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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.

Suggested Citation

  • 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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    References listed on IDEAS

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    2. repec:eee:ecoser:v:23:y:2017:i:c:p:259-267 is not listed on IDEAS
    3. 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.
    4. 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.
    5. 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.
    6. repec:eee:ecoser:v:7:y:2014:i:c:p:22-33 is not listed on IDEAS
    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. 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.
    9. Perrings, Charles, 2014. "Environment and development economics 20 years on," Environment and Development Economics, Cambridge University Press, vol. 19(03), pages 333-366, June.

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