The Japanese government introduced the Farmland, Water and Environmental Conservation Improvement Scheme (CIS) in 2007, with the aim of promoting collective stewardship of common pool resources (CPRs) and enhancing agricultural multi-functionality. In order for rural communities to participate in this scheme, they have to meet requirements and sign a contract with the government outlining the scope of collective action for maintaining CPRs. In this paper, we measure the treatment effect of the CIS using propensity score matching methods. Some framed field experiments in the previous literature show that extrinsic motivations such as payments or punishments for participants may not enhance collective stewardship because external intervention crowds out or undermines participants’ intrinsic motivation, based on social norms and reciprocity, to cooperate. Our empirical study conducted in Shiga Prefecture, however, reveals that there is a causal effect of CIS participation for increasing collective action, suggesting that the CIS is instrumental in conserving farmland, agricultural canal, pond, and irrigation facilities. Another important finding is that pre-existing social capital fostered by community members is positively correlated with their participation in the CIS.
