Evaluating the potential of marketable permits in a framed field experiment: Forest conservation in Nepal

A marketable permits system (MPS) has been deemed effective in laboratory experiments, however, little is known about how the MPS works in the field. We evaluate the MPS efficiency for forest conservation by framed field experiments in Nepal. Forestland demands are elicited from farmers, with which the experiments are carried out. The novelty lies in instituting a uniform price auction (UPA) under trader settings and in identifying the MPS efficiency for forest conservation in the field of developing nations. The results suggest that farmers with limited education understand UPA rules, reveal their forestland valuations and that the MPS is effective with 80% of efficiency.