If services aren't delivered, people won't pay: the role of measurement problems and monitoring in Payments for Environmental Services

The idea of Payments for environmental services (PES) has an appealing simplicity, which may explain the success of the concept. However, successful projects are far limited though and two constraints have been identified in literature. The first is limited demand: too few service users are so confident about the mechanism that they are willing to pay. The second obstacle is poor knowledge on the institutional requirements entailing incentive and livelihood mechanisms which so far have received comparatively less attention. This paper focuses on both constraints by arguing that monitoring effectiveness and conditionality of PES schemes are crucial and that institutional arrangements for monitoring should be in place. By analysing in a systematic way what types of measurement problems there are, the paper shows that the type of monitoring that is required within a PES has consequences for the institutional arrangement needed for a successful PES. We find that the institutional arrangements for monitoring vary according to (i) the type of environmental service and its underlying production process, (ii) the extent to which the environmental service can be freely observed or measured, (iii) the extent to which activities of the resource managers who provide the environmental service can be freely observed, and finally (iv) the deterministic or stochastic nature of production processes.PES, monitoring, measurement, institutional arrangement, Environmental Economics and Policy,

Sit down at the ball game: how trade barriers make the world less food secure

This paper analyses the impacts of trade policy responses to rising world food prices by carrying out a series of stylised experiments in the wheat market using a world trade model, GTAP. The sequence of events that is modelled comprises a negative wheat supply shock and subsequent implementation of an export tax by a major net exporter and a reduction in import tariffs by a small importer. The effects of trade policy responses are contrasted with those of full liberalisation of the wheat market. At the core are the (opposite) effects on producers and consumers, as well as the terms-of-trade and trade tax revenue effects. Food security is shown to depend crucially on changes in prices but also in incomes that are associated with changes in factor returns. The results reveal that major net exporters are generally better off when implementing export taxes for food security purposes. Large exporting countries export price instability causing world food prices to rise further. Net importing countries lose out and have limited leeway to reduce tariffs or subsidise imports. Liberalising wheat trade mitigates rising prices and contributes to food security, but to the detriment of production in Africa and Asia, making them more dependent on and vulnerable to changes in the world market. Concerted action at the WTO forum is required, notably clarifying and sharpening the rules regarding export measures.food security; world food crisis; international grain trade; trade measures; trade liberalisation; CGE modelling

Rural Livelihoods: Interplay Between Farm Activities, Non-farm Activities and the Resource Base

A concentration of poor in rural areas has resulted in a research and policy focus on agricultural technologies and (poor) households impact on soil productivity. But farm households do not live of farming alone, non-farm activities play a principal role even in remote areas. With a unique household-level dataset covering seven regions in Africa and two in Asia we analyze (1) the importance of non-farm income in different geographical zones; (2) the role of geographical factors in determining access to non-farm employment; (3) the role of non-farm income in external input use and soil nitrogen balances. Distinguishing geographical zones based on the distance to urban areas we find the share of non-farm income increasing from 12 percent in the remote areas to 35 percent in peri-urban areas. Geographical location is found to explain a major part of the variation in individual non-farm participation, besides characteristics like education and gender. At household level we find non-farm income not playing a role of significance in explaining external input use, inorganic fertilizer use nor changes in the nitrogen balance. Households thus appear not to invest non-farm income in agriculture. This limits the contribution of non-farm income to reducing widespread soil nutrient depletion witnessed in Africa.off-farm income, rural development, micro-economics, Labor and Human Capital, Q12, D1, J43, Q24,

Analysing the role of institutional arrangements: vegetable value chains in East Africa

Institutional innovations are increasingly seen as key to achieving not only agricultural growth, by overcoming market failures, but also to ensure that poor smallholders also benefit from this process. This paper analyses institutional arrangements for vegetable marketing in East Africa from a transaction cost perspective. Marketing of vegetables is still dominated by spot markets with some, but still limited, movement towards farmers' engaging collectively in contract farming through producers' organisations. It appears that little is understood concerning how farmers and traders have overcome transaction costs in such situations, and this area deserves increased attention. An understanding of how institutional change occurs is necessary if donor agencies wish to support this process.Agribusiness, Institutional and Behavioral Economics,

Sit down at the ball game: how trade barriers make the world less food secure

This paper analyses the impacts of trade policy responses to rising world food prices by carrying out a series of stylised experiments in the wheat market using a world trade model, GTAP. The sequence of events that is modelled comprises a negative wheat supply shock and subsequent implementation of an export tax by a major net exporter and a reduction in import tariffs by a small importer. The effects of trade policy responses are contrasted with those of full liberalisation of the wheat market. At the core are the (opposite) effects on producers and consumers, as well as the terms-of-trade and trade tax revenue effects. Food security is shown to depend crucially on changes in prices but also in incomes that are associated with changes in factor returns. The results reveal that major net exporters are generally better off when implementing export taxes for food security purposes. Large exporting countries export price instability causing world food prices to rise further. Net importing countries lose out and have limited leeway to reduce tariffs or subsidise imports. Liberalising wheat trade mitigates rising prices and contributes to food security, but to the detriment of production in Africa and Asia, making them more dependent on and vulnerable to changes in the world market. Concerted action at the WTO forum is required, notably clarifying and sharpening the rules regarding export measures

If services aren't delivered, people won't pay: the role of measurement problems and monitoring in Payments for Environmental Services

The idea of Payments for environmental services (PES) has an appealing simplicity, which may explain the success of the concept. However, successful projects are far limited though and two constraints have been identified in literature. The first is limited demand: too few service users are so confident about the mechanism that they are willing to pay. The second obstacle is poor knowledge on the institutional requirements entailing incentive and livelihood mechanisms which so far have received comparatively less attention. This paper focuses on both constraints by arguing that monitoring effectiveness and conditionality of PES schemes are crucial and that institutional arrangements for monitoring should be in place. By analysing in a systematic way what types of measurement problems there are, the paper shows that the type of monitoring that is required within a PES has consequences for the institutional arrangement needed for a successful PES. We find that the institutional arrangements for monitoring vary according to (i) the type of environmental service and its underlying production process, (ii) the extent to which the environmental service can be freely observed or measured, (iii) the extent to which activities of the resource managers who provide the environmental service can be freely observed, and finally (iv) the deterministic or stochastic nature of production processes

Rural Livelihoods: Interplay Between Farm Activities, Non-farm Activities and the Resource Base

A concentration of poor in rural areas has resulted in a research and policy focus on agricultural technologies and (poor) households' impact on soil productivity. But farm households do not live of farming alone, non-farm activities play a principal role even in remote areas. With a unique household-level dataset covering seven regions in Africa and two in Asia we analyze (1) the importance of non-farm income in different geographical zones; (2) the role of geographical factors in determining access to non-farm employment; (3) the role of non-farm income in external input use and soil nitrogen balances. Distinguishing geographical zones based on the distance to urban areas we find the share of non-farm income increasing from 12 percent in the remote areas to 35 percent in peri-urban areas. Geographical location is found to explain a major part of the variation in individual non-farm participation, besides characteristics like education and gender. At household level we find non-farm income not playing a role of significance in explaining external input use, inorganic fertilizer use nor changes in the nitrogen balance. Households thus appear not to invest non-farm income in agriculture. This limits the contribution of non-farm income to reducing widespread soil nutrient depletion witnessed in Africa