Economic inequality and burden-sharing in the provision of local environmental quality

Abstract

A large, but inconclusive, literature addresses how economic heterogeneity affects the use of local resources and local environmental quality. One line of thought, which derives from Nash equilibrium provision of public goods, suggests that in contexts in which individual actions degrade local environmental quality, wealthier people in a community will tend to do more to protect environmental quality. In this paper we report on experiments performed in rural Colombia that were designed to explore the role that economic inequality plays in the 'provision' of local environmental quality. Subjects were asked to decide how much time to devote to collecting firewood from a local forest, which degrades local water quality, and how much to unrelated pursuits. Economic heterogeneity was introduced by varying the private returns to these alternative pursuits. Consistent with the Nash equilibrium prediction, we found that the players with more valuable alternative options put less pressure on local water quality. However, the subjects with less valuable alternative options showed significantly more restraint relative to their pure Nash strategies. Furthermore, they were willing to bear significantly greater opportunity costs to move their groups to outcomes that yielded higher average payoffs and better water quality than the Nash equilibrium outcome.

Within and Between Group Variation of Individual Strategies in Common Pool Resources: Evidence from Field Experiments

“…This is lower than Nash equilibrium (six units), but higher than the efficient outcome (one unit). This pattern of under-extraction relative to the Nash equilibrium is consistent with that observed by Cardenas et al (2000Cardenas et al ( , 2002 in other Colombian communities using a similar protocol. In the second stage of each experiment (rounds 11-20), we introduced one of the three institutions.…”

Donor Funding of Multilateral Aid Agencies: Determining Factors and Revealed Burden Sharing

“…At the same time, parallel but more recent literature on burden-sharing propositions and empirical studies (particularly, post-Kyoto Agreement) have been characterized by environmental issues such as financing the abatement of climatic changes, CO 2 emissions, etc. (e.g., Cardenas et al 2002 andKohn 2001). But the financing of aid agencies has scarcely been accorded the same attention.…”

Evaluating the role of co-management in improving governance of marine protected areas: An experimental approach in the Colombian Caribbean

“…Although many economic experimental games aimed at analyzing the behavior of individuals in response to daily-life problems have been carried out in the field (Cárdenas et al 2000;Cárdenas et al 2002;Cárdenas, 2003;Cárdenas, 2004;Vélez et al, 2010), few have tested combinations of institutions in which cooperation and external intervention play simultaneous roles.…”