Policy recommendations

The results presented above allow us to provide a number of recommendations relevant for policy makers attempting to design PES, particularly in the context of wildlife-friendly strategies for oil-palm-dominated landscapes.

Our analyses have confirmed the high sensitivity of many bird species, particularly for-est and edge-intolerant species, to anthropogenic disturbances, such as the transfor-mation of natural habitats into monoculture oil palm plantations. To conserve those species it is crucial to protect natural habitats though land-sparing approaches. Howev-er, our results have shown that wildlife-friendly oil palm plantations that restore a cer-tain degree of habitat complexity (mixed tree stands, ground layer vegetation) provide a valuable habitat for edge-tolerant, open-habitat and generalist species. It suggest that

wildlife-friendly strategies in oil-palm-dominated landscapes while not replacing natu-ral habitats should not rejected a priori by policy makers.

Furthermore, we have shown that the implementation of wildlife-friendly strategies comes at the cost of lower revenues, indicating that self-interested, profit-maximizing farmers do not have an incentive to extensify their oil palm cultivation. Assuming that policy makers or other stakeholders are interested in encouraging wildlife-friendly strategies, governmental and private institutions should place greater emphasis on the development and implementation of market-based policy instruments, such as certifica-tion schemes or PES. We have exhibited that the marginal shadow price of bird species varies conditional on the initial management intensity gradient. It suggests that a devia-tion from a “flat” PES scheme might be feasible to increase economic efficiency (under certain conditions discussed below). Flat payments are not differentiated according to the costs of providing environmental services. Payment schemes other than a flat scheme include a “compensation” scheme, whereby land users that can provide envi-ronmental services at the least cost are targeted and only compensated for their costs of provision (Narloch et al., 2011; Pascual et al., 2010).

The results of both experimental studies have confirmed that the introduction of PES induces environmental additionality in terms of conservation area, albeit not markedly.

Considering that almost half of the group endowment has already been assigned to con-servation in the baseline, which would be compensated for in the PES scheme, the costs per additional hectare conserved are considerably higher for the policy maker than the average payments received by resource users. It implies that although the PES interven-tion might be recommendable under the considerainterven-tion of environmental effectiveness, this might change when considering the efficiency of the intervention.

Since the levels of payment do not fully compensate for the forgone benefits associated with the conservation, results have indicated that intangible factors associated with the PES policy design or the desired activity affect conservation behavior. It implies that policy makers should understand PES not only as an instrument that alter economic reasoning, but also as an institutional mechanism that interacts with moral and social incentives in complex ways. In this context, our results have confirmed that incentives

are part of how a situation is represented. Policy makers should consider these contex-tual manipulations associated with the policy intervention. Specifically, the results have shown that conservation behavior is significantly crowded in when framing a policy intervention as an environmental intervention (such as PES), which signals the envi-ronmental dimension of the decisions. However, this framing effect is not observed for participants with very weak or no preferences for conservation. Results presented in Chapter II indicate that farmers of relatively intensively managed oil palm plantations are the lowest-cost suppliers of bird diversity (abundance). Assuming that this level of management intensity also reflects their very weak preferences for conservation find-ings have suggested that although these farmers should be targeted from a neoclassical perspective, the consideration of crowding effects might reverse this finding. This high-lights the importance for policymakers to carefully assess the heterogeneity in the exist-ing preferences for the desired conservation activity and potential interaction effects of incentives with preferences.

The further specification of the motivational factors that underlie the observed framing effect, has confirmed a common phenomenon in practice, where participation in an en-vironmental-related program is driven by pro-social motives induced by stakeholders, such as the desire for social conformism rather than by an activation of or change in environmental-related preferences.

Moreover, the results from the hypothetical setting have suggested that environmental campaigns prior to the PES implementation might play an important role in encourag-ing pro-environmental behavior.

Considering heterogeneity in land size and productivity, we have found that environ-mental additionality at the group level that can be observed in response to the introduc-tion of an equal PES scheme mainly stems from low-endowed participants. This sug-gests that under the conditions explored here, conservation policy interventions are not necessarily more effective in terms of environmental additionality if targeting large landowners. Furthemore, results have indicated that the distribution of the incomes (direct income from activities) among landholders is not affected by the introduction of an equal PES scheme.

Practicioners might explicitly consider redistribution as strategiy objective in the im-plementation of PES. Results have confirmed that the introduction of a discriminatory PES scheme, indeed, raligns income in favor of the poor and decrease inequality among group members (compared to the baseline decision and the equal PES scheme). At the same time, it does not necessarily need to be compromised by environmental addition-ality at community level. It implies that discriminatory PES scheme, might function as a multipurpose instrument that promote conservation and enhance equity. These hold only under certain conditions discussed further below.