Abstract
This study investigates the effect of payments for ecosystem services (PES) programs on common pool resource management in the context of village collective-managed irrigation systems (VMISs) in China. Drawing on institutional bricolage theory, we propose that the functioning of a PES program depends on its combination with local institutions. We infer transaction cost-reduction and trust-strengthening mechanisms as the two pathways for institutional bricolage to illustrate the process whereby a PES program enables a VMIS to internalise positive externalities. Based on data from a field survey at the household level, our empirical results confirm that a PES program is an effective means of improving the performance of VMISs in terms of environmental, economic, and equitable benefits, because it aligns benefits for the village collective with those for the overall society. We conclude that a PES program is of greater benefit to communities with local institutions and that PES programs and local institutions exert an interactive impact as they reinforce each other's effect on common pool resource management.
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