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Behavioral Spillovers from Targeted Incentives: losses from excluded individuals can counter gains from those selected

Francisco Alpizar, Anna Norden, Alexander Pfaff, Juan Robalino
Duke Environmental & Energy Economics Working Paper Series

PDF link iconIncentives conditioned on socially desired acts such as donating blood, departing conflict or mitigating climate change have increased in popularity. Many incentives are targeted, excluding some of the potential participants based upon characteristics or prior actions. We hypothesize that pro-sociality is reduced by exclusion, in of itself (i.e., fixing prices and income), and that the rationale for exclusion influences such ‘behavioral spillovers’. To test this, we use a laboratory experiment to study the effects of a subsidy to donations when participants are fully informed about why they are selected, or not, for the subsidy. We study the effects of introducing different selection rules upon changes in donations. Selecting for the subsidy those who initially acted less pro-social (i.e., gave little to start) increased donations, while random subsidies and rewarding greater pro-sociality did not. Yet a selection rule which targets lower prior pro-sociality also intentionally excludes the people who donated more initially, and only that rule reduced donations by the excluded. This shows a tradeoff between losses from excluded participants and gains from selected.

 

Unintended Effects of Targeting an Environmental Rebate

Francisco Alpizar, Anna Norden, Alexander Pfaff, Juan Robalino
Environmental and Resource Economics (accepted)

PDF link iconWhen designing schemes such as conditional cash transfers or payments for ecosystem services, the choice of whom to select and whom to exclude is critical. We incentivize and measure actual contributions to an environmental public good to ascertain whether being excluded from a rebate can affect contributions and, if so, whether the rationale for exclusion influences such effects.  Treatments, i.e., three rules that determine who is selected and excluded, are randomly assigned. Two of the rules base exclusion on subjects’ initial contributions. The third is based upon location and the rationales are always explained. The rule that targets the rebate to low initial contributors, who have more potential to raise contributions, is the only rule that raised contributions by those selected. Yet by design, that same rule excludes the subjects who contributed the most initially. They respond by reducing their contributions even though their income and prices are unchanged.

Evaluating Interactions of Forest Conservation Policies on Avoided Deforestation

Juan Robalino, Catalina Sandoval, David N. Barton, Adriana Chacon, Alexander Pfaff
PLoS ONE 10(4):e0124910 (2015) doi:10.1371/journal.pone.0124910

PDF link iconWe estimate the effects on deforestation that have resulted from policy interactions between parks and payments and between park buffers and payments in Costa Rica between 2000 and 2005. We show that the characteristics of the areas where protected and unprotected lands are located differ significantly. Additionally, we find that land characteristics of each of the policies and of the places where they interact also differ significantly. To adequately estimate the effects of the policies and their interactions, we use matching methods. Matching is implemented not only to define adequate control groups, as in previous research, but also to define those groups of locations under the influence of policies that are comparable to each other. We find that it is more effective to locate parks and payments away from each other, rather than in the same location or near each other. The high levels of enforcement inside both parks and lands with payments, and the presence of conservation spillovers that reduce deforestation near parks, significantly reduce the potential impact of combining these two policies.

 

Ecopayments and Deforestation in Costa Rica: a nationwide analysis of PSA’s initial years

Juan Robalino, Alexander Pfaff
Land Economics (2013) volume 89 (3): 432–448

PDF link iconWe offer a nationwide analysis of the initial years of Costa Rica’s PSA program, which pioneered environmental-services payments and inspired similar initiatives. Our estimates of this program’s impact on deforestation, between 1997 and 2000, range from zero to one-fifth of 1% per year (i.e., deforestation is avoided on, at most, 2 out of every 1,000 enrolled hectares). The main explanation for such a low impact is an already low national deforestation rate. We also consider the effect of enrollment. Predicted deforestation on enrolled versus nonenrolled hectares, and matching analyses suggest an enrollment bias toward lower clearing threat. Enrolling land facing higher threat could raise payments’ impact on deforestation.

 

Human choices and policies’ impacts on ecosystem services: improving evaluations of payment and park effects on conservation and carbon

Alexander Pfaff, Juan Robalino
Engel, S. and C. Palmer, editors, “Avoided Deforestation: Prospects for Mitigating Climate Change”, Routledge Explorations in Environmental Economics 2009

PDF link iconThis chapter conveys why human choices complicate correct evaluations of impacts. Unobservable land choices, choices affecting policy location and interactions among choices complicate both ex post impact evaluation and ex ante policy planning. Based on application of proper methods to Costa Rica, we then suggest how these hurdles can best be addressed. We provide examples of: how a best practice deforestation baseline rightly conveys the constraints on the impact the pioneering Costa Rican eco-payments programme could have; why it may be critical to have different baselines for different locations to correctly infer the impacts of Costa Rican protected areas; and how choices by conservation agencies and landowners can determine the bias within heretofore typical approaches to impact evaluation.