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Payments for Ecosystem Services: Can we kill two birds with one stone? Insights from a Natural Field Experiment in Madagascar

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  • Sophie Clot
  • Fano Andriamahefazafy
  • Gilles Grolleau
  • Lisette Ibanez
  • Philippe Méral

Abstract

The explicit assumption underlying Payments for Ecosystem Services (PES) is that offering payments that are at least equal to individual’s opportunity cost will establish individuals’ participation. At the same time, that payment should act as a substitution within landowners’ global income, making environmental conservation compatible with economic development goals, and suitable for win-win policy. This partially acts under the more general hypothesis of money fungibility built-in neoclassical economic premise. Meanwhile, behavioural economics demonstrate that individuals track their financial activities using a set of cognitive labels depending to the context in which it was obtained, each of which being associated with a different marginal propensity to consume. Based on a ‘Humans’ vs. ‘Econs’ approach, we test the effect of income’s origin (‘Low effort’ based money vs. ‘High effort’ based money) on spending decisions (Necessity vs. Superior goods) and pro social preferences (Contribution to a public good) within Madagascar rural areas that are potential beneficiaries of PES programs, using a natural field experiment. Our findings support that human’s behavioural responses matter and could, under some circumstances, alter environmental conservation policies.

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Paper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 14-01.

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Length: 38 pages
Date of creation: Jan 2014
Date of revision: Jan 2014
Handle: RePEc:lam:wpaper:14-01

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Cited by:
  1. Sophie Clot & Charlotte Stanton, 2014. "Present Bias in Payments for Ecosystem Services: Insights from a Behavioural Experiment in Uganda," Working Papers 14-03, LAMETA, Universtiy of Montpellier, revised Jan 2014.

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