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Abstract
Agri-environmental programs offering uniform payments to farmers
achieved only low participation ratios in some regions whereas, in
other regions, windfall profits arose. Auctions leading to individual
payments equal to farmers’ bids could solve this problem. Simulations
showing auctions’ efficiency gains are based on critical assumptions
though. In this article the validity of these assumptions is discussed
for different auction designs and different subprograms. We
find that extensification programs offer the best conditions for successful
auctions. However, it seems counterproductive to use auctions
for choosing among different areas in environmental contracting.