139
4. Consistency with cultural practices, such as societal values, worldviews, cultural
norms and behaviors, perceptions of needs for action, and compatibility of
strategies with lifestyles.
5. Availability of technology.
6. Knowledge of new practices, such as knowledge and awareness of waterconserving irrigation strategies as elaborated on in Chambwera et al. (2014).
Limits may be alleviated through educational programs, extension programs,
loan programs, grants, and other actions. They may also render some strategies
useless.
5.2.10 The Role of Incentives
It is rarely the case that a FEW Nexus action will make everyone better off (what
economists commonly call an action that is Pareto optimal, and others call a winwin situation). Generally, at least one participant in Nexus or a group thereof will be
made worse off by the given action.
In judging action desirability, economists generally utilize the compensation
principle finding that the action is desirable if those gaining from the implementation have gains large enough to compensate those who lose (for discussion see Just
et al. 2008).
When an action is implemented, there is no guarantee that the compensation will
actually occur, that is, if consumers benefit from a production increase while producers lose consumers generally do not compensate producers. However, if the individuals that would need to implement the Nexus action can choose whether or not
to implement, then some form of direct compensation would be needed to get the
Nexus action implemented. For example, suppose an action involves the construction of a reservoir in a valley containing a small number of farms, and that the purpose of the reservoir is supplying water to a nearby town, but it takes water away
from the farmers. If the people who benefit from the reservoir, that is, the urban
population could in principle fully compensate the losers, that is, the farmers, and
farmers feel that they will be worse off as a result of the reservoir, then the reservoir
may not be built. However, if compensation is actually paid, then the farmers may
cooperate. Such a situation is common with water trades from agriculture to urban
interests where water markets are a way that farmers can be compensated.
Compensation in the form of incentives needs to stimulate target entities to adopt
costly practices which generally do not yield benefits to themselves even though
others receive gains. Steps can also be taken to make current practices undesirable
steering decision-makers to shift toward the Nexus action. Many different forms of
incentives or steering disincentives are possible, including:
1. The introduction of markets for Nexus items, like a water market, where cities
can buy the water from farmers who would lose if they lost access to the water,
but the price for the water could be high enough to compensate the farmers for
any losses.
5 Economics
4. Consistency with cultural practices, such as societal values, worldviews, cultural
norms and behaviors, perceptions of needs for action, and compatibility of
strategies with lifestyles.
5. Availability of technology.
6. Knowledge of new practices, such as knowledge and awareness of waterconserving irrigation strategies as elaborated on in Chambwera et al. (2014).
Limits may be alleviated through educational programs, extension programs,
loan programs, grants, and other actions. They may also render some strategies
useless.
5.2.10 The Role of Incentives
It is rarely the case that a FEW Nexus action will make everyone better off (what
economists commonly call an action that is Pareto optimal, and others call a winwin situation). Generally, at least one participant in Nexus or a group thereof will be
made worse off by the given action.
In judging action desirability, economists generally utilize the compensation
principle finding that the action is desirable if those gaining from the implementation have gains large enough to compensate those who lose (for discussion see Just
et al. 2008).
When an action is implemented, there is no guarantee that the compensation will
actually occur, that is, if consumers benefit from a production increase while producers lose consumers generally do not compensate producers. However, if the individuals that would need to implement the Nexus action can choose whether or not
to implement, then some form of direct compensation would be needed to get the
Nexus action implemented. For example, suppose an action involves the construction of a reservoir in a valley containing a small number of farms, and that the purpose of the reservoir is supplying water to a nearby town, but it takes water away
from the farmers. If the people who benefit from the reservoir, that is, the urban
population could in principle fully compensate the losers, that is, the farmers, and
farmers feel that they will be worse off as a result of the reservoir, then the reservoir
may not be built. However, if compensation is actually paid, then the farmers may
cooperate. Such a situation is common with water trades from agriculture to urban
interests where water markets are a way that farmers can be compensated.
Compensation in the form of incentives needs to stimulate target entities to adopt
costly practices which generally do not yield benefits to themselves even though
others receive gains. Steps can also be taken to make current practices undesirable
steering decision-makers to shift toward the Nexus action. Many different forms of
incentives or steering disincentives are possible, including:
1. The introduction of markets for Nexus items, like a water market, where cities
can buy the water from farmers who would lose if they lost access to the water,
but the price for the water could be high enough to compensate the farmers for
any losses.
5 Economics