Press "Enter" to skip to content

Contracts versus Trust for Transfers of Nature’s Services: equity and efficiency in resource allocation and environmental provision

Alexander Pfaff, Maria Alejandra Velez, Amar Hamoudi, Renzo Taddei, Kenneth Broad
Water Resources & Economics 2018 http://dx.doi.org/10.1016/j.wre.2018.04.001

pdf link icon

Managing natural-resource allocation and environmental externalities is a challenge. Institutional designs are central when improving water quality for downstream users, for instance, and when reallocating water quantities including for climate adaptation. Views differ on which institutions are best: states; markets; or informal institutions. For transfers of ecosystem services, we compare informal trust-based institutions to enforced contracts, both being institutional types we observe commonly in the field. The trust-based institutions lack binding promises, thus ecosystem-services suppliers are unsure about the compensation they will receive for transferring services to users. We employ decision experiments given the shortcomings of the alternative methods for empirical study of institutions, as well as the limits on theoretical prediction about behaviors under trust. In our bargaining game that decouples equity and efficiency, we find that enforced contracts increased efficiency as well as all measures of equity. This informs the design of institutions to manage transfers of ecosystem services, as equity in surplus sharing is important in of itself and in permitting efficient allocation.

5 Comments

  1. … [Trackback]

    […] Information to that Topic: sites.sanford.duke.edu/alexpfaff/2018/10/16/contracts-versus-trust-for-transfers-of-natures-services-equity-and-efficiency-in-resource-allocation-and-environmental-provision/ […]

  2. read more
    read more March 1, 2024

    … [Trackback]

    […] There you will find 35824 additional Information to that Topic: sites.sanford.duke.edu/alexpfaff/2018/10/16/contracts-versus-trust-for-transfers-of-natures-services-equity-and-efficiency-in-resource-allocation-and-environmental-provision/ […]

  3. … [Trackback]

    […] Information to that Topic: sites.sanford.duke.edu/alexpfaff/2018/10/16/contracts-versus-trust-for-transfers-of-natures-services-equity-and-efficiency-in-resource-allocation-and-environmental-provision/ […]

Comments are closed, but trackbacks and pingbacks are open.