Testing the Design Variables of ECOSEL: A Market Mechanism for

ECOSEL is a voluntary market framework for private provision of forest ecosystem services. 4 Multi-objective optimization is used in conjunction with a unique funding mechanism to generate and 5 market forest management alternatives that are projected to lead to efficient bundles of ecosystem 6 services on a piece of forestland. ECOSEL allows the public to bid on the competing alternatives. 7 Whichever option attracts the highest combined value of bids over the associated costs is implemented by 8 the landowner. We conduct a series of experiments to test and inform the design of the mechanism in an 9 attempt to maximize social surplus and seller revenues. We find that allowing the participants to 10 communicate with each other during bidding increases the likelihood of an outcome that maximizes social 11 surplus. We also find that a lower number of alternatives presented for bidding increases seller profit. 12 Lastly, threshold cost disclosure, whether to disclose the amount of money to the bidders that would have 13 to be raised for a particular alternative, has a mixed impact depending on the perceived value of the 14 services. We identify a range of public good values where cost disclosure is always the best policy with 15 respect to both social surplus and seller profit. 16