IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v191y2022ics0921800921002949.html
   My bibliography  Save this article

Program design and heterogeneous treatment effects of payments for environmental services

Author

Listed:
  • Ito, Junichi

Abstract

Payments for environmental service (PES) programs have been increasingly promulgated worldwide recently to secure broader environmental benefits and provide financial assistance to environmental custodians. This study highlights the incentive design of PES and ecosystem providers' behavioral responses using a standard principal-agent model. Based on a theoretical model characterized by a screening game, I establish a hypothesis that as long as the PES conditionality is implemented and enforced effectively, ecosystem service (ES) providers more likely to participate in the scheme perform better in terms of environmental resource conservation. An empirical analysis in this study uncovers heterogeneous treatment effects in favor of the ES providers whose propensity scores for scheme participation are relatively high. This result lends strong support to the hypothesis that the strict conditionality embedded in the PES scheme dissuades potential participants at a high risk of noncompliance from participating the program, which helps enhance the PES additionality.

Suggested Citation

  • Ito, Junichi, 2022. "Program design and heterogeneous treatment effects of payments for environmental services," Ecological Economics, Elsevier, vol. 191(C).
  • Handle: RePEc:eee:ecolec:v:191:y:2022:i:c:s0921800921002949
    DOI: 10.1016/j.ecolecon.2021.107235
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800921002949
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.ecolecon.2021.107235?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wunder, Sven, 2015. "Revisiting the concept of payments for environmental services," Ecological Economics, Elsevier, vol. 117(C), pages 234-243.
    2. Loft, Lasse & Gehrig, Stefan & Le, Dung Ngoc & Rommel, Jens, 2019. "Effectiveness and equity of Payments for Ecosystem Services: Real-effort experiments with Vietnamese land users," Land Use Policy, Elsevier, vol. 86(C), pages 218-228.
    3. Banerjee, Simanti & Cason, Timothy N. & de Vries, Frans P. & Hanley, Nick, 2017. "Transaction costs, communication and spatial coordination in Payment for Ecosystem Services Schemes," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 68-89.
    4. Rob Fraser, 2009. "Land Heterogeneity, Agricultural Income Forgone and Environmental Benefit: An Assessment of Incentive Compatibility Problems in Environmental Stewardship Schemes," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 190-201, February.
    5. Mohebalian, Phillip M. & Aguilar, Francisco X., 2018. "Design of tropical forest conservation contracts considering risk of deforestation," Land Use Policy, Elsevier, vol. 70(C), pages 451-462.
    6. Emmanuelle Quillérou & Rob Fraser, 2010. "Adverse Selection in the Environmental Stewardship Scheme: Does the Higher Level Stewardship Scheme Design Reduce Adverse Selection?," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 369-380, June.
    7. Jennifer M. Alix-Garcia & Katharine R. E. Sims & Patricia Yañez-Pagans, 2015. "Only One Tree from Each Seed? Environmental Effectiveness and Poverty Alleviation in Mexico's Payments for Ecosystem Services Program," American Economic Journal: Economic Policy, American Economic Association, vol. 7(4), pages 1-40, November.
    8. Lichtenberg, Erik, 2002. "Agriculture and the environment," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 23, pages 1249-1313, Elsevier.
    9. Juan Robalino & Alexander Pfaff, 2013. "Ecopayments and Deforestation in Costa Rica: A Nationwide Analysis of PSA’s Initial Years," Land Economics, University of Wisconsin Press, vol. 89(3), pages 432-448.
    10. Jeffrey M. Peterson & Craig M. Smith & John C. Leatherman & Nathan P. Hendricks & John A. Fox, 2015. "Transaction Costs in Payment for Environmental Service Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 219-238.
    11. Ferraro, Paul J., 2008. "Asymmetric information and contract design for payments for environmental services," Ecological Economics, Elsevier, vol. 65(4), pages 810-821, May.
    12. Mariano Mezzatesta & David A. Newburn & Richard T. Woodward, 2013. "Additionality and the Adoption of Farm Conservation Practices," Land Economics, University of Wisconsin Press, vol. 89(4), pages 722-742.
    13. Emmanuelle Quillérou & Rob Fraser, 2010. "Adverse Selection in the Environmental Stewardship Scheme: Does the Higher Level Stewardship Scheme Design Reduce Adverse Selection?," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 369-380, June.
    14. Ito, Junichi & Feuer, Hart N. & Kitano, Shinichi & Asahi, Haruka, 2019. "Assessing the effectiveness of Japan's community-based direct payment scheme for hilly and mountainous areas," Ecological Economics, Elsevier, vol. 160(C), pages 62-75.
    15. Engel, Stefanie & Pagiola, Stefano & Wunder, Sven, 2008. "Designing payments for environmental services in theory and practice: An overview of the issues," Ecological Economics, Elsevier, vol. 65(4), pages 663-674, May.
    16. Andrew Moxey & Ben White & Adam Ozanne, 1999. "Efficient Contract Design for Agri‐Environment Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(2), pages 187-202, May.
    17. Vatn, Arild, 2010. "An institutional analysis of payments for environmental services," Ecological Economics, Elsevier, vol. 69(6), pages 1245-1252, April.
    18. Börner, Jan & Baylis, Kathy & Corbera, Esteve & Ezzine-de-Blas, Driss & Honey-Rosés, Jordi & Persson, U. Martin & Wunder, Sven, 2017. "The Effectiveness of Payments for Environmental Services," World Development, Elsevier, vol. 96(C), pages 359-374.
    19. Martin Persson, U. & Alpízar, Francisco, 2013. "Conditional Cash Transfers and Payments for Environmental Services—A Conceptual Framework for Explaining and Judging Differences in Outcomes," World Development, Elsevier, vol. 43(C), pages 124-137.
    20. Cooke, Benjamin & Moon, Katie, 2015. "Aligning ‘public good’ environmental stewardship with the landscape-scale: Adapting MBIs for private land conservation policy," Ecological Economics, Elsevier, vol. 114(C), pages 152-158.
    21. Rodrigo A. Arriagada, & Paul J. Ferraro & Erin O. Sills & Subhrendu K. Pattanayak & Silvia Cordero-Sancho, 2012. "Do Payments for Environmental Services Affect Forest Cover? A Farm-Level Evaluation from Costa Rica," Land Economics, University of Wisconsin Press, vol. 88(2), pages 382-399.
    22. Muradian, Roldan & Rival, Laura, 2012. "Between markets and hierarchies: The challenge of governing ecosystem services," Ecosystem Services, Elsevier, vol. 1(1), pages 93-100.
    23. Sven Wunder & Jan Börner & Driss Ezzine-de-Blas & Sarah Feder & Stefano Pagiola, 2020. "Payments for Environmental Services: Past Performance and Pending Potentials," Annual Review of Resource Economics, Annual Reviews, vol. 12(1), pages 209-234, October.
    24. Taisuke Takayama & Tomoaki Nakatani & Tetsuji Senda & Takeshi Fujie, 2021. "Less‐favoured‐area payments, farmland abandonment and farm size: evidence from hilly and mountainous areas in Japan," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 658-678, July.
    25. Hayes, Tanya & Murtinho, Felipe, 2018. "Communal governance, equity and payment for ecosystem services," Land Use Policy, Elsevier, vol. 79(C), pages 123-136.
    26. Lundberg, Liv & Persson, U. Martin & Alpizar, Francisco & Lindgren, Kristian, 2018. "Context Matters: Exploring the Cost-effectiveness of Fixed Payments and Procurement Auctions for PES," Ecological Economics, Elsevier, vol. 146(C), pages 347-358.
    27. Driss Ezzine-de-Blas & Sven Wunder & Manuel Ruiz-Pérez & Rocio del Pilar Moreno-Sanchez, 2016. "Global Patterns in the Implementation of Payments for Environmental Services," PLOS ONE, Public Library of Science, vol. 11(3), pages 1-16, March.
    28. S. Wunder & R. Brouwer & S. Engel & D. Ezzine-de-Blas & R. Muradian & U. Pascual & R. Pinto, 2018. "From principles to practice in paying for nature’s services," Nature Sustainability, Nature, vol. 1(3), pages 145-150, March.
    29. Engel, Stefanie, 2016. "The Devil in the Detail: A Practical Guide on Designing Payments for Environmental Services," International Review of Environmental and Resource Economics, now publishers, vol. 9(1-2), pages 131-177, July.
    30. Sims, Katharine R.E. & Alix-Garcia, Jennifer M., 2017. "Parks versus PES: Evaluating direct and incentive-based land conservation in Mexico," Journal of Environmental Economics and Management, Elsevier, vol. 86(C), pages 8-28.
    31. Ito, Junichi & Feuer, Hart N. & Kitano, Shinichi & Komiyama, Midori, 2018. "A Policy Evaluation of the Direct Payment Scheme for Collective Stewardship of Common Property Resources in Japan," Ecological Economics, Elsevier, vol. 152(C), pages 141-151.
    32. Sommerville, Matthew & Jones, Julia P.G. & Rahajaharison, Michael & Milner-Gulland, E.J., 2010. "The role of fairness and benefit distribution in community-based Payment for Environmental Services interventions: A case study from Menabe, Madagascar," Ecological Economics, Elsevier, vol. 69(6), pages 1262-1271, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dongbin Hu & Mei Lin & Yang Chen, 2022. "Can Horizontal Ecological Compensation Improve the Water Environment in Cross-Provincial Watersheds?," Sustainability, MDPI, vol. 14(16), pages 1-18, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ito, Junichi & Feuer, Hart N. & Kitano, Shinichi & Asahi, Haruka, 2019. "Assessing the effectiveness of Japan's community-based direct payment scheme for hilly and mountainous areas," Ecological Economics, Elsevier, vol. 160(C), pages 62-75.
    2. Cisneros, Elías & Börner, Jan & Pagiola, Stefano & Wunder, Sven, 2022. "Impacts of conservation incentives in protected areas: The case of Bolsa Floresta, Brazil," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    3. Börner, Jan & Baylis, Kathy & Corbera, Esteve & Ezzine-de-Blas, Driss & Honey-Rosés, Jordi & Persson, U. Martin & Wunder, Sven, 2017. "The Effectiveness of Payments for Environmental Services," World Development, Elsevier, vol. 96(C), pages 359-374.
    4. Liu, Zhaoyang & Kontoleon, Andreas, 2018. "Meta-Analysis of Livelihood Impacts of Payments for Environmental Services Programmes in Developing Countries," Ecological Economics, Elsevier, vol. 149(C), pages 48-61.
    5. Izquierdo-Tort, Santiago & Ortiz-Rosas, Fiorella & Vázquez-Cisneros, Paola Angélica, 2019. "‘Partial’ participation in Payments for Environmental Services (PES): Land enrolment and forest loss in the Mexican Lacandona Rainforest," Land Use Policy, Elsevier, vol. 87(C).
    6. Arriagada, Rodrigo & Villaseñor, Adrián & Rubiano, Eliana & Cotacachi, David & Morrison, Judith, 2018. "Analysing the impacts of PES programmes beyond economic rationale: Perceptions of ecosystem services provision associated to the Mexican case," Ecosystem Services, Elsevier, vol. 29(PA), pages 116-127.
    7. Oliveira Fiorini, Ana Carolina & Mullally, Conner & Swisher, Marilyn & Putz, Francis E., 2020. "Forest cover effects of payments for ecosystem services: Evidence from an impact evaluation in Brazil," Ecological Economics, Elsevier, vol. 169(C).
    8. Ito, Junichi & Feuer, Hart N. & Kitano, Shinichi & Komiyama, Midori, 2018. "A Policy Evaluation of the Direct Payment Scheme for Collective Stewardship of Common Property Resources in Japan," Ecological Economics, Elsevier, vol. 152(C), pages 141-151.
    9. Núñez-Regueiro, Mauricio M. & Hiller, Josh & Branch, Lyn C. & Núñez Godoy, Cristina & Siddiqui, Sharmin & Volante, José & Soto, José R., 2020. "Policy lessons from spatiotemporal enrollment patterns of payment for ecosystem service programs in Argentina," Land Use Policy, Elsevier, vol. 95(C).
    10. Moros, Lina & Vélez, María Alejandra & Corbera, Esteve, 2019. "Payments for Ecosystem Services and Motivational Crowding in Colombia's Amazon Piedmont," Ecological Economics, Elsevier, vol. 156(C), pages 468-488.
    11. Robalino, Juan & Pfaff, Alexander & Sandoval, Catalina & Sanchez-Azofeifa, G. Arturo, 2021. "Can we increase the impacts from payments for ecosystem services? Impact rose over time in Costa Rica, yet spatial variation indicates more potential," Forest Policy and Economics, Elsevier, vol. 132(C).
    12. Lliso, Bosco & Pascual, Unai & Engel, Stefanie, 2021. "On the role of social equity in payments for ecosystem services in Latin America: A practitioner perspective," Ecological Economics, Elsevier, vol. 182(C).
    13. Bauchet, Jonathan & Asquith, Nigel & Ma, Zhao & Radel, Claudia & Godoy, Ricardo & Zanotti, Laura & Steele, Diana & Gramig, Benjamin M. & Chong, Andrea Estrella, 2020. "The practice of Payments for Ecosystem Services (PES) in the Tropical Andes: Evidence from program administrators," Ecosystem Services, Elsevier, vol. 45(C).
    14. Jones, Kelly W. & Muñoz Brenes, Carlos L. & Shinbrot, Xoco A. & López-Báez, Walter & Rivera-Castañeda, Andrómeda, 2018. "The influence of cash and technical assistance on household-level outcomes in payments for hydrological services programs in Chiapas, Mexico," Ecosystem Services, Elsevier, vol. 31(PA), pages 208-218.
    15. Blundo-Canto, Genowefa & Bax, Vincent & Quintero, Marcela & Cruz-Garcia, Gisella S. & Groeneveld, Rolf A. & Perez-Marulanda, Lisset, 2018. "The Different Dimensions of Livelihood Impacts of Payments for Environmental Services (PES) Schemes: A Systematic Review," Ecological Economics, Elsevier, vol. 149(C), pages 160-183.
    16. Montoya-Zumaeta, Javier G. & Wunder, Sven & Tacconi, Luca, 2021. "Incentive-based conservation in Peru: Assessing the state of six ongoing PES and REDD+ initiatives," Land Use Policy, Elsevier, vol. 108(C).
    17. Campanhão, Ligia Maria Barrios & Ranieri, Victor Eduardo Lima, 2019. "Guideline framework for effective targeting of payments for watershed services," Forest Policy and Economics, Elsevier, vol. 104(C), pages 93-109.
    18. Alix-Garcia, Jennifer M. & Sims, Katharine R.E. & Phaneuf, Daniel J., 2019. "Using referenda to improve targeting and decrease costs of conditional cash transfers," Journal of Public Economics, Elsevier, vol. 176(C), pages 179-194.
    19. Ola, Oreoluwa & Menapace, Luisa & Benjamin, Emmanuel & Lang, Hannes, 2019. "Determinants of the environmental conservation and poverty alleviation objectives of Payments for Ecosystem Services (PES) programs," Ecosystem Services, Elsevier, vol. 35(C), pages 52-66.
    20. McWherter, Brooke & Bauchet, Jonathan & Ma, Zhao & Grillos, Tara & Asquith, Nigel & Rathjen, Meagan & Markos, Andrea, 2022. "Compliance under control: Insights from an incentive-based conservation program in rural Bolivia," Ecological Economics, Elsevier, vol. 194(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:191:y:2022:i:c:s0921800921002949. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.