Collective Action Dynamics under External Rewards: Experimental Insights from Andean Farming Communities ULF NARLOCH University of Cambridge, UK UNAI PASCUAL University of Cambridge, UK Basque Centre for Climate Change (BC3), Bilbao, Spain Ikerbasque Basque Foundation for Science, Bilbao, Spain and ADAM G. DRUCKER * Bioversity International, Rome, Italy Summary. — This paper explores the potential effects of external reward systems on conservation behavior by accounting for their interactions with patterns of collective action. In order to simulate such dynamics, we conducted framed field experiments in farming communities from the Bolivian and Peruvian Andes. These game-based simulation exercises were framed around agrobiodiversity con- servation decisions the participating farmers were very familiar with. We find that collective rewards could be ineffective and crowd-out social norms. Promisingly though, individual rewards appear to increase conservation levels through a crowding-in effect that stabilizes collective action. Ó 2012 Elsevier Ltd. All rights reserved. Key words — cooperation, payments for ecosystem services, social norms, Andes, Bolivia, Peru 1. INTRODUCTION External reward mechanisms, such as Payments for Ecosys- tem Services (PES), may provide resource users with an incen- tive to conserve that which benefits wider society, and thus have been praised as a more flexible and effective instrument to facilitate protection of public ecosystem services as compared to those based on regulation (Ferraro & Kiss, 2002; Kinzig et al., 2011; Landell-Mills & Porras, 2002; Wunder, 2006). Yet it has widely been neglected that formal institutions, like PES, are embedded in social systems and thus interact with infor- mal institutions such as social norms within a community (Muradian, Corbera, Pascual, Kosoy, & May, 2010). Globally, it has been found that resource users have created self-governing mechanisms for the sustainable management of their ecosystems (Cardenas & Carpenter, 2008; Henrich et al., 2001; Ostrom, 1990). In many rural communities collective action 1 toward conservation is based on social norms (Rustagi, Engel, & Kosfeld, 2010). In such contexts, it has been found that can PES as an economic instrument may pro- vide little additional incentive for conservation but could instead affect deontological or moral incentives for conserva- tion (Sommerville, Milner-Gulland, Rahajaharison, & Jones, 2010). Similarly, Reason and Tisdell point out that “... under some circumstances, introducing market-based institutions to provide incentives for the provision of public goods may have unintended consequences“ (2010, 452). In line with these con- cerns, it has also been argued that interventions introducing formal institutions may crowd-out existing pro-social norms (Cardenas, Stranlund, & Willis, 2000; Reeson & Tisdell, 2008, 2010; Vollan, 2008). Similarly, there is anecdotal evidence that can PES replace intrinsic motivations for environmental protection and thus hamper existing conserva- tion efforts (Clements et al., 2010; Pattanayak, Wunder, & Ferraro, 2010; van Hecken & Bastiaensen, 2010). Nonetheless, different reward systems, such as individual re- wards, whereby resource users are paid for their private con- servation efforts and collective rewards in the form payments for a group’s aggregated conservation levels, may affect exist- ing social norms differently and they may erode (i.e., crowd- out) such norms or complement (i.e., crowd-in) them as found in experimental studies by Travers, Clements, Keane, and Mil- ner-Gulland (2011). The responses to such formal institutions, however, can be expected to be context specific, as their are shaped by existing social norms (Cardenas & Carpenter, 2008; Velez, Murphy, & Stranlund, 2010; Vollan, 2008), as the social preferences underlying such norms evolve given dai- ly social and economic interactions (Bowles, 1998; Ostrom, 2000; Carpenter & Seki, 2010). * This paper is part of Bioversity International’s payment for agrobiodi- versity conservation services projects financed by the Syngenta Founda- tion for Sustainable Agriculture and the CGIAR Systemwide Program on Collective Action and Property Rights (CAPRi). We are highly indebted to Juan-Camilo Cardenas and Daan van Soest for their useful guidance during the game set-up and to Bjo ¨ rn Vollan and two anonymous reviewers for helpful comments to earlier drafts of this paper. We also thank our national research partners, the Centro de Investigacio ´n de Recursos Na- turales y Medio Ambiente (CIRNMA) in Peru and the Fundacio ´n Pro- mocio ´n e Investigacio ´ n de Productos Andinos (PROINPA) in Bolivia for contributing their expertise and effort both in and outside of the field sites to implement this research. Final revision accepted: March 12, 2012. World Development Vol. 40, No. 10, pp. 2096–2107, 2012 Ó 2012 Elsevier Ltd. All rights reserved 0305-750X/$ - see front matter www.elsevier.com/locate/worlddev http://dx.doi.org/10.1016/j.worlddev.2012.03.014 2096