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We investigate a Mexican federal program that compensates landowners for forest protection. We use matched controls from the program applicant pool to establish counterfactual deforestation rates. Deforestation was reduced by 50% in enrolled parcels, but expected average clearing rates without the program were low (0.8% per year), suggesting modest total avoided deforestation benefits. We test for two types of slippage: increased deforestation on other property belonging to program recipients and increased deforestation within markets where there are high levels of program participation. We find evidence of both, with substitution impacts reducing program effectiveness in common properties by about 4% on average.

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.

Natural resource managers are often expected to achieve both environmental protection and economic development even when there are fundamental trade‐offs between these goals. Adaptive management provides a theoretical structure for program administrators to balance social priorities in the presence of trade‐offs and to improve conservation targeting. We used the case of Mexico's federal Payments for Hydrological Services program (PSAH) to illustrate the importance of adaptive management for improving program targeting. We documented adaptive elements of PSAH and corresponding changes in program eligibility and selection criteria. To evaluate whether these changes resulted in enrollment of lands of high environmental and social priority, we compared the environmental and social characteristics of the areas enrolled in the program with the characteristics of all forested areas in Mexico, all areas eligible for the program, and all areas submitted for application to the program. The program successfully enrolled areas of both high ecological and social priority, and over time, adaptive changes in the program's criteria for eligibility and selection led to increased enrollment of land scoring high on both dimensions. Three factors facilitated adaptive management in Mexico and are likely to be generally important for conservation managers: a supportive political environment, including financial backing and encouragement to experiment from the federal government; availability of relatively good social and environmental data; and active participation in the review process by stakeholders and outside evaluators. Mejorando los Objetivos Ambiental y Social Mediante el Manejo Adaptativo en el Programa de Pagos por Servicios Hidrológicos en México

Payments for environmental services (PES) programs incentivize landowners to protect or improve natural resources. Many conservationists fear that introducing compensation for actions previously offered voluntarily will reduce social capital (the institutions, relationships, attitudes, and values that govern human interactions), yet little rigorous research has investigated this concern. We examined the land cover management and communal social capital impacts of Mexico’s federal conservation payments program, which is a key example for other countries committed to reducing deforestation, protecting watersheds, and conserving biodiversity. We used a regression discontinuity (RD) methodology to identify causal program effects, comparing outcomes for PES participants and similar rejected applicants close to scoring cutoffs. We found that payments increased land cover management activities, such as patrolling for illegal activity, building fire breaks, controlling pests, or promoting soil conservation, by ∼50%. Importantly, increases in paid activities as a result of PES did not crowd out unpaid contributions to land management or other prosocial work. Community social capital increased by ∼8–9%, and household-level measures of trust were not affected by the program. These findings demonstrate that major environmental conditional cash transfer programs can support both land management and the attitudes and institutions underpinning prosocial behavior. Rigorous empirical research on this question can proceed only country by country because of methodological limitations, but will be an important line of inquiry as PES continues to expand worldwide.

Environmental conditional cash transfers are popular but their impacts are not well understood. We evaluate land cover and wealth impacts of a federal program that pays landowners for protecting forest. Panel data for program beneficiaries and rejected applicants allow us to control for fixed differences and time trends affecting both groups. We find the program reduces the expected land cover loss by 40–51 percent and generates small but positive poverty alleviation. Environmental gains are higher where poverty is low while household gains are higher where deforestation risk is low, illustrating the difficulty of meeting multiple policy goals with one tool.

We quantified the avoided deforestation impacts of environmental land registration in Brazil's Amazonian states of Mato Grosso and Pará between 2005 and 2014. We find that the program reduced deforestation on registered lands. The magnitude of the effect implies that deforestation in the two states would have been 10% higher in the absence of the program. The impacts of registration varied over time, likely due to changing suites of policies linking environmental registration to land use incentives. Our results also reveal that agriculturally suitable lands and those located in regions undergoing the most land‐use change were more likely to be registered than those in less suitable, less dynamic regions. We conclude that environmental registration is an important first step in implementing avoided deforestation policies targeting private landholders.

We examine how agricultural subsidies may induce deforestation and interact with conservation programs by analyzing two large-scale national programs in Mexico that have existed simultaneously for more than a decade: an agricultural subsidy for livestock (PROGAN) and a program of payments for ecosystem services (PES). Looking across the entire Mexican landscape, we exploit the surprises in the timing of enrollment in PROGAN's waves, fluctuations in program payments, and the change in the value of the subsidy induced by inflation and currency fluctuations to identify the impacts of the livestock subsidy on environmental outcomes. We find that PROGAN increased municipal deforestation by 7 per cent. The deforestation effects of PROGAN were smaller in municipalities with higher concentrations of PES recipients. We suggest that livestock subsidies could be better targeted to places with low deforestation risk and high livestock productivity to maximize food production and minimize negative externalities caused by deforestation.

This paper uses remote sensing data from 1989 to 2000 to examine the impacts of price liberalization, land tenure, and biophysical characteristics on farmland abandonment in the border region of Poland, Slovakia, and Ukraine. Using regression analysis and matching estimators, we find that differences in biophysical characteristics, rather than in tenure systems, best explain the variation in abandonment rates within Poland. The difference in abandonment rates between Poland and Slovakia partially results from differences in land reform strategy, and abandonment in Ukraine takes a unique trajectory because of the incompleteness of the land reform and the lack of outside opportunities for residents.

This study examines whether locationally preferential tax incentives for firms encourage differential urban expansion in China. Using satellite-based data from 1978 to 2009, we find that zones established early tend to have large and persistent effects, and that provincially determined zones have little impact relative to those designated by national authorities. Zones established later tend only to have effects where counties already had an export-advantageous position. We conclude that such policies can encourage differential growth in the presence of significant distortions in the rest of the economy, but become less effective as these distortions are removed.

Despite the large and growing number of humanitarian emergencies, there is little economic research on the impact of refugees and internally displaced people on the communities that receive them. This analysis of the impact of the refugee inflows from Burundi and Rwanda in 1993 and 1994 on host populations in western Tanzania shows large increases in the prices of nonaid food items and more modest price effects for aid-related food items. Food aid is shown to mitigate these effects, though its impact is smaller than that of the increases in the refugee population. Examination of household assets suggests positive wealth effects of refugee camps on nearby rural households and negative wealth effects on households in urban areas.