ECOSEL: An Auction Mechanism for Forest Ecosystem Services

Abstract

This paper describes the foundations of a  market mechanism that was designed to stimulate more efficient provisions of  forest ecosystem services to society. The proposed tool is a competitive  multi-unit public goods subscription game of incomplete information. A  conceptual and mathematical characterization of the game is followed by an  illustrative example where Pareto-efficient bundles of timber, carbon and  mature forest habitat services of a real forest are used in a simulated  bidding game. Attractive features of the mechanism include the use of  multi-criteria optimization to ensure only the most cost-efficient bundles  of ecosystem services are offered for bidding, and that it does not rely on  regulatory control or on complex valuation exercises that are otherwise  needed in alternative methods such as the cap-and-trade scheme.   MCFNS 2(2):99-116.