The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

High-frequency data from three irrigation schemes in Mozambique reveal patterns consistent with water inefficiency. Farmers use the amount of water required at the most sensitive stage of production as a benchmark for all allocations in the crop cycle. We demonstrate that these rule-ofthumb approaches create scarcity at the plot level despite schemes having sufficient water to meet farmers' individual demands. We therefore explore the possibility of a feedback tool that visually communicates to farmers the potential to conserve by varying water applications at each stage of the crop cycle. To test the importance of tailoring the information to farmers' own settings, we randomize a set of farmers to also receive visualizations comparing water requirements with each farmer's water use in the same season of the previous year. The experiment fails to detect an additional effect of individualized comparative feedback relative to a general information treatment. Water measurement shows that the gains from correcting observed misallocations of water in terms of water savings and avoided scarcity is potentially large as a share of water used in the agricultural sector. These findings support additional testing of feedback tools to encourage water conservation but not the expensive investments that would be required to generate feedback based on individual metering for all targeted farmers.

The role of extrinsic versus intrinsic motivation in environmental decisions remain unresolved. We exploit data from a lab-in-the-field experiment to analyze the role of extrinsic and intrinsic incentives in shaping individual demand for a payment for environmental services (PES) program in São Paulo, Brazil. The lab-in-the-field experiment is a theoretical incentive program that offers annual payments to landholders in vulnerable watersheds for either conserving and/or restoring trees surrounding springs on their land to preserve and improve local water quality. Our findings suggest that, in contrast with predictions from rational choice theory, individuals’ responses to incentives are not monotonic. Landholders who took part in our lab-in-the-field experiment were randomly assigned to four offer levels and asked a double-bounded contingent valuation question to elicit a willingness to accept value. Landholders were less likely to accept the higher offers compared to the lowest offers. Given that the rational choice model fails to fully account for the role of incentives in shaping demand for PES, we then look at the interaction of the randomized incentive offers and individuals’ initial intrinsic motivations. We find that, while high monetary incentives crowd in demand of progovernment landholders, they crowd out demand of proenvironment and prosocial landholders. Overall, we find much evidence of heterogeneous responses.