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Conditional Cash Transfers and Payments for Environmental Services: A Conceptual Framework for Explaining and Judging Differences in Outcomes

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  • Persson, U. Martin
  • Alpizar, Francisco

Abstract

Despite the recent popularity of conditional cash transfers (CCT) and payments for environmental services (PES) programs, what determines their success is not well understood. We developed a conceptual framework to give insight into some of the main determinants of CCT and PES program efficiency that hope to increase investments in human and environmental capital. We used a simple agent-based model and validated the results with empirical data from existing programs. We show that 1) the share of participants who meet the program’s conditions at baseline is a powerful predictor of program efficiency, (2) and selection bias erodes program efficiency to a large extent. (Selection bias stems from agents who already meet program criteria and who self-select into programs at higher rates than those who do not meet the conditions.) Based on these results, we discuss possibilities for improving efficiency—mainly by targeting applicants or increasing payments—and criteria for evaluating and choosing CCT, PES, or other policy instruments.

Suggested Citation

  • Persson, U. Martin & Alpizar, Francisco, 2011. "Conditional Cash Transfers and Payments for Environmental Services: A Conceptual Framework for Explaining and Judging Differences in Outcomes," Discussion Papers dp-11-06-efd, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-11-06-efd
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    References listed on IDEAS

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    Cited by:

    1. Gwenolé Le Velly & Alexandre Sauquet & Sergio Cortina-Villar, 2017. "PES Impact and Leakages over Several Cohorts: The Case of the PSA-H in Yucatan, Mexico," Land Economics, University of Wisconsin Press, vol. 93(2), pages 230-257.
    2. Gwenolé Le Velly & Céline Dutilly, 2016. "Evaluating Payments for Environmental Services: Methodological Challenges," PLOS ONE, Public Library of Science, vol. 11(2), pages 1-20, February.
    3. 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.
    4. Francisco Alpízar & Anna Nordén & Alexander Pfaff & Juan Robalino, 2017. "Unintended Effects of Targeting an Environmental Rebate," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(1), pages 181-202, May.
    5. Gatiso, Tsegaye T. & Vollan, Björn & Nuppenau, Ernst-August, 2015. "Resource scarcity and democratic elections in commons dilemmas: An experiment on forest use in Ethiopia," Ecological Economics, Elsevier, vol. 114(C), pages 199-207.
    6. 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.
    7. Ma, Zhao & Bauchet, Jonathan & Steele, Diana & Godoy, Ricardo & Radel, Claudia & Zanotti, Laura, 2017. "Comparison of Direct Transfers for Human Capital Development and Environmental Conservation," World Development, Elsevier, vol. 99(C), pages 498-517.
    8. 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.
    9. 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.
    10. Cho, Seong-Hoon & Soh, Moonwon & English, Burton C. & Yu, T. Edward & Boyer, Christopher N., 2019. "Targeting payments for forest carbon sequestration given ecological and economic objectives," Forest Policy and Economics, Elsevier, vol. 100(C), pages 214-226.
    11. Mohebalian, Phillip M. & Aguilar, Francisco X., 2016. "Additionality and design of forest conservation programs: Insights from Ecuador's Socio Bosque Program," Forest Policy and Economics, Elsevier, vol. 71(C), pages 103-114.
    12. 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.
    13. Sharma, Bijay P. & Cho, Seong-Hoon & Yu, T. Edward, 2019. "Designing cost-efficient payments for forest-based carbon sequestration: An auction-based modeling approach," Forest Policy and Economics, Elsevier, vol. 104(C), pages 182-194.
    14. 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).

    More about this item

    Keywords

    conditional cash transfer; payment for ecosystem services; program evaluation; additionality;

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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