Preliminary evidence suggests crowding out for rewards, less so for enforcements. Collective payments not likely to succeed.

2. Deforestation in Tanzania’s East Usambaras:
Sticks, Carrots and the ‘Crowding Out’ effect
David Kaczan
M.Sc Student
Brent Swallow
Professor and supervisor
Vic Adamowicz
Professor and co-supervisor
Delia Catacutan
ICRAF co-supervisor

3. What is the ‘Crowding Out’ effect, and
why does it matter?
Endogenous preferences Self determination
Information conveyance Framing

4. (Reyes, et al. 2006)
The Context
•3300 km2 of sub montane and
montane forest
•A Biodiversity hotspot: “...the highest
ratio of endemic flora and fauna per
100 km2 of all biodiversity hotspots in
the world”
•35 % of species endemic
•Other important ecosystem functions: water
provision, local climate
(Reyes et al. 2006; Burgess et al. 2007)

5. Human Impact
Reyes et al. (2007)

6. •60 percent of forest cover lost in East Usambaras
•26 percent of remaining forest has cardamom

7. Hall, 2006

8. Conservation efforts
•Forest reserves, Amani nature reserve, Derema
corridor
•What about incentive schemes (PES)?
•If so, how would you design such a scheme for
maximum effectiveness?

9. Intervention Points No compensation?
> 100 percent compensation (Knowledge transfer,
(- altruism / pro social) Credit)
> 50 percent compensation
(- altruism / pro social)

10. A research question
But: if PES is used, is there a danger that economic
incentives could ‘crowd out’ pre existing altruistic/pro
social incentives?

11. Approach 1: Experiments
Precedents, mechanisms?

12. Experimental design: dictator game
Donated to
passive group
30 Tsh 20 Tsh 50 Tsh
50 Tsh 40 Tsh 20 Tsh

14. Dictator game: stylized PES
0.65
Not Significant Significant
0.6
0.55
0.5
0.45
0.4
0.35
0.3
0.25
0.2
1 3 5 7 9 11 13 15 17 19 21 23 25 27
Period
Control PES treatment
Control (average) PES (average)

15. Dictator game: stylized enforcement (high)
0.65
Significant Not significant
0.6
0.55
0.5
0.45
0.4
0.35
0.3
0.25
0.2
1 3 5 7 9 11 13 15 17 19 21 23 25 27
Period
Control Enforcement - high
Control (average) Enforcement - high (average)

16. Dictator game: stylized enforcement (low)
0.65
Not Significant Not significant
0.6
0.55
0.5
0.45
0.4
0.35
0.3
0.25
0.2
1 3 5 7 9 11 13 15 17 19 21 23 25 27
Period
Control Enforcement - low (average)
Control (average) Enforcement - low

17. Dictator game: stylized PES (collective)
0.65
Significant Significant
0.6
0.55
0.5
0.45
0.4
0.35
0.3
0.25
0.2
1 3 5 7 9 11 13 15 17 19 21 23 25 27
Period
Control PES - collective
Control (average) PES collective (average)

18. Experiment II: Which of the payment options will you prefer?
(n=194)
70%
62%
60%
50%
40%
30% 23%
20%
11%
10%
2.5%
0%
No payment but Individual Payment of Disagree/Need
provision for payment of Tsh2000 additional
village Tsh2000 transferred to options
infrastructure village
committee
Vardhan, 2010 (unpublished)

19. Experiment I: Will your neigbor participate under these payment
options? (n=194)
120%
97%
100%
82% 76%
80% 74%
64%
60%
40%
20%
0%
High No mention High social Payment Low
individual of payment payment (Tsh mentioned individual
payment 1000) offered but not payment (Tsh
(Tsh1000) offered 200 offered)
offered
Vardhan, 2010 (unpublished)

20. In summary...
•Preliminary evidence suggests crowding out for
rewards, less so for enforcements
• Fact of enforcement may be more important
than its magnitude
•Contrary to other studies, but some similarities
with Vardhan?
•Collective payment unsuccessful

21. “First do no harm....”

22. With thanks…
to supervisors B. Swallow, V. Adamowicz and D. Catacutan;
field assistants F. Njilima, V. Mkongewa, Y. Mwaikio and A. Kajiru;
administrators at ICRAF Tanzania and Kenya;
and valuable, regular advice from H. Vihemaki, S. Rantala and R. Bullock