structure and relevant production conditions. Therefore the possibility for a higher
efficiency and a higher ecological use compared to an uniform premium is given. So the
orders can be assigned market-similarly on the basis of individual calculated offers to the
most efficient farmers. Moreover the use of auctions comprises financial incentives to
innovations and a more efficient employment of the factors of production. So farmers try
to reduce their costs of production and increase the possibility for an acceptance of bids in
future auctions.
4.2. The proving in the model-region
To make sure that this regional payment scheme is not just a theoretical construct, but
could be an institutional innovation as a part of the future agri-environmental policy it
needs to be tested. In January 2004 the empirical proving started in a model-region - the
administrative district Northeim in the south of Lower Saxony (Germany). Thereby the
realisation of the first bidding procedure and the production of the tender documents was
focused. This was accomplished in close contact with the responsible administration, in
order to prepare an efficient implementation into the practice. The public proclamation of
the auction took place on the 1st of June 2004. Afterwards in a period of six weeks the
farmers in the model-region could request the tender documents and make their offers. On
the 10th of July 2004 the offers were opened and evaluated by the project collaborators.
Until the 17th of July 2004 the commitments and denials were sent to the farmers and those
whose offers were accepted, were contracted to produce ecological goods according to
they offers. Each farmer had to deliver an individual offer for every plot of grassland. The
offer includes the choice of the ecological good (grassland I, II or III), the calculation of
the price per hectare and the exact description of the grassland plot on witch the ecological
goods exist or will be produced. This shows the specification of an auction. Farmers have
to calculate in an entrepreneurial way, orientated on their specific ecological production
conditions, witch leads to differentiated offers. The exclusion criteria in this first auction
were economic criteria based on the price per hectare and the ecological valuation took
place by the graduation of the ecological goods grassland I, II or III. The control of the
offered ecological goods will take place until the 31st of July 2005 and if the ecological
goods could be proved the way they were offered, farmers get paid in August 2005. Below
the most relevant results of the first bidding procedure and first empirical data from two
surveys in the administrative district Northeim will be presented.