Enhancing Spatial Coordination in Payment for Ecosystem Services Schemes with Non-Pecuniary Preferences

Laure Kuhfuss*, Raphaële Préget, Sophie Thoyer, Frans de Vries, Nick Hanley

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

The environmental benefits from Payment for Ecosystem Services (PES) schemes can often be enhanced if private land managers are induced to enrol land in a spatially coordinated manner. One incentive mechanism which has been proposed to achieve such spatial coordination is the agglomeration bonus, a two-part payment scheme which offers a pecuniary (financial) reward for decisions that lead to greater spatial coordination of enrolled land. However, farmers respond to a range of motives when deciding whether to participate in such schemes, including non-pecuniary motives such as a concern for the environment or social comparisons. This study implements a de-contextualised laboratory experiment to test the effectiveness of the agglomeration bonus when non-pecuniary motives are explicitly incorporated into the decision-making environment. We capture intrinsic preferences for the public good dimension of environmental improvement through a real donation to environmental charities and examine the relative impact of a group-ranking nudge. The experimental results show that the agglomeration bonus does indeed improve participation and spatial coordination when non-pecuniary motives are accounted for, but that its performance is not enhanced by the nudge.
Original languageEnglish
Article number107271
Number of pages14
JournalEcological Economics
Volume192
Early online date12 Nov 2021
DOIs
Publication statusE-pub ahead of print - 12 Nov 2021

Keywords

  • Spatial Coordination
  • agglomeration bonus
  • coordination games
  • nudge
  • social comparison
  • laboratory experiments
  • environmental preferences

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