Experimental Design Details
FNB signs a reciprocal watershed agreement with a member of an interested household, and only one member from a given household, either male or female, may hold an active contract at a time. The contract is a legal document, and one section details the obligations of each party, i.e., FNB is obliged to provide in-kind payments (with detailed description of the items) to the recipient household, and the recipient household is obliged to adopt conservation behaviors that improve the production of ecosystem services (e.g., preserving forest cover, preventing cattle from grazing in riparian areas). The exact behaviors listed in each contract vary based on the situation of each recipient. A separate section in the contract details the monitoring regime and penalties for noncompliance.
Contracts cover a three-year period, and FNB verifies compliance with its conditions annually. Non-complying households must return items received or their cash value to the community authority for the benefit of the community (not to FNB). Participants receive an up-front payment for all three years from FNB immediately upon signing of the contract. FNB just completed a three-year, RCT-based evaluation of their conditional PES program, for which 65 of the 130 communities in our sample were offered conditional contracts. That evaluation ended in August 2016, and all contracts and payments associated with that evaluation ended at the same time. As a result of that evaluation, half of the communities in our sample have been exposed to conditional PES through FNB, and the other half have not.
We will randomly assign 65 communities to be offered a labeled unconditional contract (our “treatment” group), and the other 65 communities to be offered a traditional conditional contract (our “control” group), both by FNB. Our design allows us to measure the impact of an unconditional contract relative to a conditional contract, not against a group without any PES contract. This will allow us to account for concerns about households self-selecting to sign up for PES (conditional or unconditional). For the conditional group FNB will offer the same contract it has used in the past. For the unconditional group, the “treatment” will be implemented by eliminating the “obligation and penalty” clause in the traditional contract which details the participants’ obligation for compliance and penalties for non-compliance. We will then replace this eliminated clause with a “commitment and expectation” clause (hence, labeling) which explains that the payments demonstrate FNB’s commitment to and appreciation for participants who are expected to adopt behaviors that improve the production of ecosystem services. This will allow the contracts to effectively strongly encourage the recipient household to adopt desired behaviors without conditionality requirements and enforcement.
Communities, rather than households, will be assigned to the unconditional or conditional contracts because local cultural and political conditions make it difficult to assign some households in a community to be offered one type of PES and others to be offered another type. Working closely with FNB, we will make sure our presentations of the two types of contracts to communities are culturally appropriate. To ensure that communities in the treatment and control groups are similar along key characteristics, we will stratify the randomization by two variables: exposure to previous FNB conditional PES program and the municipality in which a community is located.
We will use a complete list of 130 communities to randomly assign them to either the conditional or unconditional group, before FNB enters the communities to offer their reciprocal watershed agreements. When entering a community, FNB will explain its program and the contracts in a community-wide public meeting: FNB will present either the conditional or unconditional contract in accordance with the random assignment of the community. At the end of this meeting, interested individuals will approach FNB staff to receive more information about signing a contract. In the conditional communities, FNB staff will further explain to those interested individuals what their obligations are, how staff will conduct monitoring through field visits and using remote-sensing imagery, and what penalties will occur in the case of non-compliance. If an individual decides to sign a contract, FNB staff will test his/her understanding of the obligations and penalties using a set of pre-determined questions, and ask him/her to sign or finger print after the “obligation and penalty” clause. In the unconditional communities, FNB staff will further explain to those interested individuals what FNB’s expectations are, without stressing how staff will conduct monitoring through field visits and using remote-sensing imagery, or penalties for noncompliance. If an individual decides to enroll in the program, FNB staff will give him/her a copy of the unsigned contract with the “commitment and expectation” clause.