Strategic Behavior and the Environment > Vol 7 > Issue 1–2

Tradable Disturbance Permits for Old-growth Forest Conservation: Experimental Evaluation of Implementation Options

Orsolya Perger, University of Alberta, Canada, Curtis Rollins, University of Alberta, Canada, Marian Weber, University of Alberta and Alberta Innovates Technology Futures, Canada, marian.weber@albertainnovates.ca Wiktor Adamowicz, University of Alberta, Canada, Peter Boxall, University of Alberta, Canada,
 
Suggested Citation
Orsolya Perger, Curtis Rollins, Marian Weber, Wiktor Adamowicz and Peter Boxall (2017), "Tradable Disturbance Permits for Old-growth Forest Conservation: Experimental Evaluation of Implementation Options", Strategic Behavior and the Environment: Vol. 7: No. 1–2, pp 73-107. http://dx.doi.org/10.1561/102.00000074

Published: 06 Dec 2017
© 2017 O. Perger, C. Rollins, M. Weber, W. Adamowicz and P. Boxall
 
Subjects
Environmental Economics:Endangered Species,  Environmental Economics:Market-based Policy Instruments,  Forestry
 
Keywords
JEL Codes: D47D44C91
Tradable permitsBiodiversity conservationMarket design
 

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In this article:
Introduction
Market Design Issues
Experimental Design and Procedures
Results
Discussion
Conclusions
Acknowledgements
Appendix
References

Abstract

Experiments are used to examine the performance of tradable disturbance permits (TDPs) for meeting old-growth targets on public forest land. TDPs are an allowance-based cap-and-trade system for rights to disturb forest for development of timber and energy resources. Treatments compare three market institutions for permit allocation: second-price sealed-bid (SPSB) auction and grandfathering permits to the forest sector with a call or double-auction resale market. The large size of the forest sector creates opportunities for strategic interactions. Additional treatments include banking, uncertainty from forest fires, and adaptive caps. Grandfathering to the forest sector with a double-auction resale market outperformed the SPSB auction, alleviating concerns about market power. Without fire, banking had a negative effect on energy firms and total market surplus. Adaptive caps increased permits during low-fire seasons with a positive effect on surplus to energy firms and total market surplus.

DOI:10.1561/102.00000074

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Strategic Behavior and the Environment, Volume 7, Issue 1-2 ICT-based Strategies for Environmental Conflicts: Articles Overiew
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