C08 - Designing effective policy instruments to induce sustainable land use

This project aims to explore the role of different policy options in shaping environmental preferences and fostering sustainable land uses. The main focus will be on the role of payments for environmental services and educational campaigns. In particular, two objectives are addressed: (1) to investigate the effects of different incentive payment schemes on environmental effectiveness and equity outcomes, and (2) to evaluate the impact of environmental extension on environmental preferences and land use choices.
These objectives build on the research conducted during the first phase of the CRC, which generated results regarding the link between conservation and equity and regarding the role of environmental framing for land use decisions in an experimental context. First, we tested two different payments for environmental services schemes that differed with respect to the implicit fairness criterion using framed field experiments. We found that by adopting a payment scheme that compensates households with lower land endowments for their higher opportunity costs of conservation, higher levels of equity can be achieved without compromising conservation outcomes. Second, we implemented another set of framed field experiments to disentangle the pure price effect of the monetary incentives and the crowding effect resulting from framing payments as an environmental bonus. We found that the pure price effect on sustainable land use choices in the experiment was minor, whereas the framing effect contributed to significant increases in conservation.
Against this background in work package (1) we plan to implement framed field experiments to test different design options for payments for environmental services schemes and their implications for environmental effectiveness and equity outcomes. Exploiting close collaboration with B11 Hölscher/Kreft/Wollni, participants in the economic experiment will be asked to make choices about enrichment planting in oil palm plantations. When designing the payment schemes to be tested in the experiment, different fairness criteria will be considered, including egalitarian schemes (funds are distributed equally among ecosystem service providers based on the number of native trees planted), maxi-min schemes (payments are allocated to maximize the net benefit of the poorest providers), as well as schemes that allocate payments according to the incurred costs of provision (compensatory) or ecosystem service outcomes (actual/expected provision).
In work package (2) we implement different environmental information treatments and investigate the effects on environmental preferences and actual land use decisions. Environmental extension treatments will be assigned randomly to the households in our sample. One of the treatments involves visiting the enrichment experiment established in B11 Hölscher/Kreft/Wollni to learn about the environmental and economic implications of enrichment in oil palm first hand. To evaluate the effect of the information treatments, surveys will be implemented before and after the intervention. Environmental preferences will be elicited using survey questions (building on data generated during the first phase) and choice experiments. Building on the social network data that was collected during the first phase, we will collect a second round of social network data to explicitly track information flows resulting from our information interventions and thus determine potential spillover effects between treated and nontreated individuals.

Material of the information campaign: illustrative manual