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Nudging Participation and Spatial Agglomeration in Payment for Environmental Service Schemes

Laure Kuhfuss (), Raphaële Préget (), Sophie Thoyer (), Frans P. de Vries and Nick Hanley ()
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Frans P. de Vries: Division of Economics, University of Stirling Management School, Stirling FK9 4LA, Scotland, UK

Discussion Papers in Environment and Development Economics from University of St. Andrews, School of Geography and Sustainable Development

Abstract: The environmental benefits from Payment for Environmental Service (PES) schemes can often be enhanced if landowners can be induced to enrol land in a spatially - coordinated manner. This is because the achievement of many targets for biodiversity conservation policy or water quality improvements are increasing in the spatial connectedness of enrolled land. One incentive mechanism which has been proposed by economists to achieve such connectedness is the Agglomeration Bonus (AB). There has also been an interest within the literature on PES design in using “nudges” to enhance participation and scheme performance. This paper explores whether a specific nudge in the form of information provided to participants on the relative environmental performance of their group can improve participation and spatial coordination, and enhance the AB performance. We design a laboratory experiment whereby the environmental benefits generated by a PES scheme are materialized by real contributions to an environmental charity, mirroring the situation in actual PES schemes where participants derive utility from contributing to the environmental outputs of the scheme, in addition to the monetary payoffs they receive. The experimental results confirm positive environmental outcomes derived under an AB, but the impact of the nudge is less environmentally effective. Interestingly, we find that the nudge does not significantly supercharge the AB, and can even worsen its performance

Keywords: Social norms; Laboratory experiments; Coordination games; Agricultural policy; Environmental performance; Agri-environmental schemes; Charity (search for similar items in EconPapers)
JEL-codes: C91 C92 Q15 Q18 Q57 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-cbe, nep-env and nep-exp
Date: 2017-11
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