Coasean bird sanctuaries, with auctions too

by on April 15, 2014 at 1:52 am in Economics | Permalink

The BirdReturns program, financed by the Nature Conservancy, then pays rice farmers in the birds’ flight path to keep their fields flooded with irrigation water from the Sacramento River as migrating flocks arrive. The prices are determined by reverse auction, in which farmers bid for leases and the lowest bidder wins.

Because the program pays for only several weeks of water instead of buying the habitat, the sums are modest; the conservancy does not disclose bids because that might affect future auctions, but it says the figures were both above and below the $45 per acre that the federal government pays for bird-friendly practices.

The project’s first season ended last month, as birds headed north from newly flooded fields. Researchers said all of the birds whose numbers they hoped to improve were seen on “pop up” wetlands — a temporary steppingstone for the birds’ journey north. This happened when the field would have ordinarily been drained, an indication that the approach was working. More analysis will be done this month. The fields will be flooded again in the fall for the birds’ return journey. Eventually, using this and other approaches, the conservationists at BirdReturns hope to increase the number of shorebirds that stop in the Central Valley to 400,000, from current levels of 170,000.

There is more here, not like what you see in those movies!

prior_approval April 15, 2014 at 2:22 am

So, happy news, since apparently the farmers can collect both private and government funds for using government subsidized water to help birds whose habitats have already been 95% destroyed through a long term private/public project? And some wonder why the NYT did not win any writing Pulitzers this year.

(The lack of mention in the blurb of how big data and phone apps are involved might just be an indication that this web site is searching for a new trend/book proposal to explore.)

brickbats and adiabats April 15, 2014 at 4:05 am

This is a good development, but it’s also maybe third on my priority list of applications of the Coase theorem in the Sacramento River area. I’d much prefer that the Coase theorem be applied in having Sacramento River watershed residents and business owners pay for their flood control works and have market-based water allocation policies first. Water in California desperately needs reform and that this type of solution has only really been implemented in areas where 1930s era policies _haven’t_ created perverse incentives and entrenched stakeholders is an indication of just how messed up it is.

Rahul April 15, 2014 at 4:15 am

In other words, maybe rice shouldn’t be growing there in the first place?

dearieme April 15, 2014 at 4:59 am

Have a care; you’ll be suggesting next that people shouldn’t be allowed to graze their cattle free on federal land.

Roy April 15, 2014 at 5:40 am

You don’t graze cattle free on Federal land. Unless you are referring to the Bundy business in the news recently, which is a very bizarre exception.

Chip April 15, 2014 at 6:10 am

The land is needed for solar panels. So to use BLM you need to receive government subsidies, not have anything trivial like a century old business that predates the BLM.

brickbats and adiabats April 15, 2014 at 7:08 am

Frankly, in California anything that can’t be fed with drip irrigation or requires inundation should probably not be growing there. And among the commodity staples rice is not actually the worst offender on a per-ton basis of product: that distinction goes to cotton.

Rahul April 15, 2014 at 5:53 am

This just-in-time flooding, how does it manage to produce the snails, crayfish or whatever grub those birds want to eat?

John April 15, 2014 at 10:38 am

“the conservancy does not disclose bids because that might affect future auctions”

The main point of Coase’s 1960 J Law & Econ article was that transactions costs can undo the “Coase Theorem.” This point, which was poignantly reiterated in Robert Hahn’s 1989 J. Econ. Perspectives paper, which showed how few environmental problems are actually solved by these methods, is relevant here. Who exactly gains from not disclosing the price? Isn’t this just an example of asymmetric information granting market power to those in the know? If so, how much of the potential gains are left on the table?

Prior Probability -- Where did you get your priors? April 15, 2014 at 7:52 pm

This is a fascinating example, but quite odd … it seems that the TC’s (transaction costs) of setting up this bird sanctuaries would be high, yet these trades are still occurring … Is there a “reverse Coase theorem” at work here, where one’s commitment to a good cause (such as nature conservation) is able to override or negate high TC’s?

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