Opportunities exist in rangeland areas for changed grazing management practices to have positive environmental outcomes. It is important to understand what productivity tradeoffs may be involved with these changes, so as to build trust with landholders, understand how incentives for different management systems might be structured, and predict (and ameliorate) potential socio-economic impacts on regional communities. However, the complexity of agricultural and natural systems and gaps in understanding and data mean that it is very difficult to predict accurately the economic impacts of changing management actions.
In this paper, the use of experimental auctions is reported as an alternative mechanism for predicting economic impacts. The methodology used was a series of field experiments, where landholders from the Desert Uplands region participated in conservation auction workshops, using ‘dummy’ properties to design proposals. Using their knowledge of the region, participants had to design a conservation area or corridor across their dummy property, and then identify what annual payment would be needed before they would enter into a five year conservation agreement. An evaluation of the bids shows that the bid values may be influenced by several socio-economic and attitudinal factors as well as the opportunity costs involved in changed production. The mechanism provides a promising way of evaluating the opportunity costs of changing management practices and trialling conservation auction approaches.
Reference Prices and Bidder Heterogeneity in Secondary Market Online B2B Auctions