Private ex-ante transaction costs for repeated biodiversity conservation auctions: a case study

The European Union’s Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development has introduced promising changes in rewarding farmers by the implementation of conservation auctions and granting farmers’ transaction costs. The paper therefore deals with the evaluation of private transaction costs within a case study using repeated auctions to reward plant biodiversity. Based on a review of the current literature the paper develops a specific definition of transaction costs as well as a methodology to measure and calculate the farmers’ private transaction costs. The case study enfolds two field experiment auctions and two corresponding surveys. The transaction costs are measured by the use of written questionnaires and will be discussed both as a first reference value of farmers’ transaction costs as well as compared to the individual payments within the case study auctions in order to investigate the real-life performance of this specific application of repeated conservation auctions in biodiversity protection efforts.