Present Bias in Payments for Ecosystem Services: Insights from a Behavioural 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 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 incentivized choice experiments and link resulting measures to PES enrollment and household survey data in Uganda. We find that farmers who exhibit present-biased preferences – those who show a particular desire for proximate gains – are 44.1% more likely to self-select into PES than those who show time-consistent or future-biased preferences.