Abstract
In this paper, we broadly generalize the assignment auction algorithm to solve linear minimum cost network flow problems. It is significant to establish a market-based compensation mechanism by way of conservation auctions based on peasant households’ willingness, which can promote the innovation of ecocompensation policies, green development, and balanced growth. Using the survey data collected from 453 households within 3 national pilot counties in ecologically fragile regions in northwest Liaoning for the Sloping Land Conversion Programme, measuring peasant households’ willingness to accept ecocompensation through sealed auctions, we built a database through cloud computing to realize information collation and query and applied the Heckman’s Two-Step Model to study the impact of risk preference, social capital, cognitive preference, land parcel characteristics, and family endowments on farmers’ willingness to participate in protection auctions and their bid prices. The results reveal that the average bid price of peasant households in the ecologically fragile region in northwest Liaoning for the Sloping Land Conversion Programme is annually 274.5 yuan per mu and that risk preference and social capital have positive impacts on peasant households’ willingness to participate in conservation auctions and on their bid prices, cognitive preference has a positive impact on peasant households’ bid prices in conservation auctions, and land plot characteristics have a negative impact on peasant households’ bid prices in conservation auctions. It is suggested that ecocompensation policies should be optimized with such methods as lowering peasant households’ perception of high risks, setting role models for them to follow, and strengthening their perception of the environment, income, and property rights.
Highlights
Ecocompensation is a willingness-based transaction mechanism, where ecosystem service (ES) buyers/users/beneficiaries make direct and contractually agreed payments to ES providers [1]
Nondiscriminatory compensation standards based on opportunity costs for the Sloping Land Conversion Programme (SLCP) have the advantages of openness, transparency, and easy operation, but they have the problem of information asymmetry between ES providers and users [2], which leads to either insufficient compensations lower than ES providers’ opportunity costs or inefficient overcompensation transactions
Based on Heckman’s Two-Step Model, we study the impacts of unobservable factors including risk preference, cognitive preference, and social capital on peasant households’ willingness to participate in conservation auctions, which is innovative to some extent. ird, our study on SLCP ecocompensation with the conservation auction mechanism expands the range of applying the conservation auction mechanism in developing countries
Summary
Ecocompensation is a willingness-based transaction mechanism, where ecosystem service (ES) buyers/users/beneficiaries make direct and contractually agreed payments to ES providers [1]. Payment standards that influence incentive effects are always the core of policy design [2]. Nondiscriminatory compensation standards based on opportunity costs for the SLCP have the advantages of openness, transparency, and easy operation, but they have the problem of information asymmetry between ES providers and users [2], which leads to either insufficient compensations lower than ES providers’ opportunity costs or inefficient overcompensation transactions. In order to reduce informational rents generated by heterogeneity in opportunity costs, Ferraro proposed three solutions: gathering information relevant to opportunity costs, revealing peasant types by screening contracts, and using conservation auctions [11]. As an effective marketbased policy tool, the mechanism of conservation auction
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