16 Sep 2010

Auctions for ecosystem services

Sandor Toth sent me his article [pdf] on auctioning a single choice from a range of management alternatives. For example, the decision to clear-cut or maintain or selectively harvest a forest. This ECOSEL auction mechanism improves on regulations, i.e.,
We also like to emphasize that ECOSEL is a voluntary mechanism that provides a platform for both potential sellers and potential buyers of ecosystem services to freely express their intrinsic motivation. It givesmore freedom to individuals to influence forest management decisions on public or private lands via monetary contributions. More control is also given to the sellers (the forest landowners) because with ECOSEL, they have the option to try to raise dollars for management plans that they cannot afford otherwise. They are in full control because it is up to them to decide which management plans, if any, should be put up for auction. In contrast to regulations that can reward provisions or penalize non-provisions of ecosystem services, it can be argued that ECOSEL is an intervention that crowds in intrinsic motivation.
This method should be studied by people interested in low-cost, socially-efficient mechanisms for making policies that affect public or common pool goods. (Also see the last sections of this article [pdf] on options for the Sac-SJ Delta for my version of a solution.)