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