Heterogeneous users and willingness to pay in an ongoing payment for watershed protection initiative in the Colombian Andes

Rocio Moreno-Sanchez (), Jorge Maldonado, Sven Wunder and Carlos Borda-Almanza

Ecological Economics, 2012, vol. 75, issue C, 126-134

Abstract: Flat fees in payment for environmental services (PES) schemes promote administrative ease, and are perceived as egalitarian. However, when environmental-service (ES) buyers are heterogeneous in their income and water-consumption levels, this scheme may not be optimal, as total payments might become too low and services under-supplied. This paper estimates willingness to pay (WTP) higher fees from hydrological-service buyers in an ongoing PES initiative in an Andean watershed in Colombia, where small, flat user payments have been introduced. ES users fall into two highly heterogeneous categories: smallholder peasants and recreational-house owners. We perform a contingent valuation analysis in a representative sample of 218 households. For improved water services, ES buyers on average are willing to pay monthly about US$1 premium over current flat PES rate. Users’ heterogeneity, however, affects significantly this outcome: while recreational-house owners are willing to pay monthly on average US$1.61 more than the current fee, smallholders only US$0.41. Spatial variables, such as distance to the water distribution point and to the town center, importantly influence WTP. Results may help designing user-driven PES schemes in line with efficiency and equity objectives.

Keywords: Payment for environmental services; Willingness to pay; Environmental services; Hydrological services; Colombia; Watershed protection; Heterogeneous consumers (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:75:y:2012:i:c:p:126-134

DOI: 10.1016/j.ecolecon.2012.01.009

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