Stewardship Signaling and Use of Social Pressure to Reduce Nonpoint Source Pollution

Abstract

Nonpoint source pollution persists in agricultural landscapes, and policy makers are increasingly interested in opportunities to reduce pollution using behavioral approaches in lieu of regulations or increased financial incentives. We use a laboratory experiment to analyze how stewardship signaling and social pressure affect management decisions with environmental consequences. We find that stewardship signaling and, to some extent, social pressures increase adoption of a pollution-abatement technology, but the effect on social net benefit depends on the relative cost of technology adoption and the economic benefits of pollution reduction. Our results have implications for agri-environmental programs that publicly recognize environmental stewardship. (JEL Q18, Q25)