Credit-Based Payments for Ecosystem Services: Evidence from a Choice Experiment in Ecuador

The original conceptualization of payments for ecosystem services (PES) promoted direct payments to motivate the provision of environmental public goods, but market imperfections and behavioral considerations can mean that PES that reduce market constraints are preferred. The main issue with the latter is how to include conditionality. We propose credit-based PES (CB-PES) as an incentive that links an environmental condition with the reduction of a key market constraint. Through a choice experiment in Ecuador, CB-PES was found to be a promising form of PES, with multiple desirable qualities of an incentive as cited in the behavioral economics and PES literatures.