Auctioning of Performance Based Payments for Ecosystem Services – Experimental Design and Implementation

Published on 23 July 2010

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Timeline

Start Date: 31 May 2010 | End Date: 31 July 2010

Overview

This activity will be implemented in connection with BIOTA East project. The objective is to test the effect of a guaranteed base payment on the cost effectiveness of performance based conservation contracts which are auctioned to ecosystem service providers.The rationale for this is that risk averse auction participants ask for unproportionally high risk premiums as a reaction to the imposed risk that implemented conservation actions may not lead to the expected ecosystem service provision (service).A base payment may help to reduce the risk premiums so that the sum of the bid and base payment is smaller than the bid without an offered base payment. the work can help to design cost-effective performance based payments for ecosystem service schemes in areas where risk aversity plays a significant role in land use decisions.This effort will focus on the supervision of doctoral student Lucie Andeltova and will focus on two elements:1.Development of an experimental design of performance based payments for ecosystem service auctions and the use of base payments.2. Implementation of the experiments with land owners in Western Kenya. These experiments will comprise of a minimum of three different auction designs with a sample size of 100 subjects each, 300 in total.

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