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Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning

Author

Listed:
  • B. Kelsey Jack

    (University of California at Santa Barbara)

  • Seema Jayachandran

    (Princeton University)

  • Namrata Kala

    (MIT Sloan School of Management)

  • 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.

Suggested Citation

  • B. Kelsey Jack & Seema Jayachandran & Namrata Kala & Rohini Pande, 2023. "Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning," Working Papers 2023-14, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2023-14
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    Cited by:

    1. Cao, Jing & Ma, Rong, 2023. "Mitigating agricultural fires with carrot or stick? Evidence from China," Journal of Development Economics, Elsevier, vol. 165(C).
    2. Meghna Agarwala & Shampa Bhattacharjee & Aparajita Dasgupta, 2024. "Political Cycles in Crop Residue Burning: Evidence from India," Working Papers 117, Ashoka University, Department of Economics, revised 01 Aug 2024.

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    More about this item

    Keywords

    India; Life Expectancy; Payments for Ecosystem Services; PES;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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