Cardona Santos, Elsa María: Allocation of Payments for Environmental Services through auctions & the role of social interaction. - Bonn, 2018. - Dissertation, Rheinische Friedrich-Wilhelms-Universität Bonn.
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author = {{Elsa María Cardona Santos}},
title = {Allocation of Payments for Environmental Services through auctions & the role of social interaction},
school = {Rheinische Friedrich-Wilhelms-Universität Bonn},
year = 2018,
month = sep,

note = {This thesis contributes to the study of the use of auctions in the allocation of contracts of payments for environmental services. The focus of the research is on the role of social interaction as a learning source for bidders in repeated auctions. Bidders learn over time and adapt their bidding strategies accordingly, in order to increase their rents. Two different payments schemes are considered; payments for biodiversity conservation and payments for carbon sequestration. To evaluate the performance of repeated auctions, the implementation of these payments schemes is simulated by means of agent-based modeling. Agent-based models allow simulating interactions among heterogeneous individuals, their learning effects and their strategies, such that the effects that emerge from these dynamics can be analyzed. This study confirms that the cost-effectiveness of auctions to provide biodiversity conservation decreases with the learning effects of land users. Nevertheless, contrary to the expectations, learning through social interaction can dampen the deterioration of the cost-effectiveness of auctions, such that despite of learning effects, discriminatory auctions can be more cost-effective than fixed payments. Moreover, this study shows that these learning effects can contribute to the goal of poverty alleviation, which is especially relevant for the implementation of these schemes in low income countries. Repeated auctions can provide "pro-poor conservation" effectively in the presence of uncertainty about the income of alternative sources and in settings of high competition among potential participants. This thesis also explores the problem of asset specificity in the provision of environmental services, taking as an example schemes of payments for carbon sequestration, where land users are expected to plant trees on their land. It assesses the design possibilities of payments schemes to overcome this problem, and it explores the use of auctions to allocate contracts requiring specific investments. The results provide evidence for losses in cost-effectiveness through non-compliance when one-shot auctions are used to allocate long-term contracts if land users face high time preferences. However, repeated discriminatory auctions can allow the agency to allocate short-term contracts cost-effectively because the contract terms can be renewed and adapted to changes in opportunity costs, such that compliance is not compromised in the long-run.},
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