Farmers Follow the Herd: A Theoretical Model on Social Norms and Payments for Environmental Services

• Published in: Environmental & resource economics Vol. 78; no. 2; pp. 287 - 306
• Main Authors: Le Coent, Philippe, Préget, Raphaële, Thoyer, Sophie
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer Netherlands 01.02.2021; Springer Nature B.V; Springer
• Subjects: Agricultural policy; Conformity; Contracts; Economic models; Economic Policy; Economics; Economics and Finance; Environmental Economics; Environmental Law/Policy/Ecojustice; Environmental Management; Environmental services; Equilibrium; Farmers; Farms; Humanities and Social Sciences; Norms; Opportunity costs; Payments; Sensitivity; Social groups; Social norms; Subsidies; Utility functions; Payments for environmental services; Farmers; Behaviour; D03; Voluntary contribution to a public good; Q18; Social norms; payments for environmental services; behaviour; social norms; agri-environmental contracts; farmers; voluntary contribution to a public good
• ISSN: 0924-6460; 1573-1502
• DOI: 10.1007/s10640-020-00532-y

The economic literature on Payments for Environmental Services (PES) has studied extensively the behavioural factors that prevent farmers from signing PES contracts, even when the payments exceed the expected opportunity costs. This article provides a theoretical model of the role played by the interplay of descriptive and injunctive social norms in farmers’ decisions. When they choose to contribute voluntarily to an environmental public good, farmers may be driven by descriptive norms akin to conformity (do as the majority of their peers) as well as by injunctive norms (in line with what society expects them to do), which are the equivalent of a social injunction to act in favour of the environment. The interactions between these two social norms can yield multiple equilibria, depending on the relative weight of the descriptive norm (sensitivity to conformism) and of the injunctive norm (sensitivity to moral pressure) in the utility functions of farmers. More generally, our model can explain why social groups are sometimes trapped in low public-good-contribution equilibria, even when public subsidies to contributors are high. We make policy recommendations to help reach higher contribution equilibria, with a specific focus on the farm policy context.