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Improving Spatial Coordination Rates under the Agglomeration Bonus Scheme: A Laboratory Experiment with a Pecuniary and a Non-Pecuniary Mechanism (NUDGE)

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  • Simanti Banerjee

Abstract

The Agglomeration Bonus is a Payment for Ecosystem Services scheme that focuses on achieving spatially-coordinated land use across neighboring, privately-owned agricultural properties. In this article, I use a laboratory experiment to examine the role of two mechanisms in incentivizing spatially-coordinated land uses under the Agglomeration Bonus scheme on a geographical landscape resembling a local circular network. The first mechanism is pecuniary in format and varies the payoffs associated with coordination, while the second is a non-pecuniary mechanism that varies the amount of information participants have about the land use choices of other participants, specifically of those from another community. The payoff variation is implemented as a within-subject treatment and the information treatment in a between-subject format. The results indicate that the coordination rates are higher if payments associated with coordination are higher. Also, having information about outcomes of the Agglomeration Bonus scheme from another community improves spatial coordination rates in both communities.

Suggested Citation

  • Simanti Banerjee, 2018. "Improving Spatial Coordination Rates under the Agglomeration Bonus Scheme: A Laboratory Experiment with a Pecuniary and a Non-Pecuniary Mechanism (NUDGE)," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(1), pages 172-197.
    • Handle: RePEc:oup:ajagec:v:100:y:2018:i:1:p:172-197.
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    File URL: http://hdl.handle.net/10.1093/ajae/aax066
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    Cited by:

    1. Kuhfuss, Laure & Préget, Raphaële & Thoyer, Sophie & de Vries, Frans P. & Hanley, Nick, 2022. "Enhancing spatial coordination in payment for ecosystem services schemes with non-pecuniary preferences," Ecological Economics, Elsevier, vol. 192(C).
    2. Rommel, Jens & Anggraini, Eva, 2018. "Spatially explicit framed field experiments on ecosystem services governance," Ecosystem Services, Elsevier, vol. 34(PB), pages 201-205.
    3. Ruiqing Miao & Hongli Feng & David A. Hennessy & Gaurav Arora & Charles R. Loesch, 2023. "Grassland easement acquisition: Conversion hazard rate, additionality, spatial spillover, and heuristics," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 928-946, June.
    4. Villamayor-Tomas, Sergio & Sagebiel, Julian & Rommel, Jens & Olschewski, Roland, 2021. "Types of collective action problems and farmers’ willingness to accept agri-environmental schemes in Switzerland," Ecosystem Services, Elsevier, vol. 50(C).
    5. Huber, Robert & Zabel, Astrid & Schleiffer, Mirjam & Vroege, Willemijn & Brändle, Julia M. & Finger, Robert, 2021. "Conservation Costs Drive Enrolment in Agglomeration Bonus Scheme," Ecological Economics, Elsevier, vol. 186(C).
    6. Julie Metta, 2020. "Promoting discount schemes as a nudge strategy to enhance environmental behaviour," Working Papers 2020.11, FAERE - French Association of Environmental and Resource Economists.
    7. Zhaoyang Liu & Jintao Xu & Xiaojun Yang & Qin Tu & Nick Hanley & Andreas Kontoleon, 2019. "Performance of Agglomeration Bonuses in Conservation Auctions: Lessons from a Framed Field Experiment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 843-869, July.
    8. Luc Behaghel & Karen Macours & Julie Subervie, 2018. "Can RCTs help improve the design of CAP," Working Papers hal-01974425, HAL.
    9. Zhaoyang Liu & Simanti Banerjee & Timothy N. Cason & Nick Hanley & Qi Liu & Jintao Xu & Andreas Kontoleon, 2024. "Spatially coordinated conservation auctions: A framed field experiment focusing on farmland wildlife conservation in China," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(4), pages 1354-1379, August.
    10. Luc Behaghel & Karen Macours & Julie Subervie, 2019. "How can randomised controlled trials help improve the design of the common agricultural policy?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 46(3), pages 473-493.
    11. Nyanghura, Qambemeda M. & Biber-Freudenberger, Lisa & Börner, Jan, 2024. "Incentives for biodiversity conservation under asymmetric land ownership," Ecological Economics, Elsevier, vol. 219(C).
    12. Leah H. Palm-Forster & Paul J. Ferraro & Nicholas Janusch & Christian A. Vossler & Kent D. Messer, 2019. "Behavioral and Experimental Agri-Environmental Research: Methodological Challenges, Literature Gaps, and Recommendations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 719-742, July.
    13. Louis Sears & Joseph Caparelli & Clouse Lee & Devon Pan & Gillian Strandberg & Linh Vuu & C. -Y. Cynthia Lin Lawell, 2018. "Jevons’ Paradox and Efficient Irrigation Technology," Sustainability, MDPI, vol. 10(5), pages 1-12, May.
    14. Rudolf, Katrin & Edison, Edi & Wollni, Meike, 2022. "Achieving landscape patterns for biodiversity conservation through payments for ecosystem services – Evidence from a field experiment in Indonesia," Ecological Economics, Elsevier, vol. 193(C).
    15. Stephanie Rosch & Sharon Raszap Skorbiansky & Collin Weigel & Kent D. Messer & Daniel Hellerstein, 2021. "Barriers to Using Economic Experiments in Evidence‐Based Agricultural Policymaking," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 531-555, June.
    16. Pengfei Liu, 2021. "Balancing Cost Effectiveness and Incentive Properties in Conservation Auctions: Experimental Evidence from Three Multi-award Reverse Auction Mechanisms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(3), pages 417-451, March.
    17. Shimada, Hideki, 2020. "Do monetary rewards for spatial coordination enhance participation in a forest incentive program?," Ecological Economics, Elsevier, vol. 177(C).
    18. Miao, Ruiqing & Feng, Hongli & Hennessy, David A. & Arora, Gaurav & Loesch, Charles R., 2022. "Grassland Easement Acquisition: Conversion Hazard Rate, Additionality, and Spatial Spillover," 2023 Allied Social Sciences Association (ASSA) Annual Meeting, January 6-8, 2023, New Orleans, Louisiana 316531, Agricultural and Applied Economics Association.
    19. David Wuepper & Robert Huber, 2022. "Comparing effectiveness and return on investment of action‐ and results‐based agri‐environmental payments in Switzerland," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(5), pages 1585-1604, October.
    20. Wu, Shang & Palm-Forster, Leah H. & Messer, Kent D., 2021. "Impact of peer comparisons and firm heterogeneity on nonpoint source water pollution: An experimental study," Resource and Energy Economics, Elsevier, vol. 63(C).

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