Conference Agenda

Increasing attention is being paid to the design of economic incentives for conservation on private land which encourage spatial coordination. However, the design of such incentives relies on accurate, quantitative parameters to assess and reward the extra ecological benefits arising from contiguous conservation. Empirically, such ‘edge benefits’ have been shown to vary substantially across species and contexts, implying that the policy designer may make use of the wrong data to incentivise coordination. Our paper undertakes a framed field experiment to investigate the implications of using the wrong edge benefit parameters in the specific contexts of reverse auctions. We consider two auction mechanisms, a spatially coordinated (SC) mechanism which directly accounts for edge benefits in the contract allocation objective, and an agglomeration bonus (AB) mechanism which incentivises contiguous conservation using bonus payments based on edge benefit parameters. We conducted experimental auctions with a total of 240 Chinese farmers who participated in 40 auction groups. Our results suggest that SC auctions tend to have weaker performance if the parameters adopted are ‘sufficiently wrong’ and mis-target a sub-optimal set of farms than those that should have been prioritised according to the true edge benefits. Parameters that under-estimate the true edge benefits are likely to induce better auction performance than those that over-estimate. The AB mechanism designed in this study appears to be less sensitive to incorrect parameters, but when the correct ecological parameters are used, this AB mechanism is found to underperform the SC mechanism. These findings provide considerable insights for policy designers of conservation auctions subject to high heterogeneity and uncertainty in the ecological benefits of contiguous conservation.