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How auctions to allocate payments for ecosystem services contracts impact social equity

F.L. McGrath, L.R. Carrasco, B. Leimona
Ecosystem services 2017 v.25 pp. 44-55
auctions, case studies, ecosystem services, farmers, social impact, Indonesia
Conservation auctions are used in Payments for Ecosystem Services (PES) scheme implementation as they are an efficient way to identify participants. Ensuring a fair implementation process is important when considering an equitable PES scheme. Currently the implications, such as impacts on social dynamics and participant perceptions, of auctions at both the individual and community level are poorly understood. Using a case study a long-standing and well-established PES scheme in Sumberjaya, Indonesia, we aim to explore the relationship between farmer characteristics and their perceived auction fairness/satisfaction and impacts on the community social dynamics. We find that a fair auction process allowing all to participate leads to perceived fairness at the individual level. However, at the community level, we find that individuals perceive more social impacts. Our results also find that information quality is the main factor in increasing fairness and reducing community impacts. Our results suggest that while it is possible to have an equitable implementation process, ensuring procedural equity may potentially compromise contextual equity. These results can aid in the implementation of PES schemes and shed some light into which characteristics to identify within potential participants and communities to avoid social disruptions.