We evaluate three farmer behavioral responses to incentive payments for ecosystem services, specifically a cover crop cost-share program aimed at reducing nitrogen loads in the Chesapeake Bay. Using farmer survey data in Maryland, we estimate a two-stage simultaneous equation model to correct...

Payment for ecosystem services (PES) program contracts include penalties for nonperformance to ensure that they receive the environmental benefits they have been paying for. The standard penalty structure in PES programs requires participants to pay back all program payments received if the...