Auctioning approaches for ecosystem services – Evidence and applications

As a part of WP3-task 5 of the NOBEL project, this review paper was set out to systematically map the “where, when, and how” of ES auction research. It is a dissemination work in this dynamic field and encourages continued interdisciplinary collaboration; Using an applied classification system based on criteria like target ecosystem, location, and participant type, it is traced the development of the auction literature across time and space, situates ES auctions conceptually in the broader context of direct incentive mechanisms, synthesize major issues for forward and reverse mechanisms, and present a novel concept for an online platform to make auctions more accessible and support further research.

Auctions are a class of designed markets that can be used to increase the efficiency of allocating ES contracts. They are described by a set of rules that specify how the winner is selected and how the monetary value of the resulting contract is determined. Over the last two decades, a growing number of ES auctions have been implemented in contexts ranging from forests and agricultural lands to wetlands and coastal areas.

Auctions have been tested in the field in laboratory experiments, and through various computational models; 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. The article specifically addressed the following questions:

(1) What are the main approaches, applications (in terms of ecosystems and services), and programs described in the scholarly and gray literature on ES auctions?

(2) What are the main advantages and limitations of auction approaches in the ES context?

(3) What attributes are required to develop a comprehensive framework for a web-based ES auctioning platform?

The fig below shows the Global distribution of articles on ES auctions across countries (Source: base map from Esri).

Ecosystems targeted by auctions in the sample of this work is also shown in the pie chart which is based on the list of ecosystem categories from the MEA (2005) plus two more categories “No specific” (when a specific ecosystem was not mentioned) and “Mixed” (when at least two ecosystems, including ‘No specific’, were identified in one item)

In a conclusion, this review takes stock of a growing collection of academic and gray literature exploring the adaptation of auction tools to promote the provision of ES. Overall, it was assessed that auction tools have a strong potential to improve the cost-effectiveness of programs aimed at supporting ES provisioning through direct incentives.

To facilitate future experimentation, a framework for an online platform for hosting customizable forward and reverse auctions, which could improve the accessibility of auctions and potentially connect buyers with sellers was sketched.

To learn more about  this critical and comprehensive review please find the full article prepared by Mengistie Kindu, Trang Le Ngoc Mai, Logan Robert Bingham, José G.Borges, Jens Abildtrup, Thomas Knoke in the link below: