Cash for Cooperation? Payments for Ecosystem Services and Common Property Management in Mexico

This paper analyzes whether monetary incentives modify cooperative behavior in activities that have been traditionally unpaid. We provide a simple theoretical framework and exploit variation over time in community access to Payments for Ecosystem Services (PES) within Mexican common property communities to analyze whether payments increase work in forest protection activities, which are increasingly incentivized under PES, and also explore their effects on other community activities that remain unpaid. We find that cash incentives increase work, both in the intensive and extensive margins, in forest conservation activities; however, we claim that the framing of the incentive plays an important role in explaining cooperation in activities that remain unpaid. Our findings indicate that, as long as agents are exposed to sanctions resulting from deviant behavior and their actions are visible, lump-sum transfers without specfic work conditionalities can be more effective than wages to promote cooperation. Given the increased popularity of PES initiatives as tools to combat climate change, our findings are important not only for environmental conservation but also for the sustainability and welfare of common property communities.