- Title
- Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning
- Author(s)
- B. Kelsey Jack B. Jack (University of California at Santa Barbara)
- Seema Jayachandran Seema Jayachandran (Princeton University)
- Namrata Kala Namrata Kala (MIT Sloan School of Management)
- Rohini Pande Rohini Pande (Yale University)
- Abstract
- We test the effectiveness of payments for ecosystem services (PES) in reducing crop residue burning, which contributes significantly to India’s poor air quality. Standard PES contracts pay a monetary reward after verification that the participant has met a pro-environment condition (clearing agricultural fields without burning). We randomize paying a portion of the money upfront and unconditionally to address liquidity constraints and farmer distrust, which may undermine the standard contract’s effectiveness. Despite providing a lower reward for compliance, contracts with partial upfront payment increase compliance by 10 percentage points, which is corroborated with satellite-based burning measurements. The cost per life saved using this strategy is $4400. In contrast, standard PES has no effect on burning; the payments made are entirely inframarginal.
- Creation Date
- 2023-08
- Section URL ID
- Paper Number
- 2023-14
- URL
- https://seemajayachandran.com/money_not_to_burn.pdf
- File Function
- Jel
- O13, Q01, Q56
- Keyword(s)
- India, Life Expectancy, Payments for Ecosystem Services, PES
- Suppress
- false
- Series
- 13