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Tuesday, March 9th 2021

Laure Kuhfuss (James Hutton Institute) will present "Nudging Participation and Spatial Agglomeration in Payment for Environmental Service Schemes", written with Raphaële Préget, Sophie Thoyer, Frans de Vries and Nick Hanley.

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 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 the performance of the agglomeration bonus is not enhanced by the nudge.

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