Allocating community-level payments for ecosystem services initial experiences from a REDD pilot in Tanzania

Payments for ecosystem services (PES) typically reward landowners for managing their land to provide ecosystem services that would not otherwise be provided. REDD—Reduced Emissions from Deforestation and Forest Degradation—is a form of PES aimed at decreasing carbon emissions from forest conversion and extraction in lower-income countries. A key challenge for REDD occurs when it is implemented at the community rather than the individual landowner level. Whilst achieving this community-level reduction relies on individuals changing their interaction with the forest, incentives are not aligned explicitly at the individual level. Rather, payments are made to the community as a single entity in exchange for verified reduced forest loss, as per a PES scheme. In this paper, we explore how community level REDD has been implemented in one multiple-village pilot in Tanzania. Our findings suggest that considerable attention has been paid to monitoring, reporting, verification, and equity. Though no explicit mechanism ensures individual compliance with the group PES, the development of village level institutions, “social fencing,” and a shared future through equal REDD payments factor into community decisions that influence the level of community compliance that the program will eventually achieve. However, few villages allocate funds for explicit enforcement efforts to protect the forest from illegal activities undertaken by outsiders.

Present bias predicts participation in payments for environmental services: evidence from a behavioral experiment in Uganda

Farmers are necessary agents in global efforts to conserve the environment now that croplands and pastures together constitute the largest terrestrial system on Earth – covering some 48% of ice-free land surface. Whereas standard economic models predict that farmers will participate in conservation programs so long as they are profitable, empirical findings from behavioral economics point to a number of normally unobservable preferences that may influence the decision-making process. This study tests, for the first time, whether heterogeneity in behavioral preferences correlates with decisions to participate in Payments for Environmental Services (PES) programs. We elicit individual trust and time preferences using economic experiments and link resulting measures to household survey data and participation decisions in a Ugandan PES program. We find that farmers who exhibit a preference for proximate gains – present-biased preferences – are 47.7% more likely to participate in the program than those who show time-consistent or future-biased preferences. This result has implications for ongoing and planned PES programs involving farmers, particularly in Africa, by highlighting a potential relationship between payment timing and participation, and further validates the use of behavioral experiments in explaining real-world decisions.