Simanti Banerjee

How to sell ecosystem services: a guide for designing new markets

Payments for ecosystem services (PES) can improve environmental quality by aligning the incentives of individual landowners with societal interests in providing valuable ecosystem services such as carbon storage, water quality, flood control, and wildlife habitat. However, for this potential to be realized, many institutional details and technical challenges must be addressed. In this review, we discuss six critical issues for creating effective PES markets: using the appropriate type of market institution, defining suitable spatial and temporal scales for the market, promoting additionality (avoiding payments for services that would have been provided even in the absence of payments) so that payments result in increased services, offering incentives for projects that generate multiple ecosystem services, considering practice-based versus performance-based payments, and eliminating opportunities for strategic behavior aimed at “gaming the system”. We illustrate these issues with an example of how PES coul...

Improving Spatial Coordination Rates under the Agglomeration Bonus Scheme: A Laboratory Experiment with a Pecuniary and a Non-Pecuniary Mechanism (NUDGE)

&NA; The Agglomeration Bonus is a Payment for Ecosystem Services scheme that focuses on achieving spatially‐coordinated land use across neighboring, privately‐owned agricultural properties. In this article, I use a laboratory experiment to examine the role of two mechanisms in incentivizing spatially‐coordinated land uses under the Agglomeration Bonus scheme on a geographical landscape resembling a local circular network. The first mechanism is pecuniary in format and varies the payoffs associated with coordination, while the second is a non‐pecuniary mechanism that varies the amount of information participants have about the land use choices of other participants, specifically of those from another community. The payoff variation is implemented as a within‐subject treatment and the information treatment in a between‐subject format. The results indicate that the coordination rates are higher if payments associated with coordination are higher. Also, having information about outcomes of the Agglomeration Bonus scheme from another community improves spatial coordination rates in both communities.

Information Access, Conservation Practice Choice, and Rent Seeking in Conservation Procurement Auctions: Evidence from a Laboratory Experiment

&NA; Existing research emphasizes the sensitivity of conservation auction performance and bidder behavior to auction design choices, as these auctions are not incentive compatible, meaning rent seeking must be controlled. Procuring agencies must decide how to provide bidders with information about the environmental quality of different conservation practices to manage the trade‐off between an increased probability of selecting the optimal practice and increased rent‐seeking behavior associated with this information. We use an induced‐value laboratory experiment to explore how access to quality information and variation in the bid‐submission protocol can best be combined to improve auction performance. We find that the auction performs best when a bid‐menu format, in which participants submit bids for all their practices, is combined with information about the environmental quality rank of available conservation practices.