Seminar by Karl M. Aspelund (Harvard University)

Centre for Development Economics
Department of Economics
Delhi School of Economics

ANNOUNCE A SEMINAR

by

Venue:  Amex Room

Abstract:-
Market mechanisms aim to reduce environmental degradation at low cost, but they are undermined when participants’ conservation actions are not marginal to the incentive — or “additional” — as the lowest-cost participants may not offer the highest social value. We investigate this challenge in the Conservation Reserve Program’s auction mechanism for ecosystem services, linking bids to satellite-derived land use. Three-quarters of marginal auction winners are not additional. The heterogeneity in counterfactual land use introduces adverse selection. We develop a model of bidding and additionality to quantify welfare implications. Alternative auctions increase efficiency by using scoring rules that incorporate expected land use impacts. I will then discuss implications for emerging policy initiatives in India, including the nascent Green Credit framework and other forestry-based crediting schemes. I highlight how choices about measurement, additionality rules, and crediting horizons influence which projects are funded, and how insights from conservation auctions can help design environmental markets that are both credible and effective in practice.

All are cordially invited.

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