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Using referenda to improve targeting and decrease costs of conditional cash transfers

Jennifer M. Alix-Garcia, Katharine Sims and Daniel J. Phaneuf

Journal of Public Economics, 2019, vol. 176, issue C, 179-194

Abstract: Cost-effective allocation of conditional cash transfers (CCT) requires identifying recipients with low opportunity costs who might change behavior. This paper develops a low-cost approach for improving program implementation by using a stated preference, referendum-style survey question to calculate willingness to accept (WTA) for CCT contracts. We illustrate this in the context of Mexico's Payments for Ecosystem Services Program, and find that the estimated social cost based on WTA is substantially lower than actual payments. Simulation of three geographic targeting approaches shows that joint selection using deforestation risk and WTA could increase program impact under the same budget. We also simulate modified payment schedules based on predicted WTA and demonstrate that these could reduce program cost.

Keywords: Targeting; Conditional cash transfers; Payments for ecosystem services; Stated preference (search for similar items in EconPapers)
JEL-codes: Q58 Q28 O13 D04 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.jpubeco.2019.06.001

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