Learn More About ECOSEL

Summary

ECOSEL is an auction mechanism that allows individuals or organizations to bid for forest ecosystem services that could be produced on a discrete piece of forestland over a specific period of time.

HOW DOES ECOSEL WORK?

I. ECOSEL uses optimization to indentify the most cost-efficient management plans that can lead to bundles of forest ecosystem services such as carbon sequestration, viewshed or old-forest habitat preservation. The desired services are defined by the potential buyers in agreement with the seller (the forest landowner).

As an example, Figure 1 shows the tradeoffs that are associated with producing various combinations of old-forest habitat and carbon sequestration. Each bundle is associated with a spatially-explicit management plan, such as the one shown on Figure 2.

II. Once a set of optimal bundles are identified, ECOSEL calculates the opportunity costs that the landowner must incur if s/he wants to implement the associated management plan. These opportunity costs, which are calculated based on forgone timber revenues and development rights, are then used as reserve prices to solicit bids. The management plan with bids whose aggregate value exceeds the associated reserve price the most would be implemented (Figure 3). Successful bidders can therefore influence how a piece of forestland is managed (or not managed) over a period of time.

THE AUCTION

ECOSEL auctions will be administered on-line where potential buyers of forest ecosystem services can set up accounts, analyze available options and observe how others bid before they place their own offers (collusion may be advantageous). The bids are sealed during the final stage of the auction to maximize final participation.

Once a winning bundle is identified, the associated management plan serves as a contract for the sellers and the buyers.