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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.

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  • 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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    1. Cao, Jing & Ma, Rong, 2023. "Mitigating agricultural fires with carrot or stick? Evidence from China," Journal of Development Economics, Elsevier, vol. 165(C).

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    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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