Environmental Economics Seminar
Payments for Forest Conservation: Evidence from Field Trials in the Brazilian Amazon
Post-doct at CEE-M
Payments for Environmental Services (PES) have become a popular forest conservation policy in recent years. However, the effectiveness of PES is often minimal because conservation buyers know less than landowners about the costs of contractual compliance. Auction mechanisms can be used to make ex-ante estimates of the payments needed to save the forests. This study reports the results from a Becker-DeGroot-Marschak (BDM) experimental auction that aimed to estimate forest owners’ willingness to accept (WTA) PES contracts at different forest conservation thresholds. The BDM auction was nested in an RCT in which we tested the hypothesis that a contract offering flexible PES performed better than one with a zero-deforestation target. Auction results suggest that the average WTA is low relative to the social cost of carbon and that forest owners tend to bid higher in a PES auction that offers contracts with the most difficult-to-achieve environmental targets. The empirical results show that forest loss declined in treated farm holds by 41% on average, but neither contract saved more forest. In addition, we find that 44% of treated farm holds did not respect their contract and that this proportion is twice as high in the most restrictive contract. Finally, we find that a zero-deforestation PES contract is ultimately most cost-effective than a flexible one. Altogether, these results suggest that measuring WTA provides an essential input for shaping pricing policy and guiding the magnitude and targeting of forest conservation PES contracts and that introducing flexibility into PES contracts may increase PES acceptance but decrease efficiency.
Institut Agro de Montpellier / INRAE - Bat. 26 - Centre de documentation Pierre Bartoli
2 Place Viala 34000 Montpellier
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