Paying For Environmental Performance: Using Reverse Auctions to Allocate Funding For Conservation

Can reverse auctions be used to achieve cost-effective improvements in environmental quality?

This Policy Note explains how reverse auctions can be used to allocate funding in agricultural conservation programs or environmental trading programs with constrained or limited budgets. Reverse auctions are competitive bidding systems where sellers compete to supply buyers with a specified good or service, ensuring cost-effective environmental improvements are purchased with conservation dollars.

The Policy Note outlines the findings and lessons learned from the Conestoga Reverse Auction Project in Pennsylvania, where a reverse auction was used to allocate funding to agricultural conservation or Best Management Practices based on their ability to reduce phosphorus losses.

The World Resources Institute is releasing a series of Policy Notes outlining issues and providing recommendations relating to environmental markets, energy, climate, and trade. These recommendations are based on the World Resources Institute’s independent analysis of biofuel policies, experience with developing and testing environmental markets, and our expertise in climate and trade issues.

We hope that you find the Notes informative and useful in helping define policies that promote environmental sustainability, rural vitality, and a healthy farm sector. Additional Policy Notes can be downloaded from http://www.wri.org/publications/policy-notes.