Watershed Conservation Auction: Payments for Ecosystem Services

Auction Mechanism

Conservation budget $3,000k

Riparian buffer decay 1.00

Auction Result

Spent $0kof $3,000k

Parcels enrolled

0 / 81

Service purchased

0.0 units/yr

$ per service unit

—

Water quality index

0 / 100

How it works

This models a Payments for Ecosystem Services (PES) scheme, the mechanism behind real programs like Costa Rica's PSA and the TEEB (The Economics of Ecosystems & Biodiversity) framework's push to price natural capital. A watershed authority pays upstream landowners to convert farmland to forest buffer, because intact riparian forest filters sediment and nutrients before they reach the river.

Each of the 81 parcels has a private opportunity cost c_i (the profit the farmer gives up) and a public service value v_i (sediment/nutrient reduction, higher near the river):

v_i = 10 · exp(-distance_i / decay) · noise_i
ratio_i = c_i / v_i   (cost per unit of service)

A cost-effectiveness (reverse) auction sorts all parcels by ascending ratio and enrolls them in that order until the budget runs out:

enroll while Σ c_enrolled ≤ Budget,
            taking lowest ratio_i first

Targeted mode replicates real conservation-auction design (e.g. Australia's BushTender): cheap, high-value parcels near the river get enrolled first, so a fixed budget buys far more water-quality improvement.
Random mode enrolls parcels in a random order under the same budget — the uniform-payment baseline that most flat per-hectare PES schemes actually use, and which economists critique for wasting budget on low-value or expensive land.
Riparian buffer decay controls how fast a service's value falls off with distance from the river — a small value means only parcels right on the bank matter; a large value spreads meaningful value further inland.
Water quality index is a simple 0–100 read-out of how much of the watershed's maximum purchasable service value has actually been secured.

Farmland (unenrolled) Enrolled conservation forest River (water quality)

⚠ Couldn't load the 3D engineThree.js failed to load from the CDN. Check your connection and reload.