Designing and testing an outcome focused conservation auction: evidence from a field trial targeting ground nesting birds

Design of efficient and effective biodiversity incentives is hampered by information asymmetry and moral hazard (hidden action) problems amongst other issues. Incentives are typically based on changes to management or on the modelled impact of management changes. Government accepts the risk of failure but has little opportunity to manage this risk–particularly where adverse selection is involved. We describe an auction design intended to address asymmetric information, moral hazard and adverse selection concerns as well as being built around a set of key ecological requirements. The results of a field trial of the auction design are reported for an auction targeting ground nesting birds in Australia. Our results suggest that outcome focused conservation programs are feasible to design and implement, can overcome hidden action and hidden information problems, and are more cost effective for governments and more acceptable to landholders than a prescriptive management based approach.