Enhancing spatial coordination in payment for ecosystem services schemes with non-pecuniary preferences

Citation

Kuhfuss L, Préget R, Thoyer S, de Vries FP & Hanley N (2022) Enhancing spatial coordination in payment for ecosystem services schemes with non-pecuniary preferences. Ecological Economics, 192, Art. No.: 107271. https://doi.org/10.1016/j.ecolecon.2021.107271

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.

Keywords
Spatial Coordination; Agglomeration Bonus; Coordination Games; Nudge; Social Comparison; Laboratory Experiments; Environmental Preferences

Journal
Ecological Economics: Volume 192