Social capital and conservation under collective and individual incentive schemes: a framed field experiment in Indonesia

Abstract

In this study, we explore the effects of payments for environmental services on land use decisions among farmers living in Jambi province in Indonesia. Using a framed field experiment we compare land use decisions in a baseline with no payment with two alternative payments for environmental services (PES): an individual incentive scheme, where each participant receives a flat rate payment for each experimental land unit conserved, and a collective incentive scheme that offers individual payments only if an aggregate pre-determined conservation threshold is passed by the group. We find that individual and collective PES are equally effective on the average to increase environmentally friendly behavior associated with the cultivation of rubber agroforestry. Yet we find that whereas individual incentives work equally well for small and large farmers, collective incentives only work for large farmers. In addition, collective incentives generate an increase in conservation even at low payment levels whereas individual incentives only work when payments are high. Participants with a larger social network cultivating oil palm invest a lower share of their endowment in conservation. These findings highlight how land heterogeneity and social capital influence the success of a PES scheme.