Ecosystem Services Auctions: The Last Decade of Research

Abstract

Auctions offer potential cost-effectiveness improvements over other mechanisms for payments for ecosystem services (PES) contract allocation. However, evidence-based guidance for matching design to application is scarce and research priorities are unclear. To take stock of the current state of the art, we conducted a systematic review and thematic content analysis of 56 peer-reviewed journal articles discussing ES auctions published in the last decade. Auctions were approached from three overlapping perspectives: mechanism design, PES, and policy analysis. Five major themes emerged: (1) performance, including measures like cost-effectiveness and PES criteria like additionality; (2) information dynamics like price discovery and communication effects; (3) design innovations like risk-integrating and spatially coordinated mechanisms; (4) contextual variables like policy context and cultural values; and (5) participation factors. Additional attention from policymakers and continued efforts to coordinate research in this diverse and interdisciplinary subfield may be beneficial.

Auctioning approaches for ecosystem services – Evidence and applications

“…Using previous review articles as a guideline (Rolfe et al, 2017;Schilizzi, 2017;Bingham et al, 2021;Knoke et al, 2021), our systematic review from query formulation to full text analysis follows the PRISMA diagram (Moher et al, 2009) (Fig. 1).…”

“…Generally, buyers are government agencies or NGOs seeking to procure ES on behalf of the public (Greenhalgh et al, 2007). Following Bingham et al (2021), we use the term forward auction to refer not only to the standard seller's auction, but also to other demand-side mechanisms where beneficiaries bid amounts they would be willing to pay (WTP) to secure the provision of some ES (e.g., Smith and Swallow, 2010). Usually, this is done collectively by pooling conditional financial contributions or commitments to donate.…”

“…Much of this body of research is dedicated to exploring different configurations of design variables for ES auctions, typically comparing economic performance metrics like efficiency or cost-effectiveness between different designs and under different conditions (Comerford, 2014;. In addition, ES auction related reviews are available: for instance, laboratory research (Schilizzi, 2017), conservation tenders in Australia (Rolfe et al, 2017), metric development (Whitten, 2017), spatial coordination incentive design (Nguyen et al, 2022), and the role of disciplinary perspective in shaping the main themes of auction discourse (Bingham et al, 2021). Thus, although several topical literature analyses are available, a comprehensive systematic review of where, when, and how auctions have been used to promote ES provisioning is missing.…”

Increasing environmental outcomes with conservation tenders: The participation challenge

“…As one example, researchers estimate that environmental outcomes for Australian Great Barrier Reef management could be doubled if existing funds could be allocated more efficiently (Rolfe et al, 2018b). However, conservation tenders see very low rates of adoption despite recommendations by economists and high profile examples (Bingham et al, 2021). Australia has been a hotbed of development for conservation tenders, accounting for almost 50% of published studies on the topic (Rolfe et al, 2018a).…”

“…However, conservation tenders see very low rates of adoption despite recommendations by economists and high profile examples (Bingham et al., 2021). Australia has been a hotbed of development for conservation tenders, accounting for almost 50% of published studies on the topic (Rolfe et al., 2018a).…”