The most cost-effective solution for setting up multiple development environments for a PostgreSQL database, especially when each environment is used only for half of an 8-hour workday, is to use Amazon RDS for PostgreSQL Single-AZ DB instances. This option provides a balance between cost and functionality, offering a managed database service that is cost-efficient for development purposes, without the additional costs associated with Amazon Aurora or running On-Demand instances. Moreover, using Amazon S3 buckets with Object Select is not suitable for this use case as S3 is not a database service and would not support a PostgreSQL schema effectively.