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Options for Improving Conservation Programs: Insights from Auction Theory and Economic Experiments

by Daniel Hellerstein, Nathaniel Higgins, and Michael J. Roberts

Economic Research Report No. (ERR-181) 53 pp, January 2015

cover image USDA spends over $5 billion per year on conservation programs, mostly on voluntary programs that pay farmers and landowners to provide environmental services. This report studies the use of auctions in conservation programs to determine if auction design can reduce Government expenditures or encourage landowners to provide greater environmental services.

Keywords: Conservation Reserve Program, CRP, auctions, enrollment mechanisms, bid caps, reference price auction, quota auction

In this publication...

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Webinar overviewing this report: On March 25, ERS hosted a webinar that overviewed "Options for Improving Conservation Programs: Insights from Auction Theory and Economic Experiments."

You may view the webinar here.

Duration: 38 minutes
Hosts: ERS economists Daniel Hellerstein and Nathaniel Higgins
In this ERS recorded webinar, researchers Daniel Hellerstein and Nathaniel Higgins discuss voluntary conservation programs' enrollment mechanisms. They focus on auctions: how they currently are used and how they can be used. Dan and Nate take the reverse auction used by the Conservation Reserve Program as an interesting example, and delve into one of its main features: the use of a bid cap. They provide evidence that highlights drawbacks of bid caps, and present experimental findings on alternative auction designs that may provide more cost-effective outcomes.

Last updated: Thursday, May 12, 2016

For more information contact: Daniel Hellerstein, Nathaniel Higgins, and Michael J. Roberts