If services aren't delivered, people won't pay: the role of measurement problems and monitoring in Payments for Environmental Services
AbstractThe idea of Payments for environmental services (PES) has an appealing simplicity, which may explain the success of the concept. However, successful projects are far limited though and two constraints have been identified in literature. The first is limited demand: too few service users are so confident about the mechanism that they are willing to pay. The second obstacle is poor knowledge on the institutional requirements entailing incentive and livelihood mechanisms which so far have received comparatively less attention. This paper focuses on both constraints by arguing that monitoring effectiveness and conditionality of PES schemes are crucial and that institutional arrangements for monitoring should be in place. By analysing in a systematic way what types of measurement problems there are, the paper shows that the type of monitoring that is required within a PES has consequences for the institutional arrangement needed for a successful PES. We find that the institutional arrangements for monitoring vary according to (i) the type of environmental service and its underlying production process, (ii) the extent to which the environmental service can be freely observed or measured, (iii) the extent to which activities of the resource managers who provide the environmental service can be freely observed, and finally (iv) the deterministic or stochastic nature of production processes.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 106th Seminar, October 25-27, 2007, Montpellier, France with number 7948.
Date of creation: 2007
Date of revision:
PES; monitoring; measurement; institutional arrangement; Environmental Economics and Policy;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Avenhaus, Rudolf & Von Stengel, Bernhard & Zamir, Shmuel, 2002. "Inspection games," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 3, chapter 51, pages 1947-1987 Elsevier.
- Singh, Nirvikar, 1985. "Monitoring and Hierarchies: The Marginal Value of Information in a Principal-Agent Model," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 599-609, June.
- Juan-Camilo Cardenas & Elinor Ostrom, 2004.
"What do people bring into the game? Experiments in the field about cooperation in the commons,"
Artefactual Field Experiments
00027, The Field Experiments Website.
- Cardenas, Juan-Camilo & Ostrom, Elinor, 2004. "What do people bring into the game? Experiments in the field about cooperation in the commons," Agricultural Systems, Elsevier, vol. 82(3), pages 307-326, December.
- Cárdenas, Juan-Camilo & Ostrom, Elinor, 2004. "What do people bring into the game: experiments in the field about cooperation in the commons," CAPRi working papers 32, International Food Policy Research Institute (IFPRI).
- Kandel, Eugene & Lazear, Edward P, 1992.
"Peer Pressure and Partnerships,"
Journal of Political Economy,
University of Chicago Press, vol. 100(4), pages 801-17, August.
- Gintis, Herbert, 2000. "Beyond Homo economicus: evidence from experimental economics," Ecological Economics, Elsevier, vol. 35(3), pages 311-322, December.
- Dittmann, Ingolf, 1999. "How reliable should auditors be?: optimal monitoring in principal-agent relationships," European Journal of Political Economy, Elsevier, vol. 15(3), pages 523-546, September.
- Rob Fraser, 2002.
"Moral Hazard and Risk Management in Agri-environmental Policy,"
Journal of Agricultural Economics,
Wiley Blackwell, vol. 53(3), pages 475-487.
- Fraser, Rob W., 2002. "Moral Hazard and Risk Management in Agri-Environmental Policy," 2002 Conference (46th), February 13-15, 2002, Canberra 125086, Australian Agricultural and Resource Economics Society.
- Barron, John M & Gjerde, Kathy Paulson, 1997. "Peer Pressure in an Agency Relationship," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 234-54, April.
- A. Mitchell Polinsky & Steven Shavell, 1999.
"The Economic Theory of Public Enforcement of Law,"
NBER Working Papers
6993, National Bureau of Economic Research, Inc.
- Brosig, Jeannette, 2002. "Identifying cooperative behavior: some experimental results in a prisoner's dilemma game," Journal of Economic Behavior & Organization, Elsevier, vol. 47(3), pages 275-290, March.
- Macho-Stadler, Ines & Perez-Castrillo, J. David, 1993.
"Moral hazard with several agents : The gains from cooperation,"
International Journal of Industrial Organization,
Elsevier, vol. 11(1), pages 73-100, March.
- Macho-Stadler, I. & Perez-Castrillo, J.D., 1991. "Moral Hazard with Several Agents: The Gains From Cooperation," DELTA Working Papers 91-26, DELTA (Ecole normale supérieure).
- Engle-Warnick, J. & Slonim, Robert L., 2006. "Learning to trust in indefinitely repeated games," Games and Economic Behavior, Elsevier, vol. 54(1), pages 95-114, January.
- Castillo, Daniel & Saysel, Ali Kerem, 2005. "Simulation of common pool resource field experiments: a behavioral model of collective action," Ecological Economics, Elsevier, vol. 55(3), pages 420-436, November.
- Macho-Stadler, Ines & Perez-Castrillo, J. David, 2001.
"An Introduction to the Economics of Information: Incentives and Contracts,"
Oxford University Press,
edition 2, number 9780199243273, October.
- Macho-Stadler, Ines & Perez-Castrillo, J. David, 2001. "An Introduction to the Economics of Information: Incentives and Contracts," OUP Catalogue, Oxford University Press, edition 2, number 9780199243259, October.
- Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, vol. 46(2), pages 260-281, February.
- Jeffrey Carpenter & Peter Matthews & Okomboli Ong'ong'a, 2003.
"Why Punish: Social Reciprocity and the Enforcement of Prosocial Norms,"
Middlebury College Working Paper Series
0213r, Middlebury College, Department of Economics.
- Jeffrey Carpenter & Peter Matthews & Okomboli Ong’ong’a, 2004. "Why Punish? Social reciprocity and the enforcement of prosocial norms," Journal of Evolutionary Economics, Springer, vol. 14(4), pages 407-429, October.
- Peter Matthews & Jeffrey Carpenter, 2002. "Why Punish: Social Reciprocity and the Enforcement of Prosocial Norms," Middlebury College Working Paper Series 0213, Middlebury College, Department of Economics.
- McAfee, R Preston & McMillan, John, 1991. "Optimal Contracts for Teams," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 561-77, August.
- Gautier, Axel, 1999. "Optimal Monitoring in Teams," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999006, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Parkhurst, Gregory M. & Shogren, Jason F. & Bastian, Chris & Kivi, Paul & Donner, Jennifer & Smith, Rodney B. W., 2002. "Agglomeration bonus: an incentive mechanism to reunite fragmented habitat for biodiversity conservation," Ecological Economics, Elsevier, vol. 41(2), pages 305-328, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.