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Will Buying Tropical Forest Carbon Benefit The Poor? Evidence from Costa Rica

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Author Info

  • Suzi Kerr
  • Leslie Lipper

    (Agricultural and Development Economics Division, Food and Agriculture Organization)

  • Alexander S.P. Pfaff
  • Romina Cavatassi

    (Agricultural and Development Economics Division, Food and Agriculture Organization)

  • Benjamin Davis

    (Agricultural and Development Economics Division, Food and Agriculture Organization)

  • Joanna Hendy
  • Arturo Sanchez

Abstract

We review claims about the potential for carbon markets that link both payments for carbon services and poverty levels to ongoing rates of tropical deforestation. We then examine these effects empirically for Costa Rica during the 20th century using an econometric approach that addresses the irreversibilities in deforestation. We find significant effects of the relative returns to forest on deforestation rates. Thus, carbon payments would induce conservation and also carbon sequestration, and if land users were poor could conserve forest while addressing rural poverty. However, we find poorer areas are less responsive to returns. This and transaction costs could lead carbon payments policies not to be focused upon the poor. Other practical considerations may also dampen an understandable enthusiasm for service-based payments addressing both environment and inequality. Nonetheless, as the poor live in areas with more forest, they may benefit most from payments.

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Bibliographic Info

Paper provided by Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) in its series Working Papers with number 04-20.

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Length: 37 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:fao:wpaper:0420

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Related research

Keywords: Carbon; Costa Rica; Deforestation; Forest products; Climate Change; Marketing; Poverty; Rural population; Tropical forests;

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References

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  1. Oscar J. Cacho & Graham R. Marshall & Mary Milne, 2003. "Smallholder Agroforestry Projects: Potential for carbon sequestration and poverty alleviation," Working Papers, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) 03-06, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  2. Peter J. Parks & Ian W. Hardie, 1995. "Least-Cost Forest Carbon Reserves: Cost-Effective Subsidies to Convert Marginal Agricultural Land to Forests," Land Economics, University of Wisconsin Press, vol. 71(1), pages 122-136.
  3. De Jong, Ben H. J. & Tipper, Richard & Montoya-Gomez, Guillermo, 2000. "An economic analysis of the potential for carbon sequestration by forests: evidence from southern Mexico," Ecological Economics, Elsevier, vol. 33(2), pages 313-327, May.
  4. Douglas J. Miller, 1999. "An Econometric Analysis of the Costs of Sequestering Carbon in Forests," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 81(4), pages 812-824.
  5. Suzi Kerr & Shuguang Liu & Alexander Pfaff & Flint Hughes, 2003. "Carbon Dynamics and Land-use Choices: Building a Regional-scale Multidisciplinary Model," Others, EconWPA 0309005, EconWPA.
  6. Suzi Kerr & Alexander Pfaff & Romina Cavatassi & Benjamin Davis & Leslie Lipper & Arturo Sanchez & Jason Timmins, 2004. "Effects of Poverty on Deforestation: Distinguishing behaviour from location," Working Papers, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) 04-19, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  7. Stavins, Robert N & Jaffe, Adam B, 1990. "Unintended Impacts of Public Investments on Private Decisions: The Depletion of Forested Wetlands," American Economic Review, American Economic Association, vol. 80(3), pages 337-52, June.
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Citations

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Cited by:
  1. Melania Michetti & Matteo Zampieri, 2014. "Climate–Human–Land Interactions: A Review of Major Modelling Approaches," Land, MDPI, Open Access Journal, vol. 3(3), pages 793-833, July.
  2. Arthur van Benthem & Suzi Kerr, 2010. "Optimizing Voluntary Deforestation Policy in the Face of Adverse Selection and Costly Transfers," Working Papers, Motu Economic and Public Policy Research 10_04, Motu Economic and Public Policy Research.
  3. Fortmannm Lea & Salas, Paula Cordero & Sohngen, Brent & Roe, Brian, 2014. "Incentive contracts for environmental services and their potential in REDD," Policy Research Working Paper Series 6829, The World Bank.
  4. Lykke Andersen & Jonah Busch & Elizabeth Curran & Juan Carlos Ledezma & Joaquín Mayorga & Pablo Ruiz, 2012. "Impactos socio-económicos y ambientales de compensaciones por la reducción de emisiones de deforestación en Bolivia: Resultados del modelo OSIRIS-Bolivia," Development Research Working Paper Series 05/2012, Institute for Advanced Development Studies.
  5. Lewis, Kate & Porras, Ina & Miranda, Miriam & Barton, David & Chacon, Adriana, 2012. "De Rio a Rio+ Lecciones de 20 años de experiencia en servicios ambientales en Costa Rica
    [From Rio to Rio + Lessons from 20 years of experience in environmental services in Costa Rica]
    ," MPRA Paper 43649, University Library of Munich, Germany.
  6. Blare, Trent & Haro-Carrión, Xavier & Grogan, Kelly A. & Useche, Pilar, 2013. "How Much Does the Forest Cost? Determining the Size of Subsidy Payments to Induce Reforestation in Coastal Ecuador," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 151427, Agricultural and Applied Economics Association.
  7. Blare, Trent & Haro-Carrion, Xavier, 2013. "Turning Carbon into Cash: Economic Model of Payments for Carbon Sequestration in the Dry Tropical Forest of Coastal Ecuador," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida, Southern Agricultural Economics Association 143088, Southern Agricultural Economics Association.
  8. Lykke Andersen & Jonah Busch & Elizabeth Curran & Juan Carlos Ledezma & Joaquín Mayorga & Mélissa Bellier, 2012. "Environmental and socio-economic consequences of forest carbon payments in Bolivia: Results of the OSIRIS-Bolivia model," Development Research Working Paper Series 02/2012, Institute for Advanced Development Studies.

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