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Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning

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  • B. Kelsey Jack
  • Seema Jayachandran
  • Namrata Kala
  • Rohini Pande

Abstract

Particulate matter significantly reduces life expectancy in India. We use a randomized controlled trial in the Indian state of Punjab to evaluate the effectiveness of conditional cash transfers (also known as payments for ecosystem services, or PES) in reducing crop residue burning, which is a major contributor to the region’s poor air quality. Credit constraints and distrust may make farmers less likely to comply with standard PES contracts, which only pay the participant after verification of compliance. We randomize paying a portion of the money upfront and unconditionally. Despite receiving a lower reward for compliance, farmers offered partial upfront payment are 8-12 percentage points more likely to comply than are farmers offered the standard contract. Burning measures derived from satellite imagery indicate that PES with upfront payments significantly reduced burning, while standard PES payments were inframarginal. We also show that PES with an upfront component is a cost-effective way to improve India’s air quality.

Suggested Citation

  • B. Kelsey Jack & Seema Jayachandran & Namrata Kala & Rohini Pande, 2022. "Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning," NBER Working Papers 30690, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30690
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    Citations

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    Cited by:

    1. Digvijay S. Negi, 2024. "State Mediated Trade, Distortions and Air Pollution," Working Papers 129, Ashoka University, Department of Economics.
    2. Batabyal, Amitrajeet & Beladi, Hamid, 2025. "An Analysis of Agricultural Crop Residue Burning and Urban Air Pollution in New Delhi, India," MPRA Paper 125945, University Library of Munich, Germany, revised 19 Aug 2025.
    3. Cao, Jing & Ma, Rong, 2023. "Mitigating agricultural fires with carrot or stick? Evidence from China," Journal of Development Economics, Elsevier, vol. 165(C).
    4. Meghna Agarwala & Shampa Bhattacharjee & Aparajita Dasgupta, 2024. "Political Cycles in Crop Residue Burning: Evidence from India," Working Papers 117, Ashoka University, Department of Economics, revised 01 Aug 2024.
    5. Andrew L. Dabalen & Aparajita Goyal & Ruozi Song, 2024. "Regenerative Agriculture in Practice : A Review," Policy Research Working Paper Series 10919, The World Bank.
    6. Jagnani, Maulik & Mahadevan, Meera, 2025. "Women leaders improve environmental outcomes: Evidence from crop fires in India," Journal of Public Economics, Elsevier, vol. 248(C).
    7. Behrer,Arnold Patrick, 2023. "Man or Machine ? Environmental Consequences of Wage Driven Mechanization in Indian Agriculture," Policy Research Working Paper Series 10376, The World Bank.
    8. Oumayma Sadgui & Abdellatif Khattabi & Zouhir Dichane, 2025. "Spatio-Temporal Evolution of Water-Regulating Ecosystem Services Values in Morocco’s Protected Areas: A Case Study of Ifrane National Park," Land, MDPI, vol. 14(4), pages 1-19, April.
    9. Hagerty, Nick & Zucker, Ariel, 2025. "Price Incentives for Conservation: Experimental Evidence from Groundwater Irrigation," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 361141, Agricultural and Applied Economics Association.
    10. Shefali Khanna & Kanika Mahajan & Sudarshan RSA, 2024. "Are Crop Residue Burning Bans Effective? Evidence from India," Working Papers 136, Ashoka University, Department of Economics, revised 11 Jul 2025.

    More about this item

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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