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

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 Junin, whose water provision decisions affected passive downstream beneficiaries in either the same municipality or the capital city of Bogota. 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.