Abstract
To better understand farmers’ refusal to pay agricultural water fees under the current policy in rural China and their corresponding negative emotions, this paper applies mental accounting, a behavioral economics framework, to explore how the governmental policies of reform of rural taxes and fees, direct agricultural subsidy programs, and agricultural water fees individually influence farmers’ decisions in paying the agricultural water fees. Using fieldwork data from 577 farmers and 20 water managers in Sichuan, we explore farmers’ information processing regarding paying agricultural water fees via three sequential mental accounting processes, with the associated underlying principles and measures behind each process. We find that the information processing in three mental accounting scenarios related to the agricultural water fee elucidates farmers’ observed behaviors in rural China. Generally, in the three mental accounting scenarios, two conditional intuitive expectations and nine conditional intuitive preferences are formed; however, the conditions of those expectations or preferences cannot be matched with the facts due to the reform of rural taxes and fees, the direct agricultural subsidy programs, and the internal attributes of agricultural water fee, which interpret those negative behaviors in rural China. Additionally, this paper offers a view into how previous policies create negative psychological externalities (such as farmers’ psychological dependence on the government) through mental accounting to negatively influence agents’ subsequent decision-making; it highlights the significance of underlying mental factors and information processing of negative behaviors in policymaking for managing or conserving common pool resources.
Highlights
Most countries are considering pricing and charging for agricultural water resources as an economic instrument for managing and saving water
Using three Mental Accounting (MA) processes successively by incorporating their associated underlying principles and measures, the information processing of decision-making in paying agricultural water fees (AWF) will be discussed in three scenarios, because our findings indicate that three AWF-related MAs can be formed in categorization editing
Still seen now? The facts indicate that the governmental policies of rural taxes and fees (RTF) reform and direct agricultural subsidies (DAS) programs
Summary
Most countries are considering pricing and charging for agricultural water resources as an economic instrument for managing and saving water. Water 2016, 8, 375 developing countries is the poor execution of such agricultural water fees (AWF), in China [1]. In rural China, AWF have long been charged by local governments, for instance, in the world-renowned Dujiangyan Irrigation District for over 2000 years [2]. In 2006, a majority of farmers suddenly refused to pay or showed negative emotions (conflicts, complaints, and angry expressions) related to paying AWF [3], which resulted in a dramatic decrease in collection rates. A survey disclosed that the average collection rate for 551 irrigation districts in 26 provinces was 57.37% in 2005 [4], but it dropped to 34% for 100 typical irrigation districts in 2007 [1]
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