Sándor F. Tóth

ECOSEL: a new market for forest ecosystem services

Sándor F. Tóth, Sergey S. Rabotyagov, Gregory J. Ettl and Luke W. Rogers
University of Washington, Seattle, WA 98195, Box 352100, United States
Day 2, 14:10-14:50

ECOSEL is a voluntary market that matches willing sellers of forest ecosystem services with willing buyers. Multi-objective optimization is used in conjunction with a public good subscription mechanism to generate and market management alternatives that lead to Pareto-optimal bundles of ecosystem services on a piece of forestland. ECOSEL allows the public to subscribe to the competing alternatives by means of a web-based bidding platform. The management alternative that attracts the highest total of bids over the associated opportunity cost (a.k.a., threshold cost) wins the auction. The landowner is legally bound to implement the winning plan for a profit that arises between the proceeds and the costs of the plan. We provide a few examples of how ECOSEL can be used in practice and show how the mechanism can bypass the problem of additionality and minimize free riding. We will also report on a series of experimental auctions that were used to test the design of the mechanism to maximize social surplus and seller revenues. With this talk, we intend to bring experimental game theory to the forefront of natural resource economics to encourage the community to take a serious look at voluntary mechanisms for monetizing and funding forest ecosystem services.


Sándor F. Tóth

Sándor F. Tóth is Assistant Professor of Natural Resource Informatics at the University of Washington, Seattle. Dr. Tóth’s primary interest is in developing quantitative decisision support tools to aid sustainable forest management and reserve design. He builds and tests spatial optimization models that can quantify the trade-offs between conflicting management objectives such as timber revenue maximization and conservation. His most recent projects include the development of a volunatry market for forest ecosystem services and the optimal siting of bio-refineries on the Olympic Peninsula. Dr. Tóth’s most notable publications appear in the journals of Operations Research, Forest Science and Biological Conservation.