Séminaire

Additionality and Asymmetric Information in Environmental Markets: Evidence from Conservation Auctions

Anna Russo (Harvard University)

10 novembre 2025, 14h15–15h30

Salle Auditorium 4

Industrial Organization seminar

Résumé

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 be 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.

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