environmental programs (Hespelt and Bertke, 2003). The ecological goods grassland are
achieved, when the criteria of the goods are fulfilled on the total grassland plot. To
determinate and control these goods, standardised methods will be tested during the
proving of this payment scheme up to September 2006.
The principle of subsidiarity - The Regional Advisory Board: In the period from 2000 to
2003 a Regional Advisory Board, witch represents the public demand for ecological goods
has been assembled. According to the principle of subsidiarity, the Regional Advisory
Board expresses the demand for ecological goods by deciding aboud the allocation of
funds for the defined goods. This regional group of experts acts by majority decisions and
consists of all relevant stakeholders in the model-region, like representatives from the
Northeim Country Municipal Council, the Department for Construction and Environment,
the regional office of the State Department of Agriculture, the regional office of the
Chamber of Agriculture, NGOs, the Farmer’s Union and landowner groups. Based on the
Regional Advisory Board’s demand, the regional administration invites tenders to make
offers about the production of ecological goods and accomplishes the bidding procedure.
In the context of the research project the auction is accomplished by the researchers
involved in this project. To achieve a further increase of the social acceptance and a - in
the best way - sustainable implementation of this payment scheme as an institutional
innovation, apart from expert knowledge also regional population’s preferences will be
integrated into the decision of the Regional Advisory Board. Therefor a method will be
developed to enable the continuous determination of the population’s preferences for
ecological goods in the model-region. These preferences will be presented to the Regional
Advisory Board and should find consideration in the demand for ecological goods.
Auctions - Efficiency: The use of uniform premiums to pay farmers - as embodied in agri-
environmental programs at present - leads to substantial problems. It achieves only a low
participation ratio in some regions whereas, in other regions, windfall profits arose. This
causes an inefficient use of public means (Holm-Mueller et al., 2002). This is the case,
since with a uniform premium the farmer’s individual cost structure and production
conditions do not find consideration and all farmers receive a uniform remuneration
(Plankl, 1999). Auctions therefor leading to individual payments equal to the farmer’s bids
could be the instrument to solve this problem. In the course of this price calculation it is to
be expected that the farmers will deliver different offers based on their individual cost