.

The first BushTender© pilot was conducted in two areas of Northern Victoria and the second in three areas within West and East Gippsland (see Figure 14.1). Although we report the results of two BushTender© pilots, there have been several other applications of this approach in Victoria and more recently across Australia.

Type
Chapter
Information
Biodiversity Economics
Principles, Methods and Applications
, pp. 387 - 416
Publisher: Cambridge University Press
Print publication year: 2007

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