Conservation Auctions: Should Information about Environmental Benefits Be Made Public?

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Abstract

Most bid evaluation systems in conservation auctions consider both the proposed payment and the environmental attributes. When auctioneers have a more comprehensive understanding of the conservation benefits than bidders do, information becomes a central element of the auction design. Concealing information about conservation benefits may be the optimal strategy when entry decisions are not relevant. However, disclosing information may motivate landholders whose lands are associated with high environmental benefits to participate in an auction. The present study demonstrates that revealing information about conservation benefits can be an optimal strategy if it enhances an auction's participation rate when bid acceptance rates are high.

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