The general objective of the professorship is to analyze how to design environmentally effective and cost-efficient environmental policies. In our analyses we use tools from experimental economics (including lab and different types of field experiments), game theory and social network analysis to analyze the impacts of alternative environmental policy designs. In doing so we explicitly incorporate broader models of human behavioral motivations from behavioral economics, social psychology and cognitive sociology. We are particularly interested in two types of modern policy approaches and the ways to combine them: economic incentives, in particular payments for ecosystem services (PES), and cooperative approaches based on self-regulation. For this purpose, we aim at understanding: (i) how people make their decisions when they face an environmental dilemma in a given context, (ii) why and when people sometimes cooperate to improve environmental quality, (iii) how policies can impact their intrinsic motivations to cooperate and, (iv) how to reinforce people’s social and environmental preferences.
We conduct applied research in developed countries (e.g., Germany, Switzerland) as well as in developing/transforming economies (e.g., Colombia). Environmental problems analyzed include topics ranging from climate mitigation and adaptation, biodiversity conservation and water resources management. A major theme is the relation between land use activities and the provision of ecosystem services.
Self-selection and PES design
PES programs are generally designed to be voluntary in terms of participation. That is, ecosystem managers can decide freely whether to enroll in the program and obtain payments for ecosystem service provision. The design features of a PES program may therefore not only affect the level of service provision by those participating; it may also affect who chooses to participate. We aim to investigate if individuals exhibiting different traits (including different types of preferences and personality traits) are attracted by different types of incentive schemes. It is likely that program design may affect the initial distribution of preference types among participants and hence overall program performance.
Evaluation of European Agri-Environment Policies in the context of intensive agriculture in Lower Saxony, Germany
With its portfolio of Agri-Environment Measures (AEM) the European Union is trying to halt environmental degradation of rural and farm landscapes within the Member States. Under the Common Agricultural Policy (CAP), farmers voluntarily undertaking agri-environmental practices receive compensation payments for their forgone returns. Although many farmers are participating in such programs, the environmental effectiveness and cost efficiency of the AEM payments remains questionable. Our research focusses on the effective design of AEM within the context of the CAP. Changes in the framing and conditionality, the monitoring and sanctioning system or in the sequence in which measures of varying demandingness are offered, offer promising alternatives to the current model. We develop lab and field experiments to test the performance of alternative policy designs using experimental economics methodology. We seek to work in close collaboration with practitioners and policy-makers in Lower-Saxony to secure the relevance of our findings. Lower Saxony is one of the most intensively farmed regions in Europe, with serious consequences for the environment. Intensive farming leads, in particular, to significant biodiversity loss (both agricultural and wild biodiversity) and high levels of water pollution.
Using PES to protect Paramo Ecosystems and water in Colombia
Páramo Ecosystems in the tropical Andes provide a wide variety of ecosystem services, including water provision for consumption. Yet, extractive activities such as mining and intensive agriculture threaten these ecosystems in Colombia. The government of Colombia is therefore thinking of implementing payments for water services between upstream and downstream water users to promote environmentally friendly agricultural practices and ecosystem restoration. However, many scholars showed that the way PES are designed can impact their efficiency and effectiveness. In addition, people’s fairness perceptions about a PES scheme could have a strong role in its success or failure. The main purpose of this research is to analyze, in a given context in Colombia, how to frame and design Payments for Water services (PWS) to take these fairness questions into account and thus reach the original goal of protecting ecosystems.
Cooperative approaches in environmental policy
This subproject will focus on policy interventions that aim to promote cooperation within groups of stakeholders. Examples include participatory workshops and so-called ‚Zukunftswerkstätten‘. Potential applications include the spatial coordination of land uses as well as communal renewable energy strategies. We analyze to what degree such interventions can affect social preferences and relevant beliefs that affect cooperative behavior within the group and of the group in the provision of environmental services to society. In addition to lab and field experiments, this subproject also involves a conceptual integration of different models of human cooperation from social psychology, behavioral economics and cognitive sociology into a unified framework.
Coordination and Inequalities in Agglomeration Bonus Payments
Payments for ecosystem services are increasingly used to foster biodiversity on private land. Yet, most payments focus to encourage action at the farm-level only, while some elements of biodiversity can be more effectively encouraged if conservation is targeted at the landscape-level. The latter requires spatial coordination of beneficiaries. Parkhurst et al. (2002) & others have proposed an agglomeration bonus (AB) policy to solve such coordination problems. So far, there is no evidence on the effectiveness of an AB when land owners are heterogeneous, e.g. differ in their opportunity cost of conservation. We use a coordination game with asymmetric payoffs to analyze the ability of an individual payment (similar to the AB) to achieve coordination among heterogeneous players. In addition, we test if side payments (i.e. a mechanism that allows a re-negotiation of payoffs) are able to improve coordination. We expect to draw policy conclusions with respect to improving the effectiveness of AB policies.
This is joint work with Frank Wätzold (TU Cottbus) and Martin Drechsler (UFZ).
Endogenous Benefit Distribution in Public Goods Games (PGG)
We aim to study the effect of self-governance on the level of cooperation in PGG in comparison to exogenously imposed rules. In real life, groups often establish themselves rules that govern their interaction in social dilemmas. One example is successful CPR management which is organized by resources users (e.g. Ostrom, 1992). A key issue for cooperation in such settings is the decision on how to allocate the benefits; i.e. the intra-group distribution rule. Another example are payments for ecosystem services, where benefit distribution may be endogenously determined by group members themselves. A question which arises is, if a rule that is externally imposed could become inferior to another distribution rule that is chosen by the group itself. To study this, we will make use of a laboratory experiment and will allow for two distinct benefit rules, namely equal allocation of benefits and proportional allocation (i.e. proportional to opportunity cost of conservation). We futher will vary the possibility of the rule being externally imposed or chosen by the group itself (e.g. such as through a majority voting). The results of this study are expected contribute to a more effective design of PES policies.
Impacts of Ecosystem Dynamics on Human Cooperative Behaviour
Many social-ecological systems can exist in alternative stable states which differ in their species composition, rates of ecological process and the ecosystem services they provide to humans. Gradual change in ecosystem’s conditions might cause a loss of resilience. As a consequence, even small perturbations can push it over a threshold and it shifts to an alternative regime. In this project, we use experimental economic methodology to examine the impact of ecological tipping points on human cooperative behaviour. The behavioural responses of resource users are assumed to be determined by the threat of irreversible changes and early warning signals which point to possible locations of thresholds. The aim is to improve policy designs that promote integrated resource management strategies.
Understanding relational patterns in environmental governance
In modern governance systems, numerous governmental and non-governmental actors engage in complex interactive processes in their attempt to resolve environmental problems. The interactive process among a given actor constellation, through which environmental problems are recognized and addressed, shapes relatively stable patterns which are studied in this research using network analysis. We are particularly interested in i) whether, and if so how and why, distinct interaction patterns favour, or inhibit, an interactive environmental governance process. This is studied in the context of marine resources in the Northeast of Brazil and in central Indonesia. ii) Why and under which conditions do political actors establish contacts to some actors and not to others, how do the resultant overall network patterns in a political process change over time, and what drives these changes? This is currently studied in the context of a marine protected area development process in the Southeast of Brazil and it is envisaged to complement this research with further case studies from the coastal and marine realm in Germany. iii) A further network related research focus lies on developing conceptual and methodological advances with regards to how the analysis of social and ecological relationships can be combined in a meaningful way to better understand the resilience of social-ecological systems. This is studied in a project in the Sechura Bay, Peru und in research in Lower Saxony, Germany.