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Forest Policy and Economics

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Paying for environmental services: Determining recognized participation undercommon property in a peri-urban context

K. Christoph Neitzel a,b,⁎, Angela Piedad Caro-Borrero c,d, Daniel Revollo-Fernandez a,b,Alonso Aguilar-Ibarra b, Alya Ramos d, Lucia Almeida-Leñero d

a Universidad Nacional Autonoma de Mexico (UNAM), Posgrado de la Facultad de Economia, Mexicob UNAM, Instituto de Investigaciones Economicas, Mexicoc UNAM, Posgrado en Ciencias del Mar y Limnologia, Mexicod UNAM, Laboratorio de Ecosistemas de Montaña, Departamento de Ecologia y Recursos Naturales, Facultad de Ciencias, Mexico

⁎ Corresponding author at: UniversidadNacional Autonomde la Facultad de Economia, Mexico. Fax: +52 55 5623013

E-mail address: [email protected] (K.C. Neitzel).1 The peri-urban area is the transition zone between

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Please cite this article as: Neitzel, K.C., et al., Pa peri-urban context, Forest Policy and Econ

a b s t r a c t
a r t i c l e i n f o
Article history:Received 4 May 2012Received in revised form 11 April 2013Accepted 15 April 2013Available online xxxx

Keywords:Paying for environmental servicesHydrological servicesCommon propertyPeri-urban context

This paper analyzes payment for environmental services (PES) policies under a common property regime inMexico City. Econometric analysis of field data collected in an agrarian community shows that only a limitednumber of community members recognize their active involvement in the national payment scheme, whichdemonstrates that the condition of voluntary participation, as stipulated by the program, is likely to be flawedin cases of collective property. We suggest that institutional arrangements, human capacity and capability,and perception of the natural resource context significantly influence recognized participation in PES programs.

© 2013 Elsevier B.V. All rights reserved.

1. Introduction

Payment for environmental services (PES) is a widely discussed butstill innovative economic policy instrument designed to provide incen-tives and adequately remunerate positive externalities (Engel et al.,2008; Grieg-Gran et al., 2005; Robertson and Wunder, 2005; Wunder,2005). However, policy-makers have had to confront context-specificchallenges to make PES fully self-sustaining. Although much stillneeds to be learned, there are few examples of effectively applied PES(Engel et al., 2008; Speranza and van de Sand, 2010; Wunder et al.,2008). Consequently, the analysis of diverse contexts where PES is ei-ther already or potentially applied is warranted. For instance, despitethe growing importance of the rural-urban interfacewith respect to en-vironmental policies (Gutman, 2007;Niemelä et al., 2010), few analyseshave been carried out on PES in peri-urban1 areas (e.g., Huang et al.,2011; Landell-Mills and Porras, 2002; Mayrand and Paquin, 2004). In-stead, most studies deal with rural-based programs (e.g., Engel et al.,2008; Wunder et al., 2008). However, trends in population growth,rural exodus and mega-city growth highlight the need for a newrural-urban compact (Gutman, 2007), recognizing that urban inhabi-tants benefit the most from environmental services (ES) (Bolund andHunhammar, 1999). Further studies also might shed light on what

a deMexico (UNAM), Posgrado0.

urban centers and rural areas.

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aying for environmental serviomics (2013), http://dx.doi.or

would motivate ES providers to get actively involved in voluntary con-servation schemes such as PES.

An illustrative example of developments in rural-urban compacts isMexico, the second Latin American country after Costa Rica (Pagiola,2008) to introduce a national PES program in 2003 (Muñoz-Piña et al.,2008). The program was initially set up to assure water provision,which had become an increasingly scarce resource in the country andespecially in Mexico City. This mega-city of approximately 9 million in-habitants (greater Mexico City, which includes neighboring areas, is ap-proximately 20 million) depends heavily on the water supply fromaquifers, whose main recharge areas are located in the surroundingmountains. However, expansion of the city's infrastructure exerts in-creasing pressure on these peri-urban areas, and the continuous ES pro-visions have become critical for the city's future (Pérez Campuzano et al.,2011; Schteingart and Salazar, 2005). One particular feature of theperi-urban catchment is that it is inhabited by communities that holdlegal land-use rights. Hence, a community inscribed in the national PESprogram participates collectively with all of its members. However, al-though community members have equal rights of co-determinationand land use, only a limited number of members recognize their activeinvolvement in the program. This is an interesting issue with strong pol-icy implications because stakeholders' perceptions and attitudes are par-amount in achieving successful policies such as PES (Coulibaly-Linganiet al., 2011; Wossink and van Wenum, 2003). We found that within acommon property regime, considerable heterogeneity exists. It is of par-ticular concern, therefore, whether the group recognizing its PES partic-ipation is likely tomaintain or improve ES provisions. This concern is not

ces: Determining recognized participation under common property ing/10.1016/j.forpol.2013.04.002

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2 K.C. Neitzel et al. / Forest Policy and Economics xxx (2013) xxx–xxx

confirmed by our results because community members actively takingadvantage of the commons by working or cultivating a land parcel(and thus directly targeted by PES participation) are less likely to recog-nize that such a program is applied on the commons.

While most studies of PES participation deal with individual land-holders in rural settings (e.g., Zbinden and Lee, 2005), only a few studieshave been performed in a peri-urban context where ES providers ownand manage the natural resource collectively. Furthermore, althoughresearch identifies a number of variables that theoretically determineparticipation in a PES program (Engel et al., 2008; Pagiola et al., 2005;Zbinden and Lee, 2005), to our knowledge no study refers to the caseof a common property regime and, more specifically, addresses wheth-er a member of a recipient community in Mexico recognizes its PESparticipation. Analyzing communitymembers' recognition of a PES pro-gram indicates whether voluntary participation resulted in active in-volvement of the entire community. The distinction between formalparticipation and actual recognition among community members is ofspecial interest in contexts where the land is owned and managed col-lectively. Thus, this article is interested in addressing the following re-search question: What are the socio-economic variables that influencecommunity members' recognition of participation in a PES programwithin a peri-urban context of common property?

The rest of this paper is organized into four sections. First, brief de-scriptions of the Mexican PES scheme and presentations on the areaof study are given. Second, methods used to identify variables likelyto explain the recognition of program participation through an econo-metric model are presented. Third, results from a logit model are laidout. Finally, a discussion and policy implications for PES design aredeveloped.

2. Payments for environmental services in Mexico

2.1. Background to PES programs

In response to deforestation, forest degradation and increasingwaterscarcity in specific river basins, the Mexican government established anational program of Payments for Hydrological Services (PSAH in Span-ish) in 2003 (Muñoz-Piña et al., 2008). The PSAH program aimed tostrengthen forest conservation and management practices across thecountry, paying particular attention to forested areas in critical water-sheds facing a high deforestation risk (Muñoz-Piña et al., 2008). Thegovernment further acknowledged the importanceof other ES programsby additionally establishing Payments for Carbon, Biodiversity andAgro-forestry Services (PSA-CABSA in Spanish) in 2004. In 2006, PSAHand PSA-CABSA were merged into a single policy framework known asProgram of Payments for Environmental Services (PSA in Spanish) inwhich hydrological, biodiversity, carbon and agro-forestry servicesmaintained their own procedural rules (Corbera et al., 2009).

Mexico's PES program is one of the largest in the world, managedby the National Forestry Commission (CONAFOR in Spanish) andcovers up to 2.27 million ha in 2009 (Alix-García et al., 2010). TheCONAFOR acts as the ES buyer on behalf of society. The most commonES sellers are agrarian communities and ejidos,2 and to a much lesserdegree, private landowners (Muñoz-Piña et al., 2008). The predomi-nance of rural communities as service providers is a key characteristicof Mexico's PES program, in contrast to similar initiatives in LatinAmerica, as is the fact that approximately 70% of the country's forestsare owned by these communities (Bray and Merino-Pérez, 2002; Brayand Merino Pérez, 2004). These are, in turn, made up of agrarian

2 Article 27 of the Mexican Constitution provides an explanation of the origin of twocommon property regimes of land tenure. Agrarian communities are created in areaswhere interest groups, mainly indigenous communities, can prove with documenta-tion and testimonies that they lived on and managed a land area already in colonialtimes, while ejidos are created in areas where interest groups, often former haciendaworkers, request permission from the Mexican president to manage a certain landarea.

Please cite this article as: Neitzel, K.C., et al., Paying for environmental serva peri-urban context, Forest Policy and Economics (2013), http://dx.doi.o

communities and ejidos, which are a product of the Mexican agrarianrevolution of the first half of the 20th century. In succinct terms, theyare a common property regime in which a group of families has theright to use farming lands while sharing access, withdrawal, manage-ment and exclusion rights in grazing and forest areas. Community au-thorities and an assembly of the principal right-holders decide uponand govern the use of the commons, including issues such as timber ex-traction quotas, access rules for villagers who do not hold formal landrights and the benefit-sharing system when forest concessionaries orcommunity forestry enterprises also make use of the forest commons.

Given general interest in understanding the contexts in which thePES program works, an increasing number of scientific studies havebeen published in recent years. Among these publications have beenpapers addressing the issue of non-economic value-added factors thatexplain active involvement. For example, Kosoy et al. (2008) studyfour cases of PES in Mexican ejidos around the rural area of theLacandon Forest (State of Chiapas) and find that these payments arenot only providing monetary benefits but are also increasing land ten-ure security and helping communities to organize internally. A numberof authors (Godoy, 1992; Hyman, 1983; Schuck et al., 2002; Tognettiet al., 2004; Wunder, 2008; Zbinden and Lee, 2005) confirm that landtenure plays an important role in PES participation, although the rightto participate depends on the program orientation (Pagiola et al.,2005; Wunder, 2008). In the case of Mexico, the program explicitly al-lows the common property regimes to participate and demonstratewith their enrollment the “capacity to participate” (Pagiola et al.,2005; Wunder, 2008) formally at the administrative level of collectiveproperty. However, Kosoy et al. (2008) emphasize that the economicfactor ormonetary incentivemight not be the strongest incentive in en-couraging participation in a common property regime; rather, thestrongest incentive is heritage. According to them, the possibility thatfuture generations will have access to resources as well as the abilityto diversify their productive activities encourages community involve-ment. Although a number of authors (Echeverría, 2010; Tognetti et al.,2004;Wunder, 2008) argue that the type and amount of compensationfor the landowners – for example, in the form of opportunity cost calcu-lation (Pagiola, 2008) – are important aspects in determining programparticipation, the compensation adequacy is relative in the peri-urbancontext of the studied case. This is because the paid amount of the PESprogram is partially based on opportunity costs derived from nationalaverages for maize cultivation (Muñoz-Piña et al., 2008). The implicitassumption that these payments adequately cover the real opportunitycosts within a peri-urban location seems rather unlikely. This circum-stance indicates that the recognition of PES program participationmight be motivated by other variables. On the other hand, CONAFORfound it difficult to explain the underlying principles to potential bene-ficiaries of the national PES program (see Braña et al., 2005 cited inMuñoz-Piña et al., 2008). That observation further contributes to theperspective of Corbera et al. (2009) that the existence of diversesocio-ecological systemsmakes it impossible to identify a single institu-tional design that works well in all circumstances. Like the study ofKosoy et al. (2008) andKelley et al. (2003), they reveal that thefinancialresources and guidelines for monitoring during and beyond the con-tractual provisions limit successful implementation of the program.

2.2. The Magdalena River Watershed

The Magdalena River Watershed (MRW) covers an area of approxi-mately 3000 ha. Fed by numerous springs and tributaries, theMagdalenaRiver is the most important perennial water runoff of the basin(Delegación Magdalena Contreras, 2012; Jujnovsky et al., 2010). Mostof its surface belongs to the Magdalena Atlitic community. Ownershiptitles, or property rights, in the MRW date back to the 16th centuryand cover most of its area. During the 20th century, a social reformknown as the “reparto agrario” or agrarian distribution resulted in therecognition of community rights. The earliest requests to be recognized

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as a community were placed in 1945, but it was not until 1975 that2393 hawere granted to 1779 common shareholders through the Com-munal Rights Confirmation Presidential Act (Ramos, 2008). The criteriaused in this act to establish community rights were poorly defined, andcurrently, the following two types of common shareholders are ac-knowledged: those who have a property right and those who, in fact,live there. The Magdalena Atlitic community is organized in an autono-mous way and its General Assembly gathers monthly. Only 250 of the1779 registered common shareholders are regular attendants; 800 arepresent during voting sessions, with the rest most likely erroneouslyregistered as part of the community in the last census. The vastmajorityof the community's residents work in the city because significant com-mercial agricultural activities have been abandoned within the water-shed (IG-UNAM, 2008; Ramos, 2008).

The MRW in effect abides by two administrative acts. The first is agovernment agreement, in effect since June 27, 1932, declaring3100 ha as a Natural Protected Area (NPA) known as the ContrerasRavine Forest Protection Zone. The second is a presidential decreegiven on May 19, 1947 enabling the creation of an industrial societyto use forest resources for paper production; this includes the crea-tion of the Magdalena River Forest Protection Zone, which covers a12 km river stretch starting at the source and extending 500 m inlandfrom each side along the river course (Eguiarte et al., 2002). The mainuses of the forest relate to recreation such as picnicking, cycling, run-ning and hiking, as well as spiritual and religious activities. The collec-tion of mushrooms and firewood, activities related to the simplegastronomy of the area, is not regulated. The area is not subject toplanned forest management; however, local residents say that illegallogging occurs, a claim that has not been confirmed or denied, be-cause of a lack of specific studies on the issue (PMRM, 2008; Ramos,2008).

The Magdalena Atlitic community joined the national PES in 2003for a period of five years, with a total of 1,362.89 ha and an annualpayment of 300 MXN/ha (USD 27.8/ha in 2003). The communityrenewed its participation for the period 2008 to 2012 with a total of1450.49 ha and an annual payment of 382 MXN/ha (USD 34.6/ha in2008). However, the most important issue that has restrained thecommunity from further participation is the accreditation of land ten-ure with official land titles.3 Because some parts of the wateFrshedclaimed by the community are in dispute, rules reject their enroll-ment. The community received the lowest available payment levelin both periods of operation for the concept of hydrological services.To receive the conditional payment, CONAFOR stipulates that benefi-ciaries must be committed to preserving the existing vegetationcover, preventing land-use changes, maintaining minimum supervi-sion levels and monitoring activities.

3. Methods

3.1. The survey

As stated above, out of the total number of community members inthe National Agrarian Register, only approximately 250 members regu-larly attend general assemblies, and with varying frequency. Becauseno list of the community members with their home addresses has beenavailable, random sampling of stakeholders was not possible. Social sci-entists frequently face this problem, mostly in rural settings. Accordingto Smith (1983), non-random sampling might be used for inference insocial science only when the selected sample is representative of thesub-population under study. We believe that this assertion applies inour case because decisions on community issues are made by regular at-tendants. Therefore, we applied a “convenience non-random sampling,”defined by Kelley et al. (2003) as the “sample made up by the easiest

3 Ángel Juárez, President, Magdalena Atlitic community, personal communication.

Please cite this article as: Neitzel, K.C., et al., Paying for environmental servia peri-urban context, Forest Policy and Economics (2013), http://dx.doi.or

subjects to recruit.”Hence, we conducted interviewswith “active” com-munity members before the start of general assemblies, which wereheld monthly, and presidency meetings, which were held on an irregu-lar basis. No interviews were possible during the meetings because for-eigners are not admitted and themeetings' durations are unpredictable.We attempted to apply an interview intensity of at least 10% over the“active community” of 250 members at the community meetings.Once permission for the study was obtained from the community pres-idency, the face-to-face interviews guided by a semi-structured ques-tionnaire were conducted with the community's household heads ortheir spouses.

The structure of the applied questionnaire follows the logic of theSustainable Livelihood Approach (SLA) noted in DFID (1999). It com-prises the following seven sections: (i) human capital, (ii) naturalcapital, (iii) physical capital, (iv) social capital, (v) financial capital,(vi) livelihood strategies and (vii) livelihood outcomes. The question-naire was completed with 41 community members who had an offi-cial membership title. On average, interviews lasted approximately45 min. The data collection took six months because prior consentof the presidency was needed, meetings were held irregularly and in-terviews were possible only before the assemblies.

3.2. Variable selection

As stated above, this paper seeks to elucidate the distinction be-tween formal participation and actual recognition among communitymembers in areas where land is owned and managed collectively. Toanalyze this issue, we use the dichotomous response to the followingquestion: Do you currently participate in a PES scheme?We refer to par-ticipation as the inscription of communal land in the national PES pro-gram by the Magdalena Atlitic community, which implies that allcommunitymembers form part of the program. Consequently, recogni-tion is the circumstance in which a community member should beaware of PES participation. Our hypothesis is that participation in PESprograms is not always voluntary, as accepted definitions of PES pro-grams note (e.g., Wunder, 2005). We argue that common property re-gimes, such as those found in rural-urban compacts, influence theperceptions and recognized participation of stakeholders.

To identify socio-economic variables that determinewhether a com-munity member of theMagdalena Atlitic community recognizes partic-ipation in the national PES scheme, we applied a logistic model usingSTATA 10. The semi-structured interviews guided by our questionnairewere used to collect information that defined a set of variables andallowed researchers to determine whether a community member rec-ognized his/her participation in the PES. Beyond the variables inspiredby the SLA, additional variables specifically referring to PES participa-tion and suggested by other research (e.g., Asquith and Wunder,2009; Echeverría, 2010; Martínez, 2008; Tognetti et al., 2004; Zbindenand Lee, 2005) were considered and tested for relevance in the studiedsocio-economic system. The variables used in the econometric analysisare detailed in Table 1 with the corresponding question and hypothesis.They are grouped into three broad categories of institutional arrange-ments, human capacity and capability, and perception of the natural re-source context.

The reason for integrating the category “institutional arrangements”is its expected influence on collaboration in the sustainable use of ascarce natural resource such as the common property. It is a central fea-ture of PES to employ a principal–agent, or government–community,relationship to actively involve the parties in conserving a natural re-source. Thus, this category and associated variables are expected to in-fluence participation in environmental programs such as PES. In thisinvestigation, we consider three variables specifically (see Table 2).The first variable relates to aspects of PES participation reported at thecommunity level, including the capacity to self-organize (Echeverría,2010), communal leadership (Echeverría, 2010), form of governanceand processes of decision-making (Tognetti et al., 2004), access and



Table 1Explanatory variables of the econometric model.

Independentvariable

Question and hypothesis

Institutional arrangementsASSEMBLY Indicate the number of times you have participated in the General

Assembly in the last year. It is assumed that a greater degree ofassembly assistance causes greater recognition of PESparticipation.

CONAFOR Do you trust the CONAFOR? It is assumed that a higher degreeof trust in the institution causes greater recognition of PESparticipation.

CORRUPTION Do you think that corruption is a problem in your daily living? Itis assumed that a greater degree of corruption causes lowerrecognition of PES participation.

Human capacity and capabilityAGE How old are you? It is expected that older community members

have a greater probability to recognize the participation.EDUCATION What is your level of schooling? It is assumed that a higher level

of community members' education causes greater recognitionof PES participation.

INCOME What is the level of monthly household income? It is assumed thata higher income range causes greater recognition of PESparticipation.

Perception of the natural resource contextWORK/CULTIVATE Do you work or cultivate a property or land parcel within the

polygon of the community? It is assumed that a greater degree ofcultivating or working the land property causes less recognitionfor the PES participation.

HAZARDS Do you think that pests and diseases are a problem in your dailyliving? It is hypothesized that a greater perception that hazardsthreaten community members' land-use activities causesgreater recognition of PES participation.

RUNDRY Do you think that the river could run dry? It is expected that agreater feeling that the river is at risk of running dry causesgreater recognition of PES participation.


diffusion of information (Adesina and Chianu, 2002;Adesina et al., 2000;Arnold, 1992; Hosier, 1989; Hyman, 1983; Thacher et al., 1996; Zbindenand Lee, 2005) and trust and institutional agreements (Tognetti et al.,2004). Specifically in the Mexican case, Kosoy et al. (2008) reveal thatprocesses and management at the community level (e.g., rules of forestmanagement, collective conservation values, consensus about the use ofPES income and the small size of the community) are important. As aproxy of the aforementioned factors and recognizing the particular fea-ture of common property, we included the variable ASSEMBLY, whichrepresents the main institution for collective decision-making withinthe community. The continuous variable refers to the number of timesa community member attended the General Assembly in the past12 months, with a maximum possible number of 12.

The second variable refers to the administrator of the program, in-cluding aspects such as processes and management at the programlevel (e.g., simple rules,flexibility in processes, effective communicationat different levels and access to information) (Kosoy et al., 2008), aswellas trust and institutional agreements (Tognetti et al., 2004). CONAFORrepresents the governmental institution running the PES program andinteractingwith the community, best characterizing the role of the prin-cipal to explain program participation. The dichotomous variable is aproxy for a community member's trust in the institution that runsthe program, where the number “1” denotes a member's trust inCONAFOR and “0” denotes otherwise.

The presence of corruption has been integrated as a third variablethat is likely to influence trust in institutional agreements (Tognettiet al., 2004) and the desire of participation (Pagiola et al., 2005). Thevariable, which is expected to have a critical impact on the relationshipbetween ES seller and buyer, is important for environmental policy en-forcement in general and for theMexican context in particular. The var-iable CORRUPTION denotes an interesting feature of “doing business” in


the area of study. The dichotomous variable indicates whether a com-munity member believes that the activities of daily living are affectedby corruption and mismanagement, where “1” suggests a communitymember's affectedness and “0” denotes otherwise.

In socio-economic studies, it is generally accepted that increased“human capacity and capability” in the form of capacity to work andhigher levels of schooling results in greater well-being. Because vari-ables in this category often play a central role in explaining PES programparticipation, researchers frequently include such aspects in their anal-yses of program appropriation. Accordingly, three variables are of par-ticular concern (see Table 2). The first variable relates to factors ofprogram adoption such as features of the household head (e.g., age)(Ayuk, 1997; Chambers and Foster, 1983; Echeverría, 2010; Nagubadiet al., 1996; Rahm and Huffman, 1984; Thacher et al., 1996; Tognettiet al., 2004; Zbinden and Lee, 2005) and the availability and locationof the labor force for managing the natural resource base (Ayuk, 1997;Neupane et al., 2002; Scherr, 1992; Thacher et al., 1996). We includedthe variable AGE in our research, referring to the age of the householdhead. The continuous variable provides not only an indication of a com-munity member's experience and skill level but also his/her ability toactively manage the commons.

Secondly, the education of the household head reportedly plays animportant role in program participation (Ayuk, 1997; Echeverría,2010; Nagubadi et al., 1996; Rahm and Huffman, 1984; Tognetti etal., 2004; Zbinden and Lee, 2005) and indicates the availability and lo-cation of the labor force for managing the land (Ayuk, 1997; Neupaneet al., 2002; Scherr, 1992; Thacher et al., 1996). Accordingly, the var-iable EDUCATION denotes the household head’s formal education.The continuous variable provides information about the communitymember's maximum accomplished level of schooling ranging from“1” (no schooling) to “9” (post-graduate studies).

The dimensions of the third variable explaining environmentalprogram participation include monetary income and indebtedness(Thacher et al., 1996; Wunder, 2008; Zbinden and Lee, 2005)and processes and management at the community member level(e.g., contribution to the household income and strengthening anddiversification of productive activities) (Kosoy et al., 2008). There-fore, the variable INCOME has been integrated to indicate the rangeof monthly family income. The continuous variable is measured onthe basis of the current monthly minimum income in Mexico Cityranging from “1” (≤MXN 1700; USD 137.4 in 2011) to “8” (≥MXN11,901; USD 961.6 in 2011).

In environmental economic studies such as this one, the “perceptionof the natural resource context” is of primary interest. The characteristicsof the natural capital available to the household are likely to affect the de-gree of well-being. To analyze this third category, three variables havebeen integrated in ourmodel (see Table 2). Afirst related and critical fac-tor in peri-urban areas is the opportunity cost of conservation. Accord-ingly, program appropriation is most likely influenced by land size ormanaged area (Ayuk, 1997; Chambers and Foster, 1983; Nagubadi etal., 1996; Nowak, 1987; Thacher et al., 1996; Zbinden and Lee, 2005),land quality (Adesina and Chianu, 2002; Mortensen et al., 1988;Zbinden and Lee, 2005) and processes and management at the commu-nitymember level (e.g., contribution to the household income, strength-ening and diversification of productive activities, and ensuring access toresearch and projects) (Kosoy et al., 2008). A proxy of these factors is thevariable WORK/CULTIVATE. It represents the community member's de-pendence on the active management of the commons and, therefore,the opportunity cost of extending his/her area of production. The dichot-omous variable indicates whether the community member has beenassigned a parcel onwhich he/she performs subsistence and/or commer-cial activities, where “1” suggests active management of a land parceland “0” otherwise.

A second dimension of variables associated with the natural re-source context is the attitude towards the same. The ES provider'sperception regarding the ES is a key variable for PES participation



4 We verified that neither multicollinearity nor heteroscedasticity problems existedby means of the VIF (Variance Inflation Factor) command, and the hettest (Breusch–Pagan/Cook–Weisberg test for heteroskedasticity) command, both provided by STATA.Complete tests are available upon request from the authors.


(Echeverría, 2010). It might be influenced by both indirect and directfactors. In our analysis, the variable HAZARDS has been integratedas a proxy for factors that have a direct impact on a communitymember's primary production. The dichotomous variable discloseswhether the community member believes that subsistence and/orcommercial activities for maintaining the household are negativelyaffected by environmental hazards, where “1” denotes affectednessand “0” otherwise.

Finally, because the program remunerates the provision of hydro-logical services, the respective perception of the ES provider relativeto the threat of continued ES provision is of interest. As already men-tioned, when analyzing the appropriation of a PES program, the per-ception of the ES likely plays a role (Echeverría, 2010). In general,awareness that a relationship exists between forest and water is rath-er strong in Mexican society (Muñoz-Piña et al., 2008) and in manyother Central American countries (Pagiola, 2008). Therefore, the var-iable RUNDRY is a suitable proxy for completing the category of thenatural resource context with its direct or indirect impact on a house-hold. The dichotomous variable indicates whether a communitymember believes that the river could dry up one day, where “1” indi-cates a perceived risk and “0” otherwise.

3.3. Model description

The analysis included 41 observations in the construction of theeconometric model. A two-stage selection process was applied inscreening the large set of possible variables to find those statisticallysignificant for an econometric model. The process first included acorrelation analysis between the dependent variable (recognizedparticipation in PES) and associated variables, and secondly used afactorial analysis. Both steps led to a reduction in the number ofvariables while maintaining the greatest amount of information andidentifying those variables with the greatest potential for statisticalinterpretation.

To further analyze the data and answer the research question, thisstudy employed a logistic regressionmodel. This is because the selecteddependent variable takes a value of 0 or 1 and allows answering of theresearch question. The resulting logit model determined the variablesthat explain why a community member of the Magdalena Atlitic com-munity recognizes the PES participation. The model formally takes thefollowing expression:

Yi ¼ 1 if Y�i ¼ Xiβþ Vi > 0

0 if otherwise

�

here Yi is the dependent variable, Xi is the independent variable, β is thecoefficient, Vi is the residual and i is the observation.

In this sense, the probability that Yi = 1 is:

Prob Yi ¼ 1ð Þ ¼ Prob Vi > −Xiβð Þ:

Defining F(.) as the cumulative density function of the distributionof residuals Vi:

Prob Yi ¼ 1ð Þ ¼ 1−F −Xiβð Þ:

Similarly, the probability that Yi = 0 occurs is:

Prob Yi ¼ 0ð Þ ¼ F �Xiβð Þ:

Because the decision of the community member is a binary vari-able, a probit or logit model is applied. Therefore, the research usestechniques of maximum likelihood and assumes that the distributionof Vi for the estimation of the variable Yi* is logistic for a logit model.


Defining F as the cumulative density function of normal distribution,the likelihood function L is defined as follows:

L ¼ ∏yi¼0

F −Xiβð Þ ∏yi¼1

1−F −Xiβð Þ½ �:

The functional form for F depends on the assumption regardingthe distribution of the error term. As we assume that the error func-tion has a logistic distribution, the functional form is equal to:

F −Xiβð Þ ¼ e −Xiβð Þ

1þ e �Xiβð Þ ¼1

1þ e Xiβð Þ :

The parameters found in this estimation are used to find the mar-ginal impact of a change in Xik over the probability to observe Yi = 1;where Xik is the k-th element of the vector of independent variablesXi and βk is the k-th element of the coefficient β. In this regard, thefollowing calculation is made:

∂F −Xiβð Þ∂Xik

¼ θ Xiβð Þβk:

We assume a logistic distribution for Vi: F(.) = exp(−e−vi). There-fore, the probability that a community member recognizes his/her par-ticipation in the PES is given by the following expression:

Prob Yi ¼ 1ð Þ ¼ Prob 1−Xiβð Þ ¼ e Xiβð Þ

1þ e Xiβð Þ :

The parameters found through a logit model differ slightly from aprobit model. Although the distribution is not identical it is similar, sothat either of the two can be used (Long and Freese, 2006). Similarly,the marginal impact of each variable depends on the point in the dis-tribution that is being assessed, that is:

∂L Xiβð Þ∂Xik

¼ e Xiβð Þ

1þ e Xiβð Þ� �2 βk:

The dependent variable in the model is labeled RECOGNITION andtakes the value of one (1), if the set of independent variables indicatethe recognition of PES participation, and zero (0) otherwise. The logitmodel for the dependent variable is estimated by the following ex-pression:

RECOGNITION ¼ x0 þ x1 � ASSEMBLY þ x2 � CONAFORþ x3 � CORRUPTIONþx4 � AGE þ x5 � EDUCATION þ x6 � INCOMEþ x7 �WORK=CULTIVATEþx8 � HAZARDSþ x9 � RUNDRY þ error:

The independent variables of Table 1 are assumed to explain the de-pendent variable if demonstrating statistical significance for p ≤ 0.05and 0.10.

4. Results

The results of the estimations derived from the econometric modelare shown in Table 3.4 The overall model is statistically significant at alevel of 5% (Prob > chi2 = 0.0014). The summary statistics obtainedfrom the model reveal that out of 41 observations, 56% of the subjectsrecognized their participation in the national PES program, indicatinga relative desire to participate in the PES program.

All of the coefficients of the independent variables with their mar-ginal effects are statistically significant at 10%, exceptWORK/CULTIVATEand RUNDRY. The nine independent variables of the econometric model



Table 2Descriptive statistics.

Variable n Mean Std. Dev. Min Max

RECOGNITION 41 0.560 0.502 0 1ASSEMBLY 41 7.854 3.054 0 12CONAFOR 41 0.537 0.505 0 1CORRUPTION 41 0.780 0.419 0 1AGE 41 57.341 13.207 33 82EDUCATION 41 3.634 1.757 1 9INCOME 41 2.585 1.923 1 8WORK/CULTIVATE 41 0.430 0.502 0 1HAZARDS 41 0.244 0.435 0 1RUNDRY 41 0.854 0.358 0 1


help to clarify why a community member with access to the commonproperty recognizes his/her participation in the PES program.

The independent variables indicating institutional arrangementshave mixed signs. The variable ASSEMBLY is positively related withthe dependent variable. However, the value of this coefficient is rela-tively low, which means that increasing attendance to 100% repre-sents a five-percent increase in the probability that the respondentsparticipate in the PES program. On average, the interviewees statedthat they had attended eight General Assembly meetings in the pastyear. The CONAFOR variable has a negative relationship toward therecognition of PES participation in the model. The increase of trustin the governmental institution at 100% causes a decrease of 65% inthe probability of community members' recognition of PES participa-tion; although 53% of the respondents indicated that they trust thePES administrator. The independent variable CORRUPTION is also neg-atively related to the dependent variable; the econometric model es-timates that if community perception that corruption affects dailyactivities increases to 100%, it reduces the probability that membersrecognize PES participation by 28%. This observation also is reflectedby the fact that 78% of respondents mention that corruption affectsdaily decision-making.

The independent variables related to human capacity and capabilityof households all have a positive impact on the dependent variable. Theresult for AGE reveals that if the age of the household head increases to100%, the probability of recognizing program participation increases by1.7%. A household head in the community is on average 57 years old.The result for the household head's level of education (EDUCATION)demonstrates that higher schooling increases the probability of recog-nizing PES participation. Interviewees indicated that household headshave on average a schooling level between middle and high school orapproximately nine years of education. Further, the model indicatesthat if the variable INCOME increases to 100%, the likelihood that a com-munity member recognizes program participation increases by 38%.The observations show that a household in the community has a budgetof approximately 3500MXNpermonth (USD 282.8 permonth in 2011).

Variables referring to communitymembers' perceptions of the natu-ral resource context within the peri-urban location have amixed impacton the dependent variable. The variableWORK/CULTIVATEhas a negativesign, indicating that if the variable increases to 100%, the probability thatamember recognizes participation in the PES programdecreases by 36%.Approximately 44% of the interviewees confirmed that they work orcultivate a land parcel within the common property. The variables HAZ-ARDS and RUNDRY both relate to the perception of natural vulnerabilityandhave a positive impact on the dependent variable. ForHAZARDS, 24%stated that the presence of pests and diseases affect their daily living,and it is found that an increase to 100% in this perception results in a39-percent increase in probability that the community member recog-nizes participation in the program. Evenmore respondents, 85%, believethat the water flow in the Magdalena River could eventually vanish(RUNDRY). The model indicates that if the probability increases to100%, it causes a 30% increase in recognition of the community's partic-ipation in the PES.


5. Discussion

The economic model presented indicates that the common prop-erty regime as the principal ES seller in Mexico does not per semean that the PES enrollment is absolutely voluntary because it is ajoint decision from a collective of individual ES providers with theo-retically equal right of land access and co-determination (e.g., PESprogram acceptance). Rather, results suggest that a significant differ-ence in recognized participation exists within a recipient communitywhere, for example, community members actively working or culti-vating a land parcel on the commons are less likely to recognizetheir PES participation even after 10 years of program operation.This outcome demonstrates that the conditions of voluntary partici-pation and conditionality, as stipulated by the PES definition ofWunder (2005), are likely to be flawed in the context of commonproperty regimes such as the one presented here. The nine indepen-dent variables of the econometric model help to explain this internalsplit.

In the studied case of the Magdalena Atlitic community, the Gen-eral Assembly represents the highest decision body and is the formaland regular channel of information dissemination, as for example, inthe participation in the PES program. It is observed that attendancein assemblies increases the probability that a community memberrecognizes his/her participation in the PES program. This trend wasexpected, although in greater magnitude, because in the assembliesall community-related issues (economic, social, and cultural) arediscussed and collective decision-making is made. This regular com-munication that exists among “all” members in the communitymost likely strengthens active involvement of community members.However, the General Assembly also provides the platform wherecommunity members or groups settle internal disputes, which mayhamper internal organization as reported by Ramos (2008).

The counterpart for the agrarian community as the ES seller is theCONAFOR, which represents the institution responsible for programadministration and acts as the ES buyer. As stated above, the modelshows that the coefficient for CONAFOR is negative at the level ofthe community member. This indicates an inverse relationship be-tween trust in the institution and recognition of the program partici-pation. However, this outcome is unexpected because it had beenassumed that trust in the institution controlling the payment in-creases the likelihood that respondents recognize the program. Onefactor that might have influenced this result is that intervieweesmixed up the institution making the payment and did not knowwho pays what, how, when and why. Most respondents answeredthat the payment comes from other governmental institutions.Under these circumstances, it is argued that the presence of theCONAFOR, as the principal that is executing and monitoring the pro-ject, is rather low and felt as a distant and alien institution. However,another related interpretation is the motivation of community mem-bers to adversely select such programs. That means that if they do nottrust the institution running the program, they are more willing totake advantage of the offered monetary benefits. This occurs althoughthey are not specifically aware of the programs' utility and show littleinterest in contributing. The underlying cause explaining the relation-ship could be the historically motivated distrust of common propertyregimes toward authorities. In fact, Ramos (2008) has indicated thatthis community has rather low institutional trust. Equally, Corberaand Brown (2008) reveal that in Mexico, for example, the forest car-bon market is hampered by the lack of organization in the govern-ment and civil society, as well as by deficient interactions with theinstitutions of common property regimes.

Corruption directly relates to internal (General Assembly) and ex-ternal (CONAFOR) institutional arrangements in the studied case.These arrangements likely involve monitoring of compliance withpayment rules and participation requirements, and especially thepayment of economic benefits. The model showed as anticipated



Table 3Logistic regression.

Log likelihood −14.572996 Obs. 41

Marginal effects after logit LR chi2(9) 27.08

Y Pr(RECOGNITION) Prob > chi2 0.0014

0.78002145 Pseudo R2 0.4816

Variable dy/dx Std. err. Z P > |z| [95% C.I.] X

ASSEMBLY 0.053293 0.03316 1.61 0.108 −0.01169 0.11828 7.8536CONAFORa −0.653098 0.18988 −3.44 0.001 −1.02526 −0.28093 0.5365CORRUPTIONa −0.287420 0.14391 −2.00 0.046 −0.56947 −0.00536 0.7804AGE 0.017714 0.00989 1.79 0.073 −0.00166 0.03709 57.3415EDUCATION 0.240183 0.10059 2.39 0.017 0.04303 0.43733 3.6341INCOME 0.380022 0.13156 2.89 0.004 0.12216 0.63788 2.5853WORK/CULTIVATEa −0.367429 0.24441 −1.50 0.133 −0.84647 0.11161 0.4390HAZARDSa 0.392673 0.15198 2.58 0.010 0.09479 0.69055 0.2439RUNDRYa 0.301267 0.28973 1.04 0.298 −0.26659 0.86912 0.8536

a dy/dx is for discrete change of the dummy variable from 0 to 1.


that the perception of its presence in daily activities negatively affectsthe community members' recognition of PES participation. That is, thedegree to which community members perceived corruption, particu-larly in institutions handling payments from the program in a non-transparent manner or when not performing as expected, discouragesactive individual involvement and prompts members to move awayand become uninformed or poorly informed. The high level of mis-trust in the Magdalena Atlitic community, as revealed by Ramos(2008), hampers the introduction and implementation of any envi-ronmental program, presumably affecting the performance of thePES program. Consequently, the community representation demon-strates that the government is interested in the MRW for all the ben-efits it produces, especially the provision of water to Mexico City'ssectors with higher socio-economic levels.5

The variable AGE of the household head revealed the expected re-lationship that the older the member is, the greater the likelihood ofrecognizing the PES participation. The fact that the heads of thehousehold in the sample were on average 57 years old confirmsthat both rural (Warman, 2001) and peri-urban areas managed bycommon property regimes in Mexico are aging, which also reflects ageneral trend of higher life expectancies in Mexico (World Bank,2010). The impact of age on the model might be explained throughthe circumstance that the older the community member gets, thegreater becomes his/her concern to leave the natural resource as aheritage for future generations (Rico García-Amado et al., 2013),and/or the lesser the physical capacity to exploit the natural capital.Following the latter reasoning, the older the community member,the greater the probability that his/her income opportunities de-crease in regard to agriculture or other labor-intensive activities.We might infer that additional income from other government pro-grams is highly appreciated and therefore explains recognition ofparticipation.

Education level provides information about the household head'slevel of knowledge and cognitive capacity to understand abstract PESprogram contents. As expected, the model demonstrated that thehigher the communitymember's level of education, the greater the like-lihood that he/she recognizes PES participation. In this regard, beingmore highly educated enables community members to learn aboutthe benefits and disadvantages, presumably increasing the desire toparticipate. Furthermore, education has a positive impact on the envi-ronmental awareness of members and their desire to preserve theland; they also might be less driven by payment andmore by an oppor-tunity to conserve land and resources for their descendants (Illukpitiya,2005; Rico García-Amado et al., 2013; Teklewold and Köhlin, 2010).

5 Ángel Juárez, President Magdalena Atlitic community, personal communication.


According to the econometric model, the level of liquid financial re-sources available to the household reveals the expected relation that if amember has a higher income, he/she is more likely to recognize PESparticipation. We assume that the community member perceives thePES programas anopportunity to diversify and complement the incomeportfolio. Hence, a community member gets actively involved in a PESprogram only when either he/she does not derive a relatively high in-come from the activities that a conservation program intends to restrict(Claassen et al., 2008; Engel et al., 2008; Ferraro, 2008) or does not ob-tain income at all from any of these activities. In the latter case, on theone hand, the opportunity costs are zero and a payment, in additionto being inefficient (as in the first case), will also be ineffective. On theother hand, these results indicate that lower income groups are less in-terested in information and participation in the PES, which contrastswith the additional objective of the program to alleviate poverty. Pre-sumably, a community member with a higher income perceives thepayment only as an additional income that is insignificant, while mem-bers with lower incomes perceive it as a threat to their income and sub-sistence activities that are based on resource extraction.

Consequently, the model showed as anticipated that if a commu-nity member works or cultivates the common land property, he/sheis less likely to recognize PES participation. This may suggest thatworking a land parcel implies greater opportunity costs relative tothe PES offer. The theory states that the economic amount paid forES must be greater than or at least equal to the opportunity costs ofnot using the natural resource (Bergen et al., 2002; Claassen et al.,2008; Engel et al., 2008; Ferraro, 2008; Ibarra Gené, 2007). However,the payment could in some cases support the resistance of the pres-sure from urban sprawl and favor the conservation of the land use(Murillo-Hernández, 2008). Other authors interpret the PES offer asa risk factor in the decision-making of the “farmer,” arguing that land-owners might fear a “cold” expropriation (Dobbs and Pretty, 2008)and the program thus undermines the landowner's usual (cultural)activity. Similarly, Kosoy et al. (2008) note that the economic incen-tive of PES is not always the strongest motivation for participation.Preserving traditions and heritage seem to be stronger incentives.This mindset, especially of the older community members, is deeplyrooted in the ability to work and cultivate the land, and once landuse is restricted, there is a lower level of perceived ownership. Inthe Mexican culture, “the land belongs to the tiller” and justifiesland ownership, which has been important since the revolution in1910. Therefore, it is likely that to stop working the land for conserva-tion purposes is an idea conflicting with the rationale of justifyingland ownership. However, the activity to work and cultivate theland is at odds with the conservation objectives of the PES program,and it is likely that many who want to keep this tradition either forconsumption or as lucrative income source are not interested in




conservation programs. Thus, in certain cases, the reason for a prefer-ence to cultivate goes beyond a purely monetary opportunity-costconsideration.

Environmental hazards such as pests and diseases represent a pre-occupation for community members in our sample, increasing the rec-ognition of PES participation as expected. It might be assumed thatparticipants might look at the PES as a type of insurance against a prev-alent threatwithin their vulnerability context (RicoGarcía-Amado et al.,2013). Similarly, government programs operate in theMRWto confrontenvironmental hazards and formpart of the formal safety net. Publishedstudies argue that high vulnerability in agricultural production andforestry, togetherwith limited access to “financial capital” (e.g., credits),is likely to cause landowners to limit and even avoid investments inproduction (Chambers and Conway, 1992; DFID, 1999; Grieg-Gran etal., 2005). In response, mechanisms such asmicro-financing and gener-al diversification of income increase the certainty about reliable finan-cial resources for sustainable management practices (DFID, 1999).Hence, programs such as PES might represent a way to increase the re-silience of community members regarding environmental hazards andare, therefore, recognized by the members.

Finally, our results demonstrate an association between the percep-tion of the river's water flow and the recognition of PES participation.This relationship was expected because the river is a landmark withinthe bounds of the community; a number of community members de-pend on activities related to the river (irrigation in agriculture, troutbreeding, cattle, tourism and restaurants), which creates a greaterawareness of problems that affect the river flow and the recognition ofPES as a conservation instrument. The relationship between land useand water provisions remains poorly understood, however (Asquithet al., 2008; Bennett, 2008; Pagiola, 2008; Wunder and Albán, 2008).This is a problem when justifying payoffs and creating direct links withthe ES buyer, which in the studied case is the government and not theactual ES user.

6. Policy implications

Although in theory all communitymembers are informed about andbenefit from the community's participation in the national PES scheme,in the studied case not all members of a peri-urban community recog-nize their participation in the PES program. Our econometric modelshows that the appropriation of the national PES program is rather lim-itedwithin the recipient community. In fact, the voluntary participationin a PES scheme does not imply full compliance in the context of theMexican common property regimes. Our analysis has also shown thata set of nine variables grouped into three categories (institutionalarrangements, human capacity and capability, and perception of thenatural resource context) explains the level of recognition regardingPES participation within an agrarian community.

We believe that institutions running PES programs must improvetheir collaboration with the communities to create knowledge andgenerate trust in the proposed activities for achieving the PES objec-tives. An entry point is the joint decision-making of common propertyregimes. The General Assembly, legally anchored as the highestdecision-making forum of an agrarian community, demonstratedthat it has a positive impact on recognized participation. Therefore,PES administrators should further explore a communication strategythat takes advantage of existing communication channels in the com-munity, using it as a multiplier for the dissemination of knowledgeand feedback on PES performance. However, the distrust towardsCONAFOR and the inverse relationship towards PES appropriationwithin a community are worrisome. As the institution in charge ofthe PES program, CONAFOR needs to have a closer relationship withcommunities to more easily communicate rules of operation, clarifywhere support comes from, explain why it is provided and outlinewhat has to be conducted in return. Although CONAFOR's capacity islimited by financial constraints, regular meetings must be held with


the community and in the General Assembly. In the General Assem-bly, resources are obtained from the PES and distributed amongcommunity members. This line of action also might help counteractthe far-reaching impression that corruption affects daily living. Inthe mindset of PES, the focus should be on the authorities who verifycompliance of project goals and apply the correct payments tobeneficiaries.

Our results support the observation of higher life expectanciesin Mexico, which likely coincides with trends in rural communitiesalong Mexico. However, the community could begin to undergo a re-newal process with younger members. Thus, it is important to conveythe idea that safeguarding the benefits of ES provisions is valuablefor future generations and third parties, and enable access to othersources of income and/or promote sustainable management of thenatural resource. These recommendations might eventually improvecurrent ES provisions, while at the same time allow the communityto pursue traditional forms of living. As we have also seen, higher ed-ucation levels lead to greater recognition of PES participation, whichmay have a cognitive dimension but might also be related to a lesserdependence on the natural resource base. Education is a key asset foraccessing sources of income. Thus, if PES is not able to offset the op-portunity costs from livelihood activities that the program intendsto restrict, program appropriation is low. The education level of com-munity members must be considered in the PES program to identifyactivities that can be performed within the bounds of the commonswithout harming program objectives.

Because the PES program employs the concept of opportunity coststo determine payment levels, it implies a certain difficulty to accuratelymeasure relevant land-use alternatives and their change over time. Fur-thermore, this difficulty is exacerbated when the decision to conservethe forest or change the land use is not exclusively a linear, one-dimensional process that can be explained through the weight of mone-tary incentives, such as PES, although undoubtedly, the presence or lackof the same stillmightweigh on the decision of the landowner. However,the cultural component has a profound implication in the Mexican con-text and is based on the history of land distribution in the country. Nota-bly, programs such as the PESmight conflict with aMexican culture thatis deeply rooted in indigenous and rural-coined communities. Given thepreoccupation with environmental hazards, however, it might be usedas a vehicle of communication to diffuse PES objectives, to elaborate onactivity diversification, to invest in sustainable natural resourcemanage-ment and to draw attention to the possibility that a PES scheme mightact like insurance against unforeseen events. The immediate interest ofthe community in hazard prevention is likely to increase program recog-nition. Similarly, the perceived threat of a river running dry is an aspectthat directly affects the well-being of community members, both interms of health and the economy. The PES administration could take ad-vantage of these preoccupations and provide better information aboutthe importance of the quantity of water used now and in the future,together with the positive implications of program participation.

Acknowledgments

We are very thankful to the members of the Magdalena Atliticcommunity who allowed us to develop our work in their community.We especially owe Ángel Juárez, president of the Magdalena Atliticcommunity, a debt of gratitude for helping us to realize and success-fully accomplish our field work.

The researchwork of four studentswas supported through academicscholarships granted by the National Council on Science and Technology(CONACyT in Spanish), nos. 239642, 240425, 297139 and 165058. Theauthors further acknowledge the financial support of the National Au-tonomous University of Mexico (UNAM DGAPA-PAPIIT, no. IN219809)for the investigation in the MRW and also would like to thank the fol-lowing institutes at the UNAM for their support: Postgraduate Facultyof Economics, Postgraduate Institute of Marine Science and Limnology,




Postgraduate Faculty of Biological Sciences, Economic Research Instituteand Faculty of Science. In addition, we are grateful to the Institute ofScience and Technology of the Federal District and the Center for Atmo-spheric Sciences for the funding provided through the project VirtualClimate Change Center of Mexico City.

We also would like to acknowledge the great help of our field teamthat supported us in the process of data recollection; namely, JuanCarlos Aleman, Edgar Caro Borrero, Piedad Caro Borrero, Monica Jaimes,Yougha v. Laer and AlejandroMartinéz. Further, we are deeply indebtedto Esteve Corbera and Erik Gómez-Baggethun, who commented on pre-vious versions of the paper. Any errors or omissions contained hereinare the authors' responsibility.

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