Changing the deforestation impacts of Eco-/REDD payments: Evolution (2000-2005) in Costa Rica's PSA program

Abstract

Costa Rica’s PSA (Pagos por Servicios Ambientales) environmental services payments, started in 1997, were the pioneers. Broadly cited, they have led to numerous suggestions that others emulate the PSA approach. Yet the PSA program has itself evolved over time. Following earlier work (Sanchez et al. 2007 and Pfaff et al. 2008 on PSA 1997-2000), we can evaluate here whether a change in implementation changes impacts on deforestation. Examining the PSA forest-protection contracts during 2000 and 2005, we find that less than 5 in 1000 (about 0.4%) parcels enrolled in the program would have been deforested annually without payments. To first order, this matches the 1997-2000 findings of low deforestation impact and may be explained by.low agricultural returns relative to those in ecotourism as well as by other conservation policies including the forestry law of 1996. However, there are differences in results which are instructive. First, the overall impact is in fact slightly higher than in 1997-2000; despite net reforestation, more deforestation took place and thus the PSA had a bit more land-use change to prevent. More important for upcoming policies such as global carbon payments, the shifts in PSA implementation eliminated the bias of the PSA payments towards lands that are relatively unprofitable and thus unlikely to be cleared even without payments. Thus we can see that even within the same country for the same basic policy idea, the details of implementation do matter. In this and other settings significant potential gains can be realized by increased targeting.