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

B. Jack, Seema Jayachandran, Namrata Kala and Rohini Pande
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B. Jack: University of California at Santa Barbara
Namrata Kala: MIT Sloan School of Management
Rohini Pande: Yale University

Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies.

Abstract: Particulate matter significantly reduces life expectancy in India. We use a randomized controlled trial in the 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 based on 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.

Keywords: India; Life Expectancy; Payments for Ecosystem Services; PES (search for similar items in EconPapers)
JEL-codes: O13 Q01 Q56 (search for similar items in EconPapers)
Date: 2023-03
New Economics Papers: this item is included in nep-agr, nep-des, nep-dev, nep-env, nep-exp and nep-res
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https://gceps.princeton.edu/wp-content/uploads/202 ... ot_to_burn_23mar.pdf

Related works:
Journal Article: Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning (2025)
Working Paper: Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning (2023)
Working Paper: Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning (2022)
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