1. Forest conservation policy &
motivational crowding:
Experimental evidence from
Tanzania
David Kaczan, Brent Swallow and
W.L. (Vic) Adamowicz, University of
Alberta, Canada

2. East Usambara: Multiple Ecosystem
Services from a multi-use landscape

3. East Usambara: Biodiversity Under Threat
Reyes et al. (2007)
• 60% of forest
cover lost in East
Usambaras
• 26% of remaining
forest has
cardamom

4. Payments for Environmental Services and
Motivational Crowding
• Financial payments have potential to incent
farmers to maintain or adopt land uses
consistent with environmental services (water
quality, biodiversity conservation and carbon
storage)
• Psychology has clarified two distinct motivations
for behavior: extrinsic (reward or penalty) or
intrinsic (enjoyment, interest or duty) (Frey and
Jengen, 2001). (Israeli Day Care example)
• Concerns that financial payments may “crowd
out” intrinsic motivations and that crowding out
may persist after payments stop (eg Farley and
Constanza, 2010)

5. Research Methods
• Field experiments move experimental economics from
lab to field (Cardenas, Jack)
• Field experiment with 250 men and women farmers
from two villages in the East Usambaras
• Modified “dictator game” to examine persistent
motivational crowding of PES payments
$10 endowment $2 transfer

6. Experimental design: dictator game
30 Tsh
50 Tsh
20 Tsh
40 Tsh
50 Tsh
20 Tsh
Donated to
passive group
Treatment 1, 2: Receive
compensation
Treatment 3, 4: Regulation requires
certain amount be donated

7. PES simulations , with private and collective
compensation and high and low penalties

8. Results of Games
(Difference in Differences Model – differences in generosity between pre-policy,
policy and post policy, between policy treatments.)
Standard Dictator Game: average donation 37% without payment or
enforcement
Private PES: average donation of 42%, about equal to reward, suggesting
PES substituted for intrinsic motivation (crowding out)
No evidence of persistent crowding out, when payments stopped,
donations returned to average of 33%
Collective PES: no effect of PES on donations during the policy period
Regulation prompted an increase in payments greater than economically
rational, (55% for high enforcement, 45% for low enforcement) implying a
motivation to follow rules beyond expected $ value of fines themselves.

9. Differences in Crowding Behavior
(Latent Class Model – exploring systematic differences in responses to extrinisic
incentives)
Class 1 (62% of sample) exhibited motivational crowding in –after
being financially rewarded for donations, this group had post-
policy donations 21% higher than pre-policy donations. Class 1
participants had smaller land sizes, were likely to be male and
were likely to be born in the village.
Class 2 (38% of sample) exhibited motivational crowding out – after
being financially rewarded for donations, this group had post-
policy donations 6% lower than pre-policy donations.

10. a
•No evidence for persistent crowding out for rewards.
•Evidence for persistnt crowding in for enforcements.
• Fact of enforcement may be more important than its magnitude.
•Collective payment unsuccessful.
•Strong heterogeneity of preferences: some people crowded out,
others crowded in (LCM)
In summary . . .
Acknowledgements:
Funding – AAEA, ICRAF, U of Alberta
Advice -- Heini Vihimalki, Salla Rantala, and Rene Bullock
Field assistance -- F. Njilima, V. Mkongewa, Y. Mwaikio, A. Kajiru, J. Mzalia, Mr. Yambazi;