1932

Abstract

Every year from 2000 to 2010, our planet lost native forests roughly the size of Costa Rica (FAO 2010). This rapid deforestation has dramatically changed the chemical composition of the world’s atmosphere, the level of biodiversity, and the presence of vegetation key to maintaining watershed function and preventing landslides. There has been a boom in the design of local and international policy instruments to prevent further deforestation and to encourage forest growth. This article reviews the theory and evidence surrounding forest-related payment for ecosystem services (PES) schemes intended to slow and reverse deforestation. We cover the most recent work touching on a range of issues related to PES programs, including research on targeting, contract design, environmental effectiveness, challenges to program implementation, spillovers, and distributional considerations of conditional cash transfers. We also highlight areas of potential future research.

Loading

Article metrics loading...

/content/journals/10.1146/annurev-resource-100913-012524
2014-10-05
2024-06-25
Loading full text...

Full text loading...

/deliver/fulltext/resource/6/1/annurev-resource-100913-012524.html?itemId=/content/journals/10.1146/annurev-resource-100913-012524&mimeType=html&fmt=ahah

Literature Cited

  1. Ajayi OC, Jack BK, Leimona B. 2012. Auction design for the private provision of public goods in developing countries: lessons from payments for environmental services in Malawi and Indonesia. World Dev. 40:1213–23 [Google Scholar]
  2. Alix-Garcia J, De Janvry A, Sadoulet E. 2008. The role of deforestation risk and calibrated compensation in designing payments for environmental services. Environ. Dev. Econ. 13:375–94 [Google Scholar]
  3. Alix-Garcia JM, Aronson G, Radeloff V, Ramirez-Reyes C, Shapiro E, et al. 2012a. Evaluation of CONAFOR’s payments for hydrological services program, 2003–2010. Rep. prepared for CONAFOR
  4. Alix-Garcia JM, Shapiro EN, Sims KRE. 2012b. Forest conservation and slippage: evidence from Mexico's national payments for ecosystem services program. Land Econ. 88:613–38 [Google Scholar]
  5. Alix-Garcia JM, Sims KRE, Yañez-Pagans P. 2013. Only one tree from each seed? Environmental effectiveness and poverty alleviation in programs of payments for ecosystem services. Work. Pap., Dep. Agric. Appl. Econ., Univ. Wis., Madison
  6. Alpízar F, Nordén A, Pfaff A, Robalino J. 2013. Behavioral spillovers from targeted incentives: Losses from excluded individuals can counter gains from those selected. Work. Pap. EE 13-07, Duke Environ. Energy Econ. Work. Pap. Ser., Nicolas Inst. Environ. Policy Solut./Duke Univ. Energy Initiat., Duke Univ
  7. Arriagada RA, Ferraro PJ, Sills EO, Pattanayak SK, Cordero-Sancho S. 2012. Do payments for environmental services affect forest cover? A farm-level evaluation from Costa Rica. Land Econ. 88:382–99 [Google Scholar]
  8. Asner GP, Powell GVN, Mascaro J, Knapp DE, Clark JK et al. 2010. High-resolution forest carbon stocks and emissions in the Amazon. Proc. Natl. Acad. Sci. USA 107:16738–42 [Google Scholar]
  9. Babcock B, Lakshminarayan P, Wu J, Zilberman D. 1997. Targeting tools for the purchase of environmental amenities. Land Econ. 73:325–39 [Google Scholar]
  10. Balooni K, Singh K. 2001. Tree plantations for restoration of degraded lands and greening of India: a case study of tree growers' cooperatives. Nat. Resour. Forum 25:121–32 [Google Scholar]
  11. Barbier EB, Tesfaw AT. 2013. Tenure constraints and carbon forestry in Africa. Am. J. Agric. Econ. 95:964–75 [Google Scholar]
  12. Barua S, Uusivuori J, Kuuluvainen J. 2012. Impacts of carbon-based policy instruments and taxes on tropical deforestation. Ecol. Econ. 73:211–19 [Google Scholar]
  13. Berck P, Bentley WR. 1997. Hotelling's theory, enhancement, and the taking of the Redwood National Park. Am. J. Agric. Econ. 79:2287–98 [Google Scholar]
  14. Blackman A. 2012. Post evaluation of forest conservation policies using remote sensing data: an introduction and practical guide. Discuss. Pap. 12-13, Resour. Future, Washington, DC
  15. Blackman A, Woodward RT. 2010. User financing in a national payments for environmental services program: Costa Rican hydropower. Ecol. Econ. 69:81626–38 [Google Scholar]
  16. Bomuhangi A, Doss C, Meinzen-Dick R. 2011. Who owns the land? Perspectives from rural Ugandans and implications for land acquisitions. Discuss. Pap. 1136, IFPRI
  17. Bulte EH, Lipper L, Stringer R, Zilberman D. 2008. Payments for ecosystem services and poverty reduction: concepts, issues, and empirical perspectives. Environ. Dev. Econ. 13:245–54 [Google Scholar]
  18. Calder IR. 2002. Forests and hydrological services: reconciling public and science perceptions. Land Use Water Resour. Res. 2:21–12 [Google Scholar]
  19. Caparrós A, Cerda E, Ovando P, Campos P. 2010. Carbon sequestration with reforestations and biodiversity-scenic values. Environ. Resour. Econ. 45:49–72 [Google Scholar]
  20. Champagne É, Roberts J. 2009. Case study: Brazil. Legal Frameworks for REDD: Design and Implementation at the National Level Costenbader J. 125–37 Gland, Switz.: IUCN [Google Scholar]
  21. Coase RH. 1960. The problem of social cost. J. Law Econ. 3:1–44 [Google Scholar]
  22. Corbera E, Soberanis C, Brown K. 2009. Institutional dimensions of Payments for Ecosystem Services: an analysis of Mexico's carbon forestry programme. Ecol. Econ. 68:743–61 [Google Scholar]
  23. Drechsler M, Grimm V, Mysiak J, Watzold F. 2007. Differences and similarities between ecological and economic models for biodiversity conservation. Ecol. Econ. 62:2232–41 [Google Scholar]
  24. Drechsler M, Watzold F, Johst K, Shogren JF. 2010. An agglomeration payment for cost-effective biodiversity conservation in spatially structured landscapes. Resour. Energy Econ. 32:2261–75 [Google Scholar]
  25. Duchelle AE, Cromberg M, Gebara MF, Guerra R, Melo T et al. 2014. Linking forest tenure reform, environmental compliance, and incentives: lessons from REDD+ initiatives in the Brazilian Amazon. World Dev. 55:53–67 [Google Scholar]
  26. Engel S, Pagiola S, Wunder S. 2008. Designing payments for environmental services in theory and practice: an overview of the issues. Ecol. Econ. 65:663–74 [Google Scholar]
  27. Fairhead J, Leach M, Scoones I. 2012. Green grabbing: a new appropriation of nature?. J. Peasant Stud. 39:237–61 [Google Scholar]
  28. Falk I, Mendelsohn R. 1993. The economics of controlling stock pollutants: an efficient strategy for greenhouse gases. J. Environ. Econ. Manag. 25:76–88 [Google Scholar]
  29. Farley KD, Jobbagny EG, Jackson RB. 2005. Effects of afforestation on water yield: a global synthesis with implications for policy. Glob. Change Biol. 11:101565–76 [Google Scholar]
  30. FAO. 2010. Global forest resources assessment 2010: main report. Rep., FAO, U. N
  31. Ferraro PJ. 2008. Asymmetric information and contract design for payments for environmental services. Ecol. Econ. 65:810–21 [Google Scholar]
  32. Fleming DA. 2010. Slippage effects of the Conservation Reserve Program: new evidence from satellite imagery. Presented at AAEA Annu. Meet., Denver, Colo
  33. Friedlingstein P, Houghton RA, Marland G, Hackler J, Boden TA et al. 2010. Update on CO2 emissions. Nat. Geosci. 3:811–12 [Google Scholar]
  34. Gan J, McCarl B. 2007. Measuring transnational leakage of forest conservation. Ecol. Econ. 64:423–32 [Google Scholar]
  35. Gauvin C, Uchida E, Rozelle S, Xu J, Zhan J. 2010. Cost-effectiveness of payments for ecosystem services with dual goals of environment and poverty alleviation. Environ. Manag. 45:3488–501 [Google Scholar]
  36. Grolleau G, McCann LM. 2012. Designing watershed programs to pay farmers for water quality services: case studies of Munich and New York City. Ecol. Econ. 76:87–94 [Google Scholar]
  37. Honey-Roses J, Baylis K, Ramirez MI. 2011. A spatially explicit estimate of avoided forest loss. Conserv. Biol. 25:51032–43 [Google Scholar]
  38. Jack BK. 2013. Private information and the allocation of land use subsidies in Malawi. Am. Econ. J. Appl. Econ. 5:113–35 [Google Scholar]
  39. Jack BK, Kousky C, Sims K. 2008. Designing payments for ecosystem services: lessons from previous experience with incentive-based mechanisms. Proc. Natl. Acad. Sci. USA 105:9465–70 [Google Scholar]
  40. Jack BK, Oliva P, Walker E, Bell S. 2013. Contract and market design for land-based carbon offsets in Zambia. Presented at Environ. Dev. Econ. Worksh., Univ. Calif., Santa Barbara, May
  41. Jacobson S. 2014. Temporal spillovers in land conservation. Work. Pap., Dep. Econ., Williams Coll
  42. Jayachandran S. 2013. Liquidity constraints and deforestation: the limitations of payments for ecosystem services. Am. Econ. Rev. 103:309–13 [Google Scholar]
  43. Karp L. 2012. Carbon leakage in general and partial equilibrium. Unpub. Pap., Dep. Agric. Resour. Econ., Univ. Calif., Berkeley
  44. Landell-Mills N, Porras IT. 2002. Silver bullet or fools' gold? A global review of markets for forest environmental services and their impact on the poor. Rep., Int. Inst. Environ. Dev., London
  45. Lipper L, Sakuyama T, Stringer R, Zilberman D. 2009. Payment for Environmental Services in Agricultural Landscapes New York: Springer [Google Scholar]
  46. Lubowski RN, Plantinga AJ, Stavins RN. 2006. Land-use change and carbon sinks: econometric estimation of the carbon sequestration supply function. J. Environ. Econ. Manag. 51:135–52 [Google Scholar]
  47. Mason CF, Plantinga AJ. 2013. The additionality problem with offsets: optimal contracts for carbon sequestration in forests. J. Environ. Econ. Manag. 66:1–14 [Google Scholar]
  48. McDonnell MD, Possingham HP, Ball IR, Cousins EA. 2002. Mathematical methods for spatially cohesive reserve design. Environ. Model. Assess. 7:107–14 [Google Scholar]
  49. Meyfroidt P, Lambin EF. 2009. Forest transition in Vietnam and displacement of deforestation abroad. Proc. Natl. Acad. Sci. USA 106:3816139–44 [Google Scholar]
  50. Mukerjee M. 2009. Conflicted conservation: when restoration efforts are pitted against human rights: Saving Earth might mean trampling indigenous societies. Sci. Am., Aug. 17. http://www.scientificamerican.com/article/conflicted-conservation-efforts
  51. Murray BC, McCarl BA, Lee H. 2004. Estimating leakage from forest carbon sequestration programs. Land Econ. 80:1109–24 [Google Scholar]
  52. Murray B, Sohngen B, Ross M. 2007. Economic consequences of consideration of permanence, leakage and additionality for soil carbon sequestration projects. Clim. Policy 80:127–43 [Google Scholar]
  53. Nelson E, Polasky S, Lewis DJ, Plantinga AJ, Lonsdorf E et al. 2008. Efficiency of incentives to jointly increase carbon sequestration and species conservation on a landscape. Proc. Natl. Acad. Sci. USA 105:289471–76 [Google Scholar]
  54. Newell R, Pizer W, Raimi D. 2013. Carbon markets 15 years after Kyoto: lessons learned, new challenges. J. Econ. Perspect. 27:123–46 [Google Scholar]
  55. Ollivier H. 2012. Growth, deforestation and the efficiency of the REDD mechanism. J. Environ. Econ. Manag. 64:312–27 [Google Scholar]
  56. Pagiola S. 2008. Payments for environmental services in Costa Rica. Ecol. Econ. 65:712–24 [Google Scholar]
  57. Palmer C, Engel S. 2009. Avoided Deforestation: Prospects for Mitigating Climate Change London/New York: Taylor & Francis [Google Scholar]
  58. Parkhurst GM, Shogren JF, Bastian C, Kivi P, Donner J, Smith RB. 2002. Agglomeration bonus: an incentive mechanism to reunite fragmented habitat for biodiversity conservation. Ecol. Econ. 41:2305–28 [Google Scholar]
  59. Pattanayak S, Wunder S, Ferraro P. 2010. Show me the money: Do payments supply environmental services in developing countries?. Rev. Environ. Econ. Policy 4:254–74 [Google Scholar]
  60. Pfaff A, Amacher G, Sills E. 2013a. Realistic REDD: understanding and improving domestic policy impacts on forest loss. Rev. Environ. Econ. Policy 7:114–35 [Google Scholar]
  61. Pfaff A, Kerr S, Lipper L, Cavatassi R, Davis B et al. 2007. Will buying tropical forest carbon benefit the poor? Evidence from Costa Rica. Land Use Policy 24:3600–10 [Google Scholar]
  62. Pfaff A, Robalino JA. 2012. Protecting forests, biodiversity, and the climate: predicting policy impact to improve policy choice. Oxf. Rev. Econ. Policy 28:1164–79 [Google Scholar]
  63. Pfaff A, Robalino JA, Sandoval C, Leon C, Sanchez-Afofeifa G. 2013b. Increasing the impacts of payments for ecosystem services: location affects deforestation impact for Costa Rica's 2000–2005 PES. Unpub. Pap., Sanford Sch. Public Policy, Duke Univ
  64. Plantinga A, Richards K. 2008. International forest carbon sequestration in a post-Kyoto agreement. Discuss. Pap. 08-11, Harvard Proj. Int. Clim. Agreem., Kennedy Sch. Gov., Harvard Univ
  65. Resosudarmo IAP, Atmadja S, Ekaputri AD, Intarini DY, Indriatmoko Y, Astri P. 2014. Does tenure security lead to REDD+ project effectiveness? Reflections from five emerging sites in Indonesia. World Dev. 55:68–83 [Google Scholar]
  66. Rios A, Pagiola S. 2011. Poor household participation in payments for environmental services in Nicaragua and Colombia. Payments for Environmental Services, Forest Conservation and Climate Change: Livelihoods in the REDD? Tacconi L, Mahanty S, Suich H. 221–43 Cheltenham, UK: Edward Elgar [Google Scholar]
  67. Robalino JA. 2007. Land conservation policies and income distribution: Who bears the burden of our environmental efforts?. Environ. Dev. Econ. 12:4521–33 [Google Scholar]
  68. Robalino JA, Pfaff A. 2012. Contagious development: neighbor interactions in deforestation. J. Dev. Econ. 97:2427–36 [Google Scholar]
  69. Robalino JA, Pfaff A. 2013. Ecopayments and deforestation in Costa Rica: a nationwide analysis of PSA’s initial years. Land Econ. 89:3432–48 [Google Scholar]
  70. Roberts MJ, Bucholtz S. 2005. Slippage in the Conservation Reserve Program or spurious correlation? A comment. Am. J. Agric. Econ. 87:244–50 [Google Scholar]
  71. Roberts MJ, Bucholtz S. 2006. Slippage in the Conservation Reserve Program or spurious correlation? A rejoinder. Am. J. Agric. Econ. 88:512–14 [Google Scholar]
  72. Robinson BE, Holland MB, Naughton-Treves L. 2011. Does secure land tenure save forests? A review of the relationship between land tenure and tropical deforestation. Work. Pap. 7, CCAFS
  73. Rose S, Sohngen B. 2011. Global forest carbon sequestration and climate policy design. Environ. Dev. Econ. 16:429–54 [Google Scholar]
  74. Salas PC, Roe B. 2012. The role of cooperation and reciprocity in structuring carbon sequestration contracts in developing countries. Am. J. Agric. Econ. 94:411–18 [Google Scholar]
  75. Salas PC, Roe B, Sohngen B. 2012. Addressing additionality in REDD contracts when formal enforcement is absent. Presented at AAEA Annu. Meet., Aug. 12–14, Seattle, Wash
  76. Samii C, Lisiecki M, Kulkarni P, Paler L, Chavis L. 2013. Effects of payment for environmental services and decentralized forest management on deforestation and poverty in low and middle income countries: a systematic review. Protocol, Campbell Collab
  77. Sánchez-Azofeifa GA, Pfaff A, Robalino JA, Bloomhower JP. 2007. Costa Rica’s payment for environmental services program: intention, implementation, and impact. Conserv. Biol. 21:51165–73 [Google Scholar]
  78. Sarkar S, Sanchez-Cordero V, Londono MC, Fuller T. 2009. Systematic conservation assessment for the Mesoamerica, Choco, and Tropical Andes biodiversity hotspots: a preliminary analysis. Biodivers. Conserv. 18:1793–828 [Google Scholar]
  79. Sathaye J, Andrasko K, Chan P. 2011. Emissions scenarios, costs, and implementation considerations of REDD-plus programs. Environ. Dev. Econ. 16:361–80 [Google Scholar]
  80. Scullion J, Thomas CW, Vogt KA, Perez-Maqueo O, Logsdon MG. 2011. Evaluating the environmental impact of payments for ecosystem services in Coatepec (Mexico) using remote sensing and on-site interviews. Environ. Conserv. 38:426–34 [Google Scholar]
  81. Sims KRE, Alix-Garcia JM, Shapiro-Garza E, Fine L, Radeloff VC, et al. 2014. Adaptive management in Mexico’s payments for hydrological services program improves targeting for environmental and social goals. Work. Pap., Econ. Dep., Amherst Coll
  82. Sohngen B, Mendelsohn R. 2003. An optimal control model of forest carbon sequestration. Am. J. Agric. Econ. 85:448–57 [Google Scholar]
  83. Stern N. 2006. Stern Review: The Economics of Climate Change London: HM Treasury [Google Scholar]
  84. Sunderlin WD, Larson AM, Duchelle AE, Resosudarmo IAP, Huynh TB et al. 2014. How are REDD+ proponents addressing tenure problems? Evidence from Brazil, Cameroon, Tanzania, Indonesia, and Vietnam. World Dev. 55:37–52 [Google Scholar]
  85. Thomas S, Dargusch P, Harrison S, Herbohn J. 2010. Why are there so few afforestation and reforestation Clean Development Mechanism projects?. Land Use Policy 27:880–87 [Google Scholar]
  86. Turpie JK, Marais C, Blignaut JN. 2008. The Working for Water programme: evolution of a payments for ecosystem services mechanism that addresses both poverty and ecosystem service delivery in South Africa. Ecol. Econ. 65:788–98 [Google Scholar]
  87. Uchida E, Rozelle S, Xu J. 2009. Conservation payments, liquidity constraints, and off-farm labor: impact of the grain-for-green program on rural households in China. Am. J. Agric. Econ. 91:70–86 [Google Scholar]
  88. Uchida E, Xu J, Rozelle S. 2005. Grain for green: cost-effectiveness and sustainability of China's conservation set-aside program. Land Econ. 81:247–64 [Google Scholar]
  89. Uchida E, Xu J, Xu Z, Rozelle S. 2007. Are the poor benefiting from China's land conservation program?. Environ. Dev. Econ. 12:4593–620 [Google Scholar]
  90. Van Hecken G, Bastiaensen J, Vásquez W. 2012. The viability of local payments for watershed services: empirical evidence from Matiguas, Nicaragua. Ecol. Econ. 74:169–76 [Google Scholar]
  91. Vidal J. 2008. The great green land grab. Guardian, Feb. 12. http://www.guardian.co.uk/environment/2008/feb/13/conservation
  92. Wear D, Murray BC. 2004. Federal timber restrictions, interregional spillovers, and the impact on US softwood markets. J. Environ. Econ. Manag. 47:2307–30 [Google Scholar]
  93. Wu J. 2000. Slippage effects of the Conservation Reserve Program. Am. J. Agric. Econ. 82:979–92 [Google Scholar]
  94. Wu J. 2005. Slippage effects of the Conservation Reserve Program: reply. Am. J. Agric. Econ. 87:251–54 [Google Scholar]
  95. Wu J, Lin H. 2010. The effect of the Conservation Reserve Program on land values. Land Econ. 86:11–21 [Google Scholar]
  96. Wu J, Zilberman D, Babcock BA. 2001. Environmental and distributional impacts of conservation targeting strategies. J. Environ. Econ. Manag. 41:333–50 [Google Scholar]
  97. Wunder S. 2008. Payments for environmental services and the poor: concepts and preliminary evidence. Environ. Dev. Econ. 13:279–97 [Google Scholar]
  98. Wunder S, Albán M. 2008. Decentralized payments for environmental services: the cases of Pimampiro and PROFAFOR in Ecuador. Ecol. Econ. 65:685–98 [Google Scholar]
  99. Wunder S, Wertz-Kanounnikoff S. 2009. Payments for ecosystem services: a new way of conserving biodiversity in forests. J. Sustain. For. 28:576–96 [Google Scholar]
  100. Xu Z, Xu J, Deng X, Huang J, Uchida E, Rozelle S. 2006. Grain for green versus grain: conflict between food security and conservation set-aside in China. World Dev. 34:130–48 [Google Scholar]
  101. Yañez-Pagans P. 2014. Cash for cooperation? Payments for ecosystem services and common property management in Mexico. Manuscr., Dep. Agric. Appl. Econ., Univ. Wis., Madison
  102. Zbinden S, Lee DR. 2005. Paying for environmental services: an analysis of participation in Costa Rica's PSA program. World Dev. 33:255–72 [Google Scholar]
  103. Zilberman D, Lipper L, McCarthy N. 2008. When could payments for environmental services benefit the poor?. Environ. Dev. Econ. 13:3255–78 [Google Scholar]
/content/journals/10.1146/annurev-resource-100913-012524
Loading
/content/journals/10.1146/annurev-resource-100913-012524
Loading

Data & Media loading...

  • Article Type: Review Article
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error