What role for cooperation in conservation tenders? Paying farmer groups in the High Andes

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What role for cooperation in conservation tenders? Paying farmer groups in the High Andes Ulf Narloch a,∗ , Adam G. Drucker b , Unai Pascual c,d,e a

World Bank, Washington, DC, USA Bioversity International, Rome, Italy Basque Centre for Climate Change (BC3), Bilbao, Spain d Ikerbasque, Basque Foundation for Science, Bilbao, Spain e Department of Land Economy, University of Cambridge, Cambridge, UK b c

a r t i c l e

i n f o

Article history: Received 31 July 2014 Received in revised form 2 June 2015 Accepted 20 September 2015 Keywords: Agrobiodiversity Conservation tenders Conservation costs Collective action Peru Bolivia

a b s t r a c t This paper sheds light on the potential of group-level tenders to enhance conservation where it depends on cooperation of small-scale farmers. We analyze data from two pilot payment for ecosystem service (PES) schemes focused on the conservation of agricultural biodiversity in the Bolivian and Peruvian Andes. Contracts were assigned to farming groups who could choose between different types of in-kind payments with varying degrees of divisibility between group members. Our main results indicate that: (1) stronger general patterns of collective action are positively related to the level of cooperation in group-bid making; (2) where collective action is robust, collective payments seem to provide stronger conservation incentives than individual payments; (3) collective payments could mitigate some potential rent-seeking behavior; (4) selecting bid offers based on both a ‘cooperation’ criterion and conservation land area offered does not overly compromise the cost-effectiveness of PES; and (5) group-level contracts may create strong incentives for contract compliance. Hence, combining farmer group-level contracts with collective inkind payments can enhance the cost-effectiveness of conservation tenders, while generating co-benefits in terms of increased interaction and social capital among group members. © 2015 Elsevier Ltd. All rights reserved.

1. Introduction Payments for ecosystem services (PES) are portrayed as an effective means to increase the incentives for conservation, but there is a wide-ranging debate on how to maximize the overall costeffectiveness of these schemes (Wünscher et al., 2008; Wendland et al., 2009; OECD, 2010; Chen et al., 2010). Coupling PES with a tender approach is means of facilitating the identification and contracting of least-cost conservation service providers (Ferraro, 2008; Ajayi et al., 2012; Jindal et al., 2013; Khalumba et al., 2014). For agencies implementing PES, group-level contracts can reduce the transaction costs of PES schemes by limiting the number of entities or actors involved in bidding, contracting, monitoring and verification (Kemkes et al., 2010). But for the most part, conservation tenders tend to target individual land users rather than groups (Windle and Rolfe 2008; Jack et al., 2009; Ajayi et al., 2012).

∗ Corresponding author. Tel.: +1 202 473 8934. E-mail address: [email protected] (U. Narloch).

Group-level contracts can involve collective payments (i.e., payments made to the group as a whole) or individual payments (i.e., made to each group member individually). Where social ties and trust between different land users is low, some group members may have a weak incentive to comply with group-level contracts under collective payments. For this reason, Costa Rica had eliminated group-level contracts from its PES portfolio in 2002 and later combined group-level contracts with individual payments to facilitate participation by farmers with limited access to information (Robalino et al., 2011; Porras et al., 2013). Group-level contracts and collective payments can be a means to foster collaboration among land users to jointly engage in conservation activities and to comply with conservation contracts. However, such collaboration will depend on collective action patterns, defined by the extent to which group members tend to work together to reach common goals. To study such behavioral dynamics under hypothetical settings, framed field experiments have increasingly been applied in developing countries (Vollan, 2008; Travers et al., 2011; Kerr et al., 2012; Narloch et al., 2012; Midler et al., 2015). Yet how land users self-organize and cooperate

http://dx.doi.org/10.1016/j.landusepol.2015.09.017 0264-8377/© 2015 Elsevier Ltd. All rights reserved.

Please cite this article in press as: Narloch, U., et al., What role for cooperation in conservation tenders? Paying farmer groups in the High Andes. Land Use Policy (2015), http://dx.doi.org/10.1016/j.landusepol.2015.09.017

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within PES schemes has received limited attention (some examples include Sommerville et al., 2010a; Zabel et al., 2013). This paper aims to identify some conditions under which grouplevel contracts and collective payments may be considered a cost-effective means to secure conservation outcomes. We pay special attention to the potential of group-level contracts and collective payments to foster cooperation in terms of the number of farmers willing to participate in joint conservation bid offers as well as to strengthen within-group mechanisms to comply with awarded conservation contracts. We focus on two pilot payments for agrobiodiversity conservation services (PACS) schemes in the High Andes aimed at enhancing the conservation of traditional quinoa landrace varieties. Two group-level conservation tenders were implemented in one Bolivian and one Peruvian site on the Andean Altiplano (high plains) in the 2010–2011 quinoa production season. Based on information from interested farmers, who indicated their individual conservation area and compensation level, invited groups determined their total group-level bid offer. These bids indicated the number of farmers willing to participate, the total conservation area within the group and the type and value of the in-kind payment requested for the conservation effort. Groups chose between quasi-individual payments, which could easily be divided between the participating farmers (e.g., seeds and construction material) and group-collective payments, which constituted an indivisible unit (such as agricultural machinery or school materials). Conservation contracts and in-kind payments were awarded under a joint-liability rule. The implementation of the tenders was the same in both sites, but different payment rules were chosen. Previous studies have analyzed the cost-effectiveness and fairness/equity outcomes of these pilot PACS under different payment rules and targeting approaches (Narloch et al., 2011a, 2013a). Here we add to this work by addressing the following questions of relevance for the overall cost-effectiveness of group-level PES schemes: (1) how are existing forms of collective action within the group related to farmers’ cooperation for the conservation bid offers? (2) How are group-level collective payments related to different group bid offers? (3) What are the social factors behind bid prices and conservation area contributions defined by individual farmers? (4) Whether a cooperation criterion used for the selection of the group-level bid offers could overly compromise cost-effectiveness? And (5) to what extent farmers in the selected groups cooperate to comply with the conservation contracts? The present paper follows up on recent experimental findings by Narloch et al. (2012) and Midler et al. (2015). The next section highlights some special features that have been incorporated in the design of these conservation tenders (Section 2) before describing the study sites and the tender design (Section 3). We then analyze the group-level bids to identify cooperation in the bid offer, preference for collective payments and individual farmers’ contributions to these bids at the bidding stage given research questions (1)–(3) above (Section 4). This is followed by a discussion of how bid offers were selected and how the selected groups cooperated to comply with the conservation contracts postbidding, with a view to addressing questions (4) and (5) above (Section 5). The main implications for the design of conservation tenders are discussed (Section 6) before the paper concludes with the main findings.

conservation tenders in the developing world targeting farmer groups with a focus on in-kind collective payments. 2.1. Payments for agrobiodiversity conservation Agrobiodiversity conservation can be associated with significant with significant global option values from safeguarding genetic material and with local public benefits, such as co-evolutionary processes and resilience at the landscape level, and bio-cultural heritage such as local identities and cultural traditions (Brush, 1989; Jackson et al., 2010; Tester and Langridge, 2010; Pascual et al., 2011). Despite these significant public benefits, agrobiodiversity is under increasing threat, as wide range of local landraces is being replaced by a few commercially profitable (most often improved) varieties (Jackson et al., 2007; FAO, 2009; Narloch et al., 2011b). Accordingly, it is important to devise conservation strategies for this important public good. Collections of germplasm in ex-situ gene banks are growing (FAO, 2009). Yet crop genetic resources are constantly evolving in an adaptive process to changing ecological and social systems, involving agricultural knowledge and seed exchange networks (Brush, 1989; Cohen et al., 1991; Faith et al., 2010). Consequently, in line with the Convention on Biological Diversity, in-situ conservation within traditional farming systems is needed (Maxted et al., 2002; Jackson et al., 2007; FAO, 2009). To secure sustained on-farm conservation of agrobiodiversity, farmers need to be compensated at least for the foregone benefits from not cultivating commercial varieties (i.e., the opportunity costs of conservation) (Smale et al., 2004; Narloch et al., 2011a,b). PES can provide farmers with such incentives (Jack et al., 2010; Kinzig et al., 2011; Ferraro, 2011). Most of the existing large-scale PES-like schemes implemented in agro-ecosystems, focus on lessintensive, wildlife-friendly farm practices in developed countries (Baylis et al., 2008; Claassen et al., 2008; Dobbs and Pretty, 2008; Hajkowicz, 2009). In developing countries, ‘agricultural’ PES are less numerous, but they have gained increasing attention in the literature (FAO, 2007; Pagiola et al., 2007; Lipper et al., 2009). Aside from one GEF scheme that paid farmers in Ethiopia for utilising traditional crop varieties,1 to our knowledge there are no real-world applications of PES for agrobiodiversity conservation. 2.2. Tendering conservation contracts As traditional farming communities still manage a wide range of landraces (Jarvis et al., 2008), they may not require high levels of compensation in order to cover the opportunity costs of their (public good) conservation service provision. Furthermore, conservation costs are location and even farm-specific, so that there is potential to reduce payments and overall conservation program costs by targeting least-cost providers (Babcock et al., 1997; Naidoo et al., 2007; Chen et al., 2010). However, the existence of information asymmetries, arising from the fact that farmers themselves are the ones best placed to judge their costs of participating in conservation activities (Latacz-Lohmann and van der Hamsvoort, 1997; Ferraro, 2008), mean that an incentive mechanism may be required to identify farmers’ real conservation opportunity costs. Competitive conservation tenders can be used as such an incentive mechanism for revealing farmer cost information (LataczLohmann and van der Hamsvoort 1997; Stoneham et al., 2003; Jack et al., 2009). Under such tenders, farmers can apply for conservation contracts through a procurement auction, with only the bid offers

2. Background The present pilot PACS schemes combine a number of special features. They represent one of the first PES schemes for agrobiodiversity conservation, as well as one of the few examples of

1 This was part of a project called ‘A Dynamic Farmer-Based Approach to the Conservation of African Plant Genetic Resources’. For further information see: http:// www.gefonline.org/projectDetailsc.f.m?projID=351.

Please cite this article in press as: Narloch, U., et al., What role for cooperation in conservation tenders? Paying farmer groups in the High Andes. Land Use Policy (2015), http://dx.doi.org/10.1016/j.landusepol.2015.09.017

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with the best cost-benefit ratio (which may be broadly defined) being selected. As a result of such characteristics, there has been a broad range of tender approaches applied in developed countries (e.g., Stoneham et al., 2003; Kirwan et al., 2005; Klimek et al., 2008). By contrast, there has been a much more limited application of conservation tenders as part of PES schemes in developing countries, although examples exist in Indonesia, Malawi, Kenya and Tanzania (e.g., Jack et al., 2009; Ajayi et al., 2012; Jindal et al., 2013; Khalumba et al., 2014).

2.3. Group-level contracts and collective payments Relative to conventional PES schemes, where land users offer a certain conservation service for a predefined, uniform price, the transaction costs of running conservation tenders can be relatively high. The conservation agency has to coordinate invitation, bidding and selection process involving a number of—possibly dispersed—farmers (Latacz-Lohmann and van der Hamsvoort, 1998). However, engaging at a group level might reduce such transaction costs for the conservation agency. The group could in principle self-organize to collect information from different land users within the group thereby bearing some of the transaction costs itself. Similarly, assigning conservation contracts to groups instead of individuals can also reduce the agency’s transaction costs related to contracting, verification, and delivery of payments and technical assistance for contract compliance. Combining group-level contracts with collective payments also functions as a joint-liability mechanism. This mechanism could increase the success rate of PES as the group can ensure compliance with the contract when some individual members cannot undertake the contracted activities. Joint-liability has often been applied in micro-lending, but has not yet been shown to be more effective than individual liability loans (Giné and Karlan, 2014). Similarly, collective payments could increase the incentives individuals face to comply with group-level contracts where group members trust each other or can deliberate with one another (Travers et al., 2011; Midler et al., 2015). Nonetheless, such collective payments may turn out to be ineffective where trust is weak or where prosocial norms are crowded-out (Kerr et al., 2012; Narloch et al., 2012; Kaczan et al., 2013). Free-riding behavior could also result in non-compliance by some farmers with group-level conservation contracts, as was observed in Costa Rica’s PES program (Porras et al., 2013). Group-level payments may be particularly suitable where the conservation outcomes require farmer coordination (Zabel et al., 2013). Often the provision of conservation services depends on collective action (Ostrom, 1990; Reeson et al., 2011; Prager et al., 2012). In the context of agrobiodiversity, although collective action may not necessarily revolve around issues directly related to the maintenance of landraces, it nonetheless underlies the maintaining of agricultural knowledge and seed exchange networks (Brush, 1989; Badstue et al., 2006; Stromberg et al., 2010; Coomes, 2010). A group-level design could potentially lead to the exclusion of less well-connected land users from the payments, with socialequity implications where such farmers tend to be relatively poorer ˜ and more disadvantaged (Munoz et al., 2007; Sommerville et al., 2010b; Narloch et al., 2013). Yet such concerns need to be considered within a broader context. In particular, group-level approaches may actually facilitate the participation of land users with lack of access to information and assets, or high individual transaction costs, who would otherwise face high entry barriers. And if payments comprise indivisible goods or services with low potential for

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excludability, such as community facilities or technical assistance, such kind of elite capture can be limited. 2.4. In-kind payments Whether payments are made in cash or in-kind can condition the effectiveness of PES, while also determining development outcomes (Wunder, 2005; Leimona et al., 2009). Thus far most PES schemes have used cash as the payment vehicle, with a few exceptions based on in-kind payments (e.g., Wunder, 2005; Asquith et al., 2008). This is mostly due to the lower transaction costs of managing and delivering cash payments compared to in-kind rewards. Moreover, cash payments are widely believed to be the most flexible, as recipients of the payment can then freely decide how to use it according to their priorities and needs (Farrington and Slater, 2006). Cash payments can provide access to start-up capital for productive livelihood activities or can be invested in social and local development activities (Munawir and Vermeulen, 2007; Leimona et al., 2009). Yet there has been concern that cash is often used, particularly by men, for consumptive uses, such as alcohol, tobacco or other unproductive goods which provide little long-term benefits to other household or community members (Harvey et al., 2005). Conditional cash transfer (CCT) programs that provide cash payments in exchange for investments in education and health have been on the rise (World Bank, 2009). Evaluations of these programs suggest that both conditional and unconditional transfers lead to better development outcomes, where the effect of CCT is not significantly larger (e.g., Baird et al., 2013). The differences in the effectiveness of cash and in-kind transfers depend on the beneficiaries’ position and the transfer design, but tend to be modest, while the latter can be more costly (Gentilini, 2014). Very few attempts have been made to relate CCT and PES (see e.g., Rodríguez et al., 2011). Many PES schemes combine cash payments with in-kind benefits, such as information, training, land titles or access to physical capital. Interestingly, the fact that in many PES schemes, participants do accept cash payments below their financial opportunity costs indicates that non-financial benefits, such as enhanced human or social capital, tenure security and reputational gains are also important (Kosoy et al., 2007; Porras et al., 2008; Wunder et al., 2008; Leimona et al., 2009; Sommerville et al., 2010a). In some contexts community members themselves have stated a preference for non-cash payments (Leimona et al., 2009; Zabel and Engel, 2010; Asquith et al., 2008; Kaczan et al., 2013; Hossack and An, 2015). In-kind payments can contribute to the formation of productive assets, such as agricultural inputs, construction or school supplies. Yet such benefits will only materialize if the payment is extramarginal, hence not only replacing an investment that would be made anyway (Cunha, 2014). Where in-kind rewards can be associated with technical advice or agricultural inputs and machinery that support traditional farming systems, they can also directly strengthen conservation outcomes. If payments are made collectively to a group of farmers, in-kind benefits can even include agricultural equipment or infrastructure (as was the case in this project), providing access to new productive assets while fostering collective use of these assets. 3. The PACS tenders The pilot PACS schemes aimed to facilitate the conservation of quinoa (Chenopodium quinoa) landraces in a Bolivian and a Peruvian study site. Conservation contracts were assigned based on singleshot and sealed-bid (i.e., information on competing offers would be withheld) procurement auctions (Narloch et al., 2011b, 2013). These conservation tenders were implemented in the 2010–2011

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3.2. Tendering conservation contracts

dissimilarity (Narloch et al., 2011a).2 This process resulted in the selection of 4 priority landraces in the Bolivian site (Chillpi Blanco, Huallata, Hilo, Kanchis and Noveton) and 5 others in the Peruvian site (Misa Quinua, Chullpi Anaranjado, Janko Witulla and Cuchi Willa). A conservation tender was announced in the two sites among communities with a long tradition in quinoa cultivation and where the threatened priority varieties would originally have been widely found. Different agroecological zones within the two study sites were covered, so as to optimize the representativeness of the area under study. Representatives from 18 community-based farming groups in Bolivia and 20 groups in Peru were invited to prepare group-level bid offers for these priority landraces for the upcoming agricultural season. Groups were clearly informed about the number of other groups invited to bid as well as that contracts would be awarded to the groups that would offer the greatest joint conservation effort in terms of area and number of participating farmers, viz-a-viz the requested aggregated compensation by those same groups. Groups were also advised that their bid offer for each landrace would be considered as an indivisible unit. In addition they were informed that the selection rule would be determined based on the bids received to allow the greatest conservation area and number of farmers to be included within a limited, although unspecified, conservation budget associated with the conservation pilot. Groups were also advised that they would be paid as a group and were jointly liable for compliance if a conservation contract was awarded. With support from local NGOs, the group representatives communicated the rules of the tender to the rest of their group members. They gathered information from interested group members about the conservation area they would be willing to individually contribute towards the group’s conservation of the priority landraces, as well as their individual bid price per land unit for each of the selected priority landraces. The representatives of each of the farmer groups determined the group-level bid offers considering the information received from all of their individual members. Although the group representatives could in principle decide not to include a given individual offer (e.g., when it appeared too costly), all representatives did determine their group bid as the aggregate of all individual members’ offers. For each of the chosen priority landrace(s) the group offers contained the following information: (i) the total number of farmers who would agree to take part in the conservation activity, (ii) the aggregate of all the group members’ offered land area allocated to the priority landrace(s), and (iii) the total payment requested by the group as compensation for their conservation effort, obtained by multiplying each individual farmers’ conservation area and their determined bid price per land unit. No ceiling was placed upon the conservation area or payments that could be requested by the group or by any individual farmer within it. To calculate the final bid value, these payments requested were adjusted for any seed purchase costs, when the seeds for the chosen landrace(s) were not available from within the group. Following the advice of local community development experts, a collective payment vehicle based on the use of in-kind rewards was chosen with a view to facilitating the enhancement of productive

Given the existence of numerous quinoa landraces, the most threatened and unique landraces need to be prioritized with a view to permitting the maximization of the diversity that may be conserved for any given conservation budget (as per Metrick and Weitzman, 1998; Samuel et al., 2013). In collaboration with local scientists and agricultural extension experts, relevant quinoa landraces were identified together with farming communities and prioritized based on an analysis of landrace risk status and

2 Landraces were ranked according to their level of risk, based on information about current cultivation area, extent in terms of the number of farmers cultivating such landraces, the level of preserved traditional knowledge associated with the landraces, and the amount of seed available. Lastly a dissimilarity analysis was used based on agro-morphological characteristics of the set of quinoa landraces, such as color and size of grain, and resistance to specific weather conditions (e.g., frost and droughts).

agricultural season by Bioversity International in collaboration with national NGOs. Two study sites were selected, which share a very similar socio-historical background, but which differ in agroecological and market conditions: the Bolivian site on the Southern Altiplano around the Salar (salt flats) of Uyuni and the Peruvian site on the Northern Altiplano around Puno at Lake Titicaca.

3.1. The study sites The Andean Altiplano is the centre of quinoa diversity, with a high number of different quinoa varieties having evolved given the varying agro-ecological conditions (Tapia and Fries, 2007; Del Castillo et al., 2007). While under the harsh climatic and marginal soil conditions in the Bolivian site, quinoa is one of the only cultivable crops (cultivated on alternating plots with fallow periods of 3–5 years), farmers in the Peruvian site follow a multi-crop rotational system. Although quinoa was originally grown for subsistence needs within the peasant household, quinoa farming is becoming more market-orientated because of soaring prices for a few certified (mostly white) varieties associated with the organic export market for the USA and Europe, as well as the increasing availability to farmers of alternative food products (Hellin and Higman, 2005). Therefore, farmers increasingly favour a few profitable commercial varieties at the expense of a diverse portfolio of local landraces (Del Castillo et al., 2008; Rojas et al., 2009). Interesting patterns of collective action have developed around traditional rotation practices, such as the Suyo systems (also called Aynoka, or Manta) (Narloch et al., 2012), a group of farmers—sometimes the whole community—decides collectively about the plots to be planted with a particular crop (or to be left as fallow land). Each farmer then individually manages his/her piece of land according to these group-level decisions (Canahua et al., 2002). These systems illustrate well-functioning collective action institutions, where individual interest (e.g., maximizing area with the most profitable crop varieties) are at odds with collective interests (e.g., rotating crops and plots to maintain soil fertility). As farmers are free to cultivate their preferred varieties, including according to culinary, cultural and risk preferences, these systems generally involve a range of diverse crop varieties (Brush, 1992; Zimmerer, 1996, 2002). Whilst farming systems in the Peruvian site still have a predominantly subsistence orientation, those in the Bolivian site tend to be increasingly market-orientated because of active export promotion by the Bolivian government and the competitive advantage of quinoa in the very dry climate of the Southern Altiplano, where it can be easily grown under organic conditions (Hellin and Higman, 2005; VSF, 2009). The growing commercialization of quinoa farming in the mono-cropping systems of the Bolivian site is driven by an expansion of quinoa areas into non-cultivated community lands and the use of modern equipment, such as tractors (VSF, 2009). In the multi-crop rotation systems of the Northern Altiplano, land for quinoa cultivations is much more scarce (Canahua et al., 2002).

Please cite this article in press as: Narloch, U., et al., What role for cooperation in conservation tenders? Paying farmer groups in the High Andes. Land Use Policy (2015), http://dx.doi.org/10.1016/j.landusepol.2015.09.017

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Fig. 1. Collective action within farmer groups and cooperation in group-level bids in the Bolivian and Peruvian sites.

assets with long-term benefits. Accordingly, each group was also required to define their preferred in-kind payment for the total bid offer. In this particular case, in-kind payment requests included such items as agricultural equipment, farming inputs (e.g., seeds, fertilizer), and construction or school materials. Additionally, the groups could specify their participation conditions by indicating whether they would only accept a conservation contract if all their landrace bid offers were selected; or whether they were willing to participate unconditionally, thereby indicating a willingness to accept a conservation contract even for just a subset of their landrace bid offers. While the unconditional participation condition increases the chances of the group being awarded a contract for at least a part of their bid offer, the conditional participation condition allows the community to ensure that none of its members would be excluded from any bid offer accepted (Narloch et al., 2013). 4. The conservation bid offers The tender scheme encouraged interested farmer groups to self-organize and collect the necessary information from their members. Bid offers were received during March and April 2010 from 12 farmer groups from the Bolivian site and from 13 groups from the Peruvian site.3 In total, information from 88 (96) farmers were recorded from the case study sites in Bolivia (Peru).4 The group bid offers listed individual bid prices and the size of conservation area contributions by each farmer within the group. We also identified each group member’s demographic characteristics, such as age and gender. In addition, in order to better identify key conditioning factors behind the group bid offers, surveys were undertaken with all group representatives regarding the farming community that the group belonged to, including information about collective action (as measured by participation in different forms of collective action) and wealth levels (as measured by ownership of agricultural assets) and, as well as agro-ecological control

3 Among the primary reasons for not submitting a bid offer was the preference for cultivating commercial varieties, worries about the certainty of the payments given the novelty of the scheme and lack of labour for sowing, management, and cultivation of the landraces. 4 For three groups in the Peruvian site there was no individual-level information available and hence these have been excluded from the individual-level analysis in Section 4.3.

variables, such as actual quinoa cultivation area, remoteness and altitude (c.f. Table 1).5

4.1. From collective action to cooperation in the bid offers Interestingly, farmer groups build on collective action for very different purposes (c.f. Fig. 1a). In the Bolivian site collective action in soil conservation and land preparation, as well as exchange of labor and agricultural equipment are more prominent than in the Peruvian site. These forms of collective action may result from labor scarcity and loss of soil fertility as the main challenges and more mechanized farming systems. The wealth score mainly reflects higher ownership of mechanized assets (e.g., trucks, tractors, pickups), and is higher in the Bolivian groups (c.f. Table 1). Conversely, collective action for seed exchange, the conservation of quinoa landraces, and the processing and marketing of agricultural output is stronger in the Peruvian site. This reflects the fact that in the Peruvian groups their seed systems and access to markets are more associated with collective action related to the exchange of planting material than in the more market-orientated Bolivian groups. As would have been expected, the collective action score is positively related to the level of cooperation, as measured by the number of participating farmers in the group-level bids—both of which are higher in the Peruvian site (c.f. Fig. 1b). The score which explains about 20% of the variance of the data mainly reflects participation in seed exchange, conservation of traditional varieties and processing of agricultural output (c.f. Fig. 1a). On average, 10 (7) farmers were involved in the Peruvian (Bolivian) groups (Table 1). Cooperation in the bid offers may have been higher in the Peruvian site, compared to the Bolivian one, as in the former, the invited groups could already build on existing collective action institutions closely linked to quinoa production and processing. This possibly meant that Peruvian group representatives were better able to mobilize their group peers, whereas the community representatives from the Bolivian site had to organize dispersed farmers without such strong organizational networks.

5 As many of the forms of collective action and types of agricultural assets are correlated, we ran a principal component analysis to reduce the multiple dimensions of the data into one ‘collective action’ and ‘wealth’ score that explains the greatest variance in the observed collective action patterns and asset holding of the groups.

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Table 1 Summary statistics of farmer and group variables and differences between the Bolivian and Peruvian sites. Variables

Description

Bid price

Conservation area

Female Age Collective payment Collective action score

Wealth score

Quinoa land

Remoteness Altitude a b

Bolivia

Average bid price as indicated by each farmer for the landraces in the group bid including seed purchase costs (in US$/ha) Total conservation area as indicated by each farmer for the different landraces in group bid (in ha) Dummy = 1 if farmer is female Age in years of farmer Dummy = 1 if group requested a group-collective payment Score generated by principal component analysis based on share of households taking part in different forms of collective action in the community Score generated by principal component analysis based on different agricultural assets held by community members Average household quinoa cultivation area in a community (ha per household) Community distance in km to next urban settlement Community altitude

Peru

P value from one sided t-test

Obs

Mean

Std

Obs

Mean

Std

(88)

1228

1231

(96)

3667a

2377

0.000

(88)

0.283a

0.345

(96)

0.076

0.014

0.000

(88) (88) (12)

0.318 48.625 0.417

0.468 13.776 0.515

(96) (96) (13)

0.636a 46.56 0.615

0.48 12.39 0.506

0.000 0.140 0.171

(12)

−0.546

0.774

(13)

0.504b

1.684

0.030

(12)

1.910a

1.301

(13)

−1.763

0.493

0.000

(12)

6.660b

8.84

(13)

0.823

0.731

0.013

(12)

33.67a

13.186

(13)

4.42308

1.38212

0.000

(12)

3727

66.66

(13)

3900

60.67

0.000

1% significance level from one sided t-test Pr(T < t) for country values. 5% significance level.

Bolivia

Per u

30.8%

25.0% 58.3%

41.7%

38.5%

61.5%

8.3% 8.3%

15.4% 7.7% 7.7%

Quasi-individual (seeds, fertilizer, construction material) Quasi-individual (seeds, fertilizer, construction material)

Agricultural machinery

Agricultural machinery

Construction of quinoa crop storage facility

Processing equipment

Processing equipment

School supplies

Tractor rental

Fig. 2. Quasi-individual (dark grey) and group-collective (dark grey) payment types requested by the Bolivian and Peruvian groups in the tender schemes.

4.2. Bid offers and preferred payment types In defining in-kind compensation levels, farmer groups ended up selecting amongst different payment types with different degrees of divisibility among farmers in the group and among others within the wider community. We differentiate between two types of in-kind payments: (i) quasi-individual payments, which could be easily divided among different participating group members (e.g., seeds, fertilizer, implements and construction material used by individual famers); and (ii) group-collective payments, which either constitute a non-divisible unit with the potential to restrict access to the participating group members (e.g., processing equipment, agricultural machinery, tractor rental) or access to the wider farming community (e.g., a crop storage facility or school materials). Fig. 2 illustrates that about 60% of the groups preferred a quasiindividual payment type (darker grey) in the Bolivian site. In

particular, half of the groups requested some kind of construction material. Conversely, in the Peruvian site a group-collective payment (lighter grey) type was preferred. When the group-collective payments requested are broken down into their different in-kind categories, the data reveal that agricultural machinery (mostly threshing machines in Peru and manual dryers in Bolivia) were the most popular type of preferred group collective payment. In Peru this was followed by materials for crop storage facility construction, processing equipment and tractor rental. In Bolivia one group also requested school supplies for the community school, which can be considered as a community-wide public good (c.f. Fig. 2). We can detect some interesting differences across the bid offers, which also reflect some of the differences between the two sites, which were discussed in previous work (Narloch et al., 2011a, 2013). Overall, the Peruvian farmers indicated significantly higher bid prices per hectare and lower conservation areas (c.f. Table 1). This finding may be explained by the existence of higher

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Table 2 Average group bid offers and group characteristics under quasi-individual and group-collective payment types in the Bolivian and Peruvian sites. Bolivia

Total number of bids Average of group bid offers Bid value in USD Bid price in USD/ha Conservation area in ha Number of participating farmers Relative median deviation of individual bid prices Gini coefficient of individual area contributions

Peru

Quasi-individual

Group-collective

Quasi-individual

Group-collective

7

5

5

8

1671 1323 2.80 8.57 0.041 0.235

407 510 1.24 5.6 0.310 0.211

1065 3636 0.32 9.4 0.006 0.207

2660 3926 0.73 9.75 0.012 0.263

yields under the better agro-ecological conditions of the Peruvian site, which leads to higher production returns per hectare and thus higher opportunity costs of conservation. In addition, quinoa land is scarce in the Peruvian site, whereas Bolivian farmers can expand their quinoa production into non-cultivated communal lands, which is reflected in the much larger quinoa land areas (c.f. Table 1). Table 2 reveals some interesting differences regarding the average group bid offers across requested payment types. In the Bolivian site, the quasi-individual payment type is associated with higher bid values. Such differences can be associated with the fact that, under the quasi-individual payment type, Bolivian groups offer much larger conservation areas which combined with higher unit prices leads to a higher total bid value. By contrast in the Peruvian site, the average of the bid values is more than twice as high under the group-collective payment vis-à-vis the quasi-individual payments, largely as a result of the on average larger area offered for conservation by the latter. Moreover, more farmers participate in the Bolivian bid offers under quasi-individual payments. Given that each group-level bid is the result of the aggregation of different conservation offers by a number of individual farmers, associated individual bid prices and conservation area contributions may well be unequally distributed between farmers within a given group. In both sites we find that there is greater intra-group variation in bid prices (as measured by its relative median deviation) under group-collective payments (c.f. Table 2). Furthermore, although inequality in the size of the conservation area contributions (as measured by the gini coefficient) is relatively higher in Peru when group-collective payments are requested, it is low under the two payment types in both study sites (c.f. Table 2). With regard to the relationship between types of payments and farmer group characteristics, no generalizable findings could be noted.

Table 3 Seemingly unrelated regression explaining individual bid levels and conservation area contributions in the Bolivian and Peruvian sites. Bolivia Std. Err.

Coef.

Std. Err.

Bid price Female Age Collective payment Collective action score Wealth score Quinoa land Remoteness Altitude cons R squared Chi 2

304.6c 5.610 −692.1a 771.9a 193.7b 22.1 6.573c −4.795b 17948b 0.713 218.540

162 5.299 168 179 97.7 14.0 3.769 2.002 7954

556.5b 14.36c −842.3a 240.5a −1288a 3257a −45.84a −2.582 12353c 0.823 469.230

216.3 8.625 219.8 71.68 270.3 195.8 8.215 1.665 6652

Conservation area Female Age Collective payment Collective action score Wealth score Quinoa land Remoteness Altitude cons R squared Chi 2

−0.1600b −0.0018 −0.2156a 0.085 −0.1308a −0.0024 −0.0040b 0.0001 1.216 0.269 32.380

0.0744 0.0024 0.0771 0.0820 0.0448 0.0064 0.0017 0.0009 3.650

−0.0612b −0.0064 0.0506c −0.0005 0.0147 0.0445c −0.0011 −0.0002 0.9401 0.194 23.570

0.026 0.001 0.027 0.009 0.033 0.024 0.001 0.0002035 0.813

Observations

88

0.000

−0.500 24.520 0.000

b

0.000

0.0027

98

Breusch–Pagan test of independence 39.206 Chi 2(1) 0.000 Pr

c

We run a regression to reveal the determinants of individual bid prices and conservation area contributions based on individual and group-level characteristics (c.f. Table 3). Together with unobserved factors, they are likely to simultaneously determine bid prices and conservation area contributions. A Seemingly-Unrelated Regression (SUR) model allows us to reject independence of the two decisions. As would be expected the correlation of the residuals is negative (c.f. Table 3) suggesting that there are unobserved factors (e.g., soil conditions, market access or fairness perceptions) that result in higher bid prices but smaller conservation area contributions. The main finding with regard to the determinant of individual per hectare bid prices is that these are higher for groups where collective action is stronger. To some extent these bid prices reflect the opportunity costs of conservation, as farmers were advised to define their individual bid prices according to the costs they would incur from cultivating the priority landraces. Collective action could reflect other opportunities, such as better access to

0.000

Correlation matrix of residuals −0.668 Coef

a

4.3. Individual bid prices and conservation area contributions

Peru

Coef.

1% significance level. 5% significance level. 10% significance level.

markets and bargaining power when negotiating conservation payments (Swallow et al., 2005; Engel and Palmer, 2008), which could lead to higher opportunity costs of conservation. Yet bid prices may also include a price premium reflecting farmers’ attempts to maximize rents and define payments above their real conservation costs (Ferraro, 2008). Hence, the positive relationship between collective action and individual bid prices may in fact indicate strategic rent-seeking behavior of those groups that can build on regular cooperation and social capital. It is also found that bid prices are higher for groups that prefer the quasi-individual payments. Under individual payments farmers can directly appropriate the payments and hence may have an incentive to define higher bid prices. The main finding regarding the determinant of the size of conservation area contributions is that Bolivian farmers are willing to contribute more under quasi-individual payments. By contrast, the

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Table 4 Potential conservation outcomes under different weighting of the cost-effectiveness rankings in the Bolivian and Peruvian sites. Bolivia Area in ha

Area 100% Farmers 100% Area 50%–farmers 50% Area 40%–farmers 40%–groups 20%

Peru Sum of farmers from landrace bid offers

No of different farmers selected

No of groups

Area in ha

Sum of farmers from landrace bid offers

No of different farmers selected

No of groups

14.49 3.70 13.74

62 121 79

43 41 48

7 8 8

1.69 1.18 1.47

59 113 81

30 48 37

4 5 5

13.23

79

47

10

1.45

85

41

6

Notes: Bid offers were selected landrace by landrace and the same farmers could be selected for different landraces so that the sum of farmers selected from the landrace bid offers is higher than the number of different farmers actually selected for the overall conservation activity.

Peruvian farmers would be willing to supply larger conservation areas under a group-collective payment scheme. Such differences may arise as the Peruvian farmers may have stronger trust in the effective and fair distribution of collective payments. Moreover, they have more experience in collective action of direct relevance for conservation, such as seed exchange and the utilization of traditional varieties (c.f. Fig. 1). Regarding some of the other variables, results also show that bid prices increase (decrease) with wealth in Bolivia (Peru). This may be explained by the very different types of agricultural assets available in the two study sites. In the Peruvian site most agricultural assets are used for smallholder farming, which may lower the opportunity costs of conservation, while in the wealthier Bolivian site, modern equipment and machinery is available that allows mechanized farming activities, thereby increasing the opportunity cost of landrace conservation. Female farmers define higher bid prices and are willing to contribute to conservation with smaller land areas within the overall group’s conservation effort. This finding is consistent with that of Krishna et al. (2013), who argue that women may be more familiar with the specific traits of the ‘conservation priority landraces’ in question and may therefore express a lower willingness to cultivate them where they do not include their preferred attributes. Peruvian farmers with larger quinoa lands are associated with higher bid prices and larger conservation areas. Possibly larger areas indicate a more market-orientated quinoa production and thus higher opportunity costs, but also more available land for conservation activities.6 By contrast for Bolivian farmers the size of quinoa lands does not play a role in bidding behavior, as they face less land constraints. 5. From bid offers to actual payments Based on these bid offers, a limited number of farmer groups were selected for conservation contracts in mid-2010 prior to the planting season and in-kind payments were awarded upon compliance with these contracts post-harvest. 5.1. Selection of farmer groups The pilot PACS tenders had a limited budget of US$4,000 in each site to cover conservation payments and the seed purchase costs. In addition, transaction costs for the overall scheme (e.g., support for the bid preparation, issuing of contracts, monitoring and verifi-

6 These results also hold for total cultivation area, which is highly correlated with quinoa land. Within the collective multi-crop rotation systems farmers mainly chose the area to plant with different varieties within the plots allocated to certain crops so that total cultivation area is less relevant for quinoa landrace in explaining landrace bidding behavior.

cation, and award ceremonies) were additionally borne by the local implementation agency.7 The budget was allocated to the different groups following an iterative process, whereby the highest (cost-effective) ranked bid offers per priority landrace were first selected. To give equal weight to the landraces, the best bids were selected up to a budget of US$800 for the five Bolivian priority landraces and US$1,000 for the four Peruvian priority landraces. Any of the remaining budget was then allocated to the landrace being assigned the smallest share of the conservation funds and so on. The selection of bid offers could be based on a combined consideration of different payment rules and cost-effectiveness rankings, which were chosen through local expert consultation based on an analysis of resulting bid offers with regard to potential tradeoffs between conservation and distributional outcomes (Narloch et al., 2011a,b, 2013). Group-level bid offers were ranked applying three cost-effectiveness criteria based on the bid value in relation to: (i) conservation area offered in the bids as a proxy for the extent of in-situ conservation and potential seed production, (ii) number of farmers willing to participate within a given group in conservation as a proxy for maintaining local agricultural knowledge and cultural practices, and (iii) total number of groups as a proxy for maximizing the likelihood of the maintenance of informal seed exchange networks and gene flow across farming communities (Narloch et al., 2011a). We then produced a number of rankings of the bid offers assigning different weights to the rankings from (i) to (iii) ranging from 0 to 100%. Incorporating a farmer-based cost-effectiveness ranking as in (ii) can be seen as a cooperation criterion for the selection of bid offers (i.e., prioritizing farmer groups that engage larger number of farmers for any given requested payment). Whereas assigning 100% weight to the number of farmers would substantially lower the achievable conservation area compared to selecting bid offers based only on maximizing land area, a multi-criteria weighting approach would not overly compromise conservation area and number of participating farmers (c.f. Table 4). Following an ex-ante evaluation of the potential conservation outcomes and discussion with local experts, a weighting of 40–40–20% was assigned to the rankings (i)–(iii) for the final selection. Local experts found that this weighting would best balance the mix of different conservation criteria (i–iii) in the two study sites. Following this decision, 10 Bolivian groups with a total of 47 farmers and six Peruvian groups

7 Data from the Peruvian site indicates that these transaction costs were substantial amounting to about US$6,450, thus about 50% greater than the actual payments received by farmers. No data was available from the Bolivian site, but given the remoteness of the communities, transaction costs may have been even higher. Nevertheless, the degree to which such transaction costs constitute such a significant proportion of overall costs remains to be explored for larger-scale, non-pilot interventions.

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with 41 farmers were selected for the conservation contracts covering 13.23 ha in the Bolivian site and 1.45 ha in the Peruvian site (c.f. Table 4). In both sites a discriminatory payment rule was applied for the selection of bid offers, whereby each selected group was paid according to their requested payment, as opposed to uniform payment (per hectare) across all selected groups. In the Bolivian site, each of the groups’ bid offers for the different landraces were selected independently from each other, that is considering the bid for each of the chosen landraces one at a time. In the Peruvian site the same approach was followed, but for those groups that had chosen a conditional participation rule, all their landrace bid offers were considered as a single composite bid. These groups were selected for either all of their bid landraces or none of them. For the other Peruvian groups and for the Bolivian groups these payment rules could mean that some groups were selected for a subset of the landraces for which they had bid and thus did not receive the full payment they had requested, but a lower value reward. For most of the payment types (seeds, fertilizer, construction material) the number of units that were handed over could be reduced accordingly. Importantly, this selection approach led to the exclusion of individual farmers within a given group that had only offered to participate in the conservation activities associated with landraces which were not selected for inclusion in their group-level conservation contract. Due to fairness concerns, groups could internally and autonomously decide how to allocate among the farmers the conservation activities as well as the in-kind payments.

5.2. Contract compliance of selected farmer groups For contract compliance the contracted individual conservation area had to be planted with the landraces listed in the selected group bid offer. Post-harvest, farmers were also required to report their total landrace production and to contribute 2% of production in the form of seed to a community seed bank. Following the joint-liability criterion, the selected groups would not receive any payment if any one of their individual farmers failed to undertake the contracted activities. Yet contracts included a “force majeure” clause, whereby the group would still get the contracted payment if this failure was due to external events beyond the farmer’s control (e.g., natural events such as frosts and hail storms). Compliance was verified shortly after the planting season in December 2010 by cataloguing the conservation plots. Farmers were further expected to manage these conservation plots appropriately so as to secure a good harvest. Additional field visits were undertaken to the conservation plots during the production season in order to verify farmers’ efforts along with the occurrence of any “force majeure” external events not under control of. In fact, in Peru three conservation plots were lost due to hail that damaged the quinoa plants. Payments were made nonetheless under the contract’s “force majeure” clause. In one Bolivian group two farmers ultimately decided not to plant the variety they had contracted to, as they considered that a “lack of soil moisture” would mean that it was not worth planting the crop. In order to comply with the group-level contract, the remaining farmers undertook their responsibilities and planted additional areas with the selected landraces in order to ensure eligibility for payment at the end of the agricultural season. This provides an indication of the strength of cooperation and the incentives provided through the group-level conservation contracts. In both sites additional post project surveys were carried out. In Peru, approximately 55% of the participants were surveyed a year later; while in Bolivia a similar survey two years later covered approximately 60% of the selected farmers. While the nature of the resulting data is largely qualitative, it nonetheless provides some

9

additional insights about the way farmers cooperated to contribute to the actual conservation activities of the groups. In the Bolivian site, selected farmers stated that they interacted with other members of their group during the growing season principally with regard to labour exchange related to sowing and harvesting. They also explained that interaction between the group members had improved as a result of the PACS tender, in part as a result of discussions about the progress of the cultivated variety and visits to each other plots. Similarly, Peruvian farmers stated that the experience had allowed them to work more closely together as a group. Selected farmers in both sites stated that the in-kind payments received were to be used by the group but also shared with other community members through a system of labour exchange. In both sites, most participants considered the payments to have been fair. 6. Lessons for the design of group-level conservation tenders The above findings from the pilot PACS tenders provide some interesting insights regarding the cost-effectiveness and cooperation associated with group-level conservation tenders. The results are of relevance for the design of conservation tenders in developing countries, and can also be relevance for tendering conservation instruments in developed countries. 6.1. Cooperation in bid offers The data shows that in the Peruvian site there is a correlation between strong patterns of collective action and more farmers cooperating in the group-level conservation bids (c.f. Fig. 1), resulting in the offering of larger conservation areas and a preference towards group-collective payments (c.f. Table 2). This suggests that group-level tenders may work better in contexts where farmers are used to work collaboratively through formalized organizational networks or informal patterns of collective action. Our data does not allow to fully identify what drives the observed differences in bidding behavior between the Peruvian and Bolivian farmer groups, which are mainly conditioned by differences in (i) agro-ecological conditions—in the Bolivian site quinoa is the only crop cultivated on widely accessible lands, with substantially lower yields per hectare; (ii) asset-holdings—Bolivian farmers are wealthier and rely more or mechanized cultivation; and (iii) market context—Bolivian groups are more market-orientated compared to the more subsistence-based Peruvian farmers. However, some of the findings point towards the important role of the market context in explaining differences in collective action and cooperation in the PACS tender. Evidence from the field and findings from field experiments in the same study sites shows that commercialization has negative impacts on agrobiodiversity conservation and cooperation (see Narloch et al., 2011a,b). Although, in remote settings, market interactions have been shown to be capable of fostering social learning and thus collective action (Bowles, 1998; Henrich et al., 2001, 2010), highly market-orientated producers also tend to be driven by individual gains and tend to compete more amongst themselves instead of strengthening collaborative working habits and institutions (Carpenter and Seki, 2006; Prediger et al., 2011). 6.2. Incentivizing conservation through collective payments The bids also indicate that the size of the conservation area offered by individual farmers and the resulting group area is larger in Peru under group-collective payments and in Bolivia under the quasi-individual payments (c.f. Tables 2 and 3). This would indicate

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that collective payments may provide greater conservation incentives where collective action is stronger and more robust, while in other settings, individual payments could be more viable, which is in line with other experimental findings (see e.g., Travers et al., 2011; Kerr et al., 2012). Similarly, field experiments in the same sites have shown that individual payments can be more effective than collective payments (Narloch et al., 2012; Midler et al., 2015). As individual payments are less sensitive to social factors, they work better where social capital and trust is limited (Midler et al., 2015). Individual payments can play a stabilizing role for conservation behavior where other social incentives are missing, while group payments may to some extent even erode existing pro-social behavior based on intrinsic motivations (Narloch et al., 2012). However, such negative social impacts may be offset by the increased interaction between farmers required for complying with the conservation contracts, building additional trust and social capital. Interestingly, under communication collective payments increase conservation levels over time to levels above those under individual payments (Midler et al., 2015). Hence collective payments may in fact be more effective in encouraging conservation in repeated conservation rounds than in one-shot schemes, especially when active deliberative mechanisms can help farmers discuss and learn from each other. 6.3. Reducing conservation costs We have seen that higher individual (within group) bid prices per hectare are requested by farmers who form part of groups with stronger collective action patterns that also prefer quasiindividual payments (c.f. Table 3). Paradoxically, this finding would imply targeting farmers in groups with greater collective action may undermine cost-effectiveness, but also that group payments can reduce the overall conservation costs. This may be explained by rent-seeking behavior that is more pronounced in powerful groups with strong collective action patterns and when group members can easily appropriate rents through individualized payments. Hence, collective payments could limit such rent seeking behavior. Rent seeking behavior may be an even greater challenge as farmers can learn from the selection results and start inflating their requested payments (McAfee and McMillan, 1987; Hailu and Schilizzi, 2004; Schilizzi and Latacz-Lohmann, 2007). Moreover, selection biases towards previous winners may reduce competition (Vogt and Kilian, 2013). Hence according to this interpretation, it follows that under repeated group-level tenders, it would be important to support groups from less cooperative settings to take part in the bids so that competitiveness can be maintained and overall conservation costs can be kept down. We have also noted that the Bolivian site is generally associated with a higher degree of cost-effectiveness due to significantly lower bid prices and larger conservation areas than in the Peruvian site. However, interpreting this narrowly as the lowest cost conservation option ignores the different agro-ecological conditions between the two sites. The substantially lower yield potential in the Southern Altiplano makes it hard to readily compare a conservation hectare between the Bolivian and the Peruvian site. Also, given the abundance of land in the Bolivian site, the marginal conservation costs for the farmer are significantly lower. In any case, a carefully designed conservation strategy would need to target both sites so as to preserve the full set of priority landraces, which a are genetically very different, and associated agricultural knowledge, seed exchange networks and local customs in both sites (Narloch et al., 2011a,b). Furthermore, when evaluating the overall cost-effectiveness of the program, consideration of the degree of additionality achieved

by the conservation activities is critical. As the priority landraces had not been grown by the selected groups in previous seasons, the scheme resulted in additional conservation areas. However, to truly assess the schemes’ cost-effectiveness in the long-run, new research is needed to measure how these additional conservation areas lead to the sustained preservation of conservation services (Narloch et al., 2011a,b).

6.4. Selecting contracts based on a cooperation criterion Promisingly, we find that a multi-criteria targeting approach that combines a cooperation criterion, based on the number of participating farmers within groups, with total offered conservation area would not overly compromise cost-effectiveness (c.f. Table 4). Ranking bids by the cost per farmer in order to optimize the number of farmers involved in conservation activity is also a way to enhance social capital through cooperation and interaction among farmers. In developing country contexts, this criterion can add to the PES scheme’s legitimacy and increase its long-term effectiveness (Pascual et al., 2014), especially when conservation activities are undertaken on common property land (Corbera and Brown, 2008). Such a collective action criterion can also reflect notions of fairness based on a common-good principle (Pascual et al., 2010) or an inclusiveness principle (Narloch et al., 2013). Yet such a ‘number of participants’ maximization approach is in contrast to that found under most competitive tender schemes, where participant numbers are limited in order to ensure (transaction) cost savings by selecting few, and thus administratively tractable, lower cost conservation service providers. Such transaction costs, however, remain limited for the agency if organization and coordination between group members are left to the group as in this group-level PES. Where groups can build on existing interaction and collective action, it may be assumed that the transaction cost for the groups may not be substantial. Lastly, agrobiodiversity conservation needs to involve a large number of small farms, each with its own specific use of the conserved landraces underpinned by a dynamic exchange of information and planting material across space (Jarvis et al., 2010). Thus, adopting targeting approaches that combine numbers of farmers and groups as additional selection criteria can maximize the participation and coordination of different land holders across space and secure conservation at a landscape scale (Prager et al., 2013).

6.5. Group-level contracts to strengthen compliance Some of the evidence gathered from the implementation of the conservation tenders suggests that group-level contracts can indeed strengthen the conservation objectives (c.f. Section 5.2). As in micro-credit schemes, providing conservation payments under joint-liability rules seems to encourage farmers to share conservation burdens and to help each other so as to comply with the agreed conservation contracts. Although more analyses and evidence are needed, the experience so far from these pilot PACS schemes gives reason to believe that group-level contracts can ensure the success of PES, where cooperation is an important factor. One last issue regarding group-level contracts is the final distribution of payments among the group members, for which we lack detailed information. Units and access could be split evenly between all group members (following an equality principle) or be shared in proportion to everyone’s conservation effort (following a proportionality principle) (see Pascual et al., 2010; Narloch

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et al., 2013).8 Yet it is possible that some group members could reap more benefits than others or are not fully compensated for their conservation costs as reported by Sommerville et al. (2010a) in Madagascar. As these benefit distribution rules are an important determinant for the perceived fairness and the overall success of collective payments schemes, it is important to better understand distributional equity rules (Zabel et al., 2013; Narloch et al., 2013). 7. Conclusions Based on data from group-level tenders in one Bolivian and one Peruvian site in the High Andes, this paper adds to the wider literature on PES and collective action. The findings suggest that: (1) stronger general patterns of collective action is positively related to the level of cooperation in group-bid making; (2) where collective action is robust, collective payments seem to provide stronger conservation incentives than individual payments; (3) collective payments could mitigate some potential rent-seeking behavior by powerful groups; (4) selecting bid offers based on both a ‘cooperation’ criterion and conservation land area offered does not overly compromise the cost-effectiveness of PES; and (5) group-level contracts may create strong incentives for contract compliance. Under certain circumstances combining group-level contracts with collective payments can enhance the cost-effectiveness of conservation tenders. Firstly, they can directly increase the conservation incentives. Secondly, they can increase social interaction and trust between group members, indirectly ensuring conservation outcomes that require cooperation. Win-win outcomes of cost-effective environmental conservation and social co-benefits are possible. Hence, before implementing PES it is imperative to carefully consider and analyze existing patterns of collective action and social factors, as well as possible interactions with potential payment mechanisms, so as to design conservation incentives in a way they can strengthen cooperation between land users. Acknowledgements This paper is part of Bioversity International’s Economics of Agrobiodiversity Conservation and Sustainable Use programme of work. The Payments for Agrobiodiversity Conservation Services (PACS) component of this work has been supported by the CGIAR’s System-wide Program on Collective Action and Property Rights (CAPRi) and the CGIAR Research Program on Policies, Institutions, and Markets. Fieldwork was carried out in collaboration with the Fundación para la Promoción e Investigación de Productos Andinos (PROINPA), Bolivia and the Centro de Investigación de Recursos Naturales y Medio Ambiente (CIRNMA), Peru. We are grateful for the comments from two anonymous reviewers and from Tobias Wünscher. The views expressed in this paper are those of the authors. They do not necessarily reflect the views of the World Bank, its executive directors, or the countries they represent. References Ajayi, O., Jack, B.K., Leimona, B., 2012. Auction design for the private provision of public goods in developing countries: lessons from payments for environmental services in Malawi and Indonesia. World Dev. 40 (6), 1213–1223. Asquith, N.M., Vargas, M.T., Wunder, S., 2008. Selling two environmental services: in-kind payments for bird habitat and watershed protection in Los Negros, Bolivia. Ecol. Econ. 65, 676–685. Babcock, A., Lakshminarayan, P.G., Wu, J., Zilberman, D., 1997. Targeting tools for the purchase of environmental amenities. Land Econ. 73, 325–339.

8 For one Peruvian group the data show the combined application of an equality and proportionality principle. This group of 12 farmers requested 12 wheelbarrows and everyone contributed exactly the same in terms of conservation area.

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