An empirical examination of the gains in cost-effectiveness from the use of multiple environmental outcome conservation tenders

Claire Edwards and Mark Eigenraam

No 100545, 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia from Australian Agricultural and Resource Economics Society

Abstract: The production and consumption of environmental goods and services are subject to many of the problems associated with public goods. Due to their non-rival and non-excludable nature, incentives for individuals to invest in their production are often absent. To address this market failure, government agencies have used a number of policy mechanisms to procure the supply of environmental outcomes on behalf of society. Recently, conservation tenders focussing on private land have been a favoured policy instrument used by many government agencies to purchase environmental outcomes in the public interest. The majority of these environmental tenders have focussed on a single environmental outcome. It is contended in this paper that multiple environmental outcomes tenders can be more cost-effective than single outcome tenders as decisions are based on information regarding a wider set of environmental outcomes – a more complete picture. Tenders that focus on more than one outcome capitalise on economies of scope in the production of environmental outcomes, as well as incorporating synergies and trade-offs into decision making. In this paper the results from a synthetic analysis of the benefits derived from running multiple-outcome tenders are compared to single outcome tenders, to empirically estimate potential cost-effectiveness gains. The baseline policy of running a multiple-outcome tender is compared to three alternative policy options: running a single outcome tender, running three single outcome tenders simultaneously, and running three single outcome tenders consecutively. Results indicate that significant cost effectiveness gains can be made by running a multiple-outcome tender compared to the three policy alternatives. These results are analysed, and advantages and limitations of applying multiple-outcome tenders in the field are discussed.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 21
Date: 2011
New Economics Papers: this item is included in nep-agr and nep-env
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/100545/files/Edwards%20C.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aare11:100545

DOI: 10.22004/ag.econ.100545

Access Statistics for this paper

More papers in 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia from Australian Agricultural and Resource Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().