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Upstream-downstream transactions and watershed externalities: Experimental evidence from Kenya

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  • Jack, B. Kelsey

Abstract

Where environmental policies or projects seek behavioral change, understanding underlying norms and preferences is essential to securing environmental outcomes. This study models a payment for environmental services intervention in an experimental field laboratory in Nyanza Province, Kenya. Upstream and downstream individuals are paired in a standard investment game, in which the upstream mover's investment represents land use decisions and the downstream mover responds with a choice of compensation payment. The experimental intervention introduces an enforcement treatment on the downstream movers' compensation decisions for a single round. Underlying social preferences and identity appear to shape individual transactions between upstream and downstream individuals. Upstream first movers are sensitive to the removal of the enforcement on their downstream partners in the second round, and make decisions consistent with crowding out of social preferences. The results suggest that environmental interventions may affect resource decisions for individuals who are not themselves direct targets of enforcement.

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  • Jack, B. Kelsey, 2009. "Upstream-downstream transactions and watershed externalities: Experimental evidence from Kenya," Ecological Economics, Elsevier, vol. 68(6), pages 1813-1824, April.
    • Handle: RePEc:eee:ecolec:v:68:y:2009:i:6:p:1813-1824
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    3. Rodríguez-Robayo, Karla Juliana & Merino-Perez, Leticia, 2017. "Contextualizing context in the analysis of payment for ecosystem services," Ecosystem Services, Elsevier, vol. 23(C), pages 259-267.
    4. Rode, Julian & Gómez-Baggethun, Erik & Krause, Torsten, 2015. "Motivation crowding by economic incentives in conservation policy: A review of the empirical evidence," Ecological Economics, Elsevier, vol. 117(C), pages 270-282.
    5. Mulatu, Dawit W. & van der Veen, Anne & van Oel, Pieter R., 2014. "Farm households' preferences for collective and individual actions to improve water-related ecosystem services: The Lake Naivasha basin, Kenya," Ecosystem Services, Elsevier, vol. 7(C), pages 22-33.
    6. Bonev, Petyo & Gorkun-Voevoda, Liudmila & Knaus, Michael, 2022. "The effect of environmental policies on environmental behaviors and intrinsic motivation: evidence from the European Union," Economics Working Paper Series 2207, University of St. Gallen, School of Economics and Political Science, revised Sep 2022.
    7. Simora, Michael & Frondel, Manuel & Vance, Colin, 2018. "Does financial compensation increase the acceptance of power lines? Evidence from Germany," Ruhr Economic Papers 742, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Shunji Oniki & Melaku Berhe & Teklay Negash, 2020. "Role of Social Norms in Natural Resource Management: The Case of the Communal Land Distribution Program in Northern Ethiopia," Land, MDPI, vol. 9(2), pages 1-17, January.
    9. Perrings, Charles, 2014. "Environment and development economics 20 years on," Environment and Development Economics, Cambridge University Press, vol. 19(3), pages 333-366, June.
    10. Gwenolé Le Velly & Céline Dutilly, 2016. "Evaluating Payments for Environmental Services: Methodological Challenges," PLOS ONE, Public Library of Science, vol. 11(2), pages 1-20, February.
    11. Ansink, Erik & Tesfaye, Abonesh & Bouma, Jetske & Brouwer, Roy, 2017. "Cooperation in watershed management: A field experiment on location, trust, and enforcement," Resource and Energy Economics, Elsevier, vol. 50(C), pages 91-104.
    12. Kaczan, David J. & Swallow, Brent M. & Adamowicz, W.L. (Vic), 2019. "Forest conservation policy and motivational crowding: Experimental evidence from Tanzania," Ecological Economics, Elsevier, vol. 156(C), pages 444-453.
    13. Bonev, Petyo & Gorkun-Voevoda, Liudmila & Knaus, Michael, 2022. "The Effect of Environmental Policies on Intrinsic Motivation: Evidence from the Eurobarometer Surveys," VfS Annual Conference 2022 (Basel): Big Data in Economics 264028, Verein für Socialpolitik / German Economic Association.
    14. Maca-Millán, Stefany & Arias-Arévalo, Paola & Restrepo-Plaza, Lina, 2021. "Payment for ecosystem services and motivational crowding: Experimental insights regarding the integration of plural values via non-monetary incentives," Ecosystem Services, Elsevier, vol. 52(C).
    15. Oniki, Shunji & Berhe, Melaku & Negash, Teklay & Etsay, Haftu, 2023. "Do economic incentives crowd out motivation for communal land conservation in Ethiopia?," Forest Policy and Economics, Elsevier, vol. 150(C).
    16. Grillos, Tara, 2017. "Economic vs non-material incentives for participation in an in-kind payments for ecosystem services program in Bolivia," Ecological Economics, Elsevier, vol. 131(C), pages 178-190.
    17. Dulce Rodrigues & Paulo Oliveira & Teodorico Alves Sobrinho & Eduardo Mendiondo, 2013. "Hydrological benefits in the context of Brazilian environmental services program," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 15(4), pages 1037-1048, August.
    18. Hao Wang & Sander Meijerink & Erwin van der Krabben, 2020. "Institutional Design and Performance of Markets for Watershed Ecosystem Services: A Systematic Literature Review," Sustainability, MDPI, vol. 12(16), pages 1-26, August.
    19. Simora, Michael & Frondel, Manuel & Vance, Colin, 2020. "Do financial incentives increase the acceptance of power lines? Evidence from Germany," Regional Science and Urban Economics, Elsevier, vol. 85(C).
    20. Simora, Michael, 2017. "The effect of financial compensation on the acceptance of power lines: Evidence from a randomized discrete choice experiment in Germany," Ruhr Economic Papers 729, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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