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Title Procurement Auctions for Conservation Practices – Economic Experiments in Kakamega, Kenya

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Short title Procurement Auctions for Conservation

Author(s) Saizaki, R.; Wünscher, T.

Presenting author Wünscher, T.

Institution(s) Center for Development Research (ZEF b), University of Bonn

Keywords Market-based conservation, ecosystem services, environmental services, payments for ecosystem services, payments for environmental services, auction, procurement auction, inverse auction, reverse auction, economic experiment, game theory

Abstract Payments for ecosystem services (PES) are an increasingly used instrument both for financing and implementing ecosystem conservation. In Kakamega, PES could help to implement conservation measures such as: reduction of extraction activities, afforestation in and outside the forest, creation of conservation corridors. The success of PES depends crucially on its cost-effectiveness. Previous studies have shown that flexible payments that only compensate the actual cost of a conservation measure can double the cost-effectiveness of payments. A major impediment to the implementation of flexible payments is the challenge to determine the site and landholder specific cost. Procurement auctions in developed countries (e.g. US and Australia) have been shown to be effective instruments to reveal these costs. So far, no conservation auction scheme in a developing country has been implemented, partly due to a lack of experience. One of the issues in conservation auctions is a learning effect in periodically repeated auctions. In economic experiments we are examining the bidding behaviour of landholders around Kakamega forest. The results of this work give unprecedented insights into the applicability of auctions and their appropriate design for developing countries and the Kakamega region specifically.

Congress Topic Land use, impact and value

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Notes Interventions

Ref. No. 646