Environment and Development Economics

Research Article

Can the poor participate in payments for environmental services? Lessons from the Silvopastoral Project in Nicaragua

STEFANO PAGIOLAa1 c1, ANA R. RIOSa2 and AGUSTIN ARCENASa3

a1 Environment Department, World Bank, 1818 H Str NW, Washington DC 20433, USA. Email: spagiola@worldbank.org

a2 Department of Agricultural Economics, Purdue University, 403 West State Street, West Lafayette, IN 47907, USA. Email: arios1@purdue.edu

a3 School of Economics, University of the Philippines, Diliman, Quezon City 1101, Philippines. Email: alarcenas@up.edu.ph

ABSTRACT

This paper uses data from a Payments for Environmental Services (PES) project being implemented in Nicaragua to examine the extent to which poorer households that are eligible to participate are in fact able to do so, an issue over which there has been considerable concern. The study site provides a strong test of the ability of poorer households to participate, as it requires participants to make substantial and complex land use changes. The results show that poorer households are in fact able to participate – indeed, by some measures they participated to a greater extent than better-off households. Moreover, their participation was not limited to the simpler, least expensive options. Extremely poor households had a somewhat greater difficulty in participating, but even in their case the difference is solely a relative one. Transaction costs may be greater obstacles to the participation of poorer households than household-specific constraints.

Correspondence

c1 Corresponding author.

Footnotes

Work on this paper was financed in part by a grant from the Norwegian Trust Fund for Environmentally and Socially Sustainable Development. The participant survey was conducted by Alfredo Ruiz García, María Raquel López Vanegas, and Yuri Marín López. We have benefited from discussions with other members of the Silvopastoral Project team, including Paola Agostini, Jill Blockhus, José Gobbi, Cees de Haan, Muhammad Ibrahim, Enrique Murgueitio, Elías Ramírez, Mauricio Rosales, and Juan Pablo Ruíz. We have also benefited from comments on earlier drafts by three anonymous reviewers. Any remaining errors are the authors' responsibility. The opinions expressed in this paper are the authors' own and do not necessarily represent those of the World Bank Group or the Government of Norway.