Cash for Carbon: A Randomized Controlled Trial of Payments for Ecosystem Services to Reduce Deforestation

Abstract

This paper evaluates a Payments for Ecosystem Services (PES) program in western Uganda that offered forest-owning households cash payments if they conserved their forest. The program was implemented as a randomized trial in 121 villages, 60 of which received the program for two years. The PES program reduced deforestation and forest degradation: Tree cover, measured using high-resolution satellite imagery, declined by 2% to 5% in treatment villages compared to 7% to 10% in control villages during the study period. We find no evidence of shifting of treecutting to nearby land. We then use the estimated effect size and the "social cost of carbon" to value the delayed carbon dioxide emissions, and compare this benefit to the program's cost.1 behaviors (Ferraro and Kiss, 2002;Wunder, 2007;Engel, Pagiola, and Wunder, 2008). PES is the environmental version of a well-known policy instrument in developing countries, conditional cash transfers (CCTs), which are more commonly used to promote child health and education.Despite the widespread use and growing popularity of PES, its effectiveness and costeffectiveness are open questions. Individuals might be unresponsive to the incentives, leading to small impacts. In addition, even if some people respond to the incentives, cost-effectiveness could be low if, absent the payments, many participants would have engaged in the incentivized behavior anyway. In the case of PES, this problem of inframarginality is often called "additionality": How much additional forest cover does a PES program actually cause? Another concern is that individuals will simply shift their tree-cutting from land covered by the PES contract to other nearby land.This paper is a randomized evaluation of a PES intervention that was piloted precisely to measure the causal impacts on forest cover. The PES program offered private owners of forestland in western Uganda payments if they refrained from clearing trees. The program was designed and implemented by a local non-governmental organization (NGO). The study was carried out in 121 villages with private forest owners (PFOs); 60 of the villages were randomly selected to be in the treatment group. In treatment villages, the PES program was marketed to PFOs and they were eligible to enroll. Over the two-year pilot program from 2011 to 2013, for each hectare of forest they owned, enrollees received 70,000 Ugandan shillings (UGX), or $28 in 2012 US dollars, per year if they complied with the contract. 3 The implementing NGO employed forest monitors who conducted spot checks of enrollees' land to check for recent tree-clearing. The program also offered additional payments in exchange for planting tree seedlings.We measure the impact of the program on forest cover by analyzing satellite imagery.Specifically, we tasked a very high resolution commercial satellite, QuickBird, to take images of the study region at baseline and endline and classified each pixel as tree-covered or not 3 The average exchange rate during the study period was approximately 2500 UGX = 1 US ...

If Possible, Incentivize Individuals Not Groups: Evidence from Lab‐in‐the‐Field Experiments on Forest Conservation in Rural Uganda

“…Our study corroborates the findings from Western Uganda by Jayachandran et al . (), who found that PBIP schemes improve the effectiveness of conservation interventions in Uganda. Our findings are also in accordance with Ferraro & Simpson (), Narloch et al .…”

Unconditional Transfers and Tropical Forest Conservation: Evidence from a Randomized Control Trial in Sierra Leone

“…There are several other key contextual and design differences between the two studies that makes a direct comparison of the relative efficacy of conservation payment schemes with different degrees of conditionality difficulty. Yet the Jayachandran et al (2017) study has some useful similarities to ours, for example they also focus on assessing short-term impacts on land cover and provide payments that are comparable in magnitude to ours. This allows for a useful comparison of our corresponding results.…”

“…To our knowledge, this study constitutes one of the first randomized controlled trials (RCT) to analyze the impact of conservation payments in the context of (tropical) deforestation and land use change. 1 Beyond a project by Jayachandran et al (2017) that was conducted concurrently to our study all previous work relies on observational data to assess the impacts of conservation policies on land cover (e.g., see Blackman 2012 for a review). 2 Despite advances in using observational methods to assess conservation policies, important challenges remain in terms of the formulation of a counterfactual scenario, and in overcoming selection bias.…”

“…These authors make a strong case for using RCTs to evaluate impacts. Jayachandran et al (2017) aims to assess the efficacy of a PES program in Uganda that pays households to conserve private mature forest lands. The authors assess a scheme that has higher levels of conditionality than ours.…”

Incentives for climate mitigation in the land use sector—the effects of payment for environmental services on environmental and socioeconomic outcomes in low‐ and middle‐income countries: A mixed‐methods systematic review

“…Sharma et al (2015) also report on the effects of the REDD+ pilot in Nepal on timber extraction signs observed in the sampled forest plots, finding a negative effect of –0.17 SMD (95% CI [−0.34, −0.01]). In Uganda, Jayachandran et al (, 2017) also report on the effects of the PES experiment on various forest extraction measures. They find a negative effect on cutting of trees in the past year of −0.30 SMD (95% CI [−0.43, −0.18]) and a negative effect of cutting trees for timber products of −0.23 SMD (95% CI [−0.35, −0.10]).…”