Limitation of the Reverse Auctions for Payment for Environmental Services (PES) and Targeting Mix

K Suranjit

MPRA Paper from University Library of Munich, Germany

Abstract: Theoretically reverse auction creates the competitive market where environmental service (ES) providers are induced to offer their service price which signals their opportunity cost whereas, targeting payment is basically based on the notions of optimal cost-benefit. Targeted payment would be either a very specific (direct) or holistic (indirect) one. In this essay, I argue that although targeted Payments for Environmental Services (PES) may increase the transaction cost it could avoid some loopholes of the reverse-auction since it focuses more on the pre-implement assessment and feasibility studies and comparatively it becomes more effective as well as sustainable. Moreover, a reverse auction with targeting mix may increase its effectiveness as well. Hence, this essay focuses on the necessity for incorporating the proper targeting variables in PES policy modelling.

Keywords: Payments for Environmental Services (PES); Reverse Auction; Targeting Mix; Policy Modelling (search for similar items in EconPapers)
JEL-codes: D44 D47 D78 Q51 Q58 (search for similar items in EconPapers)
Date: 2016-05
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:121438

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