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

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

Working Papers from Princeton University. Economics Department.

Abstract: We test the effectiveness of payments for ecosystem services (PES) in reducing crop residue burning, which contributes significantly to India’s poor air quality. Standard PES contracts pay a monetary reward after verification that the participant has met a pro-environment condition (clearing agricultural fields without burning). We randomize paying a portion of the money upfront and unconditionally to address liquidity constraints and farmer distrust, which may undermine the standard contract’s effectiveness. Despite providing a lower reward for compliance, contracts with partial upfront payment increase compliance by 10 percentage points, which is corroborated with satellite-based burning measurements. The cost per life saved using this strategy is $4400. In contrast, standard PES has no effect on burning; the payments made are entirely inframarginal.

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: 2023-08
New Economics Papers: this item is included in nep-agr, nep-dev and nep-env
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Downloads: (external link)
https://seemajayachandran.com/money_not_to_burn.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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Persistent link: https://EconPapers.repec.org/RePEc:pri:econom:2023-14

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