Who is Benefiting Downstream? Experimental Evidence on the Relevance of Upstream-Downstream Geographic Distance for Water Provision

23 Pages Posted: 31 Aug 2021

See all articles by Adriana Bernal-Escobar

Adriana Bernal-Escobar

Universität Osnabrück - Institute for Environmental Systems Research

Stefanie Engel

School of Economics and Business Administration

Estelle Midler

affiliation not provided to SSRN

Tobias Vorlaufer

Universität Osnabrück - Institute for Environmental Systems Research

Date Written: August 25, 2021

Abstract

One of the greatest challenges of water management in watersheds arises from the asymmetry in water appropriation: people upstream always have first access to water supplies and their decisions affect downstream users. Payments for watershed services (PWS) aim to incentivize water provision upstream by directly paying upstream land users for the water services they provide for downstream water users. Nevertheless, since people often exhibit parochial behavior, the question of how to frame who benefits from the ecosystem services provided needs to be addressed with caution. We implemented a modified dictator game in the field to study the effect of varying the geographical identity of downstream beneficiaries on 1) baseline water provision in the absence of PWS, 2) PWS effectiveness and 3) provision decisions after the payments end (‘motivation crowding’). Our experiments involved 60 rural farmers from the Colombian municipality of Junín, whose water provision decisions affected passive downstream beneficiaries in either the same municipality or the capital city of Bogotá. Our findings suggest that sharing a closer place identity with downstream beneficiaries is relevant to determine baseline water provision, but does not affect PWS effectiveness or the emergence of motivation crowding effects.

Keywords: Identity, parochial altruism, PWS, PES, motivation crowding, watershed

JEL Classification: Q25, Q57, Q58

Suggested Citation

Bernal-Escobar, Adriana and Engel, Stefanie and Midler, Estelle and Vorlaufer, Tobias, Who is Benefiting Downstream? Experimental Evidence on the Relevance of Upstream-Downstream Geographic Distance for Water Provision (August 25, 2021). Available at SSRN: https://ssrn.com/abstract=3911047 or http://dx.doi.org/10.2139/ssrn.3911047

Adriana Bernal-Escobar (Contact Author)

Universität Osnabrück - Institute for Environmental Systems Research ( email )

Barbarastr. 12
Osnabrueck, 49076
Germany

Stefanie Engel

School of Economics and Business Administration ( email )

Barbarastr. 12
Osnabrueck, 49076
Germany

Estelle Midler

affiliation not provided to SSRN

Tobias Vorlaufer

Universität Osnabrück - Institute for Environmental Systems Research ( email )

Barbarastr. 12
Osnabrueck, 49076
Germany

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