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Do Payments for Environmental Services Affect Forest Cover? A Farm-Level Evaluation from Costa Rica

  • Rodrigo A. Arriagada,
  • Paul J. Ferraro
  • Erin O. Sills
  • Subhrendu K. Pattanayak
  • Silvia Cordero-Sancho

Payments for environmental services (PES) are popular despite little empirical evidence of their effectiveness. We estimate the impact of PES on forest cover in a region known for exemplary implementation of one of the best-known and longest-lived PES programs. Our evaluation design combines sampling that incorporates prematching, data from remote sensing and household surveys, and empirical methods that include partial identification with weak assumptions, difference-in-differences matching estimators, and tests of sensitivity to unobservable heterogeneity. PES in our study site increased participating farm forest cover by about 11% to 17% of the mean area under PES contract over eight years.

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File URL: http://le.uwpress.org/cgi/reprint/88/2/382
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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 88 (2012)
Issue (Month): 2 ()
Pages: 382-399

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Handle: RePEc:uwp:landec:v:88:y:2012:ii:1:p:382-399
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  1. Charles Blessings Laurence Jumbe & Arild Angelsen, 2006. "Do the Poor Benefit from Devolution Policies? Evidence from Malawi’s Forest Co-Management Program," Land Economics, University of Wisconsin Press, vol. 82(4), pages 562-581.
  2. Guido M. Imbens & Jeffrey M. Wooldridge, 2008. "Recent Developments in the Econometrics of Program Evaluation," NBER Working Papers 14251, National Bureau of Economic Research, Inc.
  3. Sierra, Rodrigo & Russman, Eric, 2006. "On the efficiency of environmental service payments: A forest conservation assessment in the Osa Peninsula, Costa Rica," Ecological Economics, Elsevier, vol. 59(1), pages 131-141, August.
  4. Muller, Jeffrey & Albers, Heidi J., 2004. "Enforcement, payments, and development projects near protected areas: how the market setting determines what works where," Resource and Energy Economics, Elsevier, vol. 26(2), pages 185-204, June.
  5. Alix-Garcia, Jennifer M. & Shapiro, Elizabeth N. & Sims, Katharine R. E., 2010. "Forest Conservation and Slippage: Evidence from Mexico's National Payments for Ecosystem Services Program," Staff Paper Series 548, University of Wisconsin, Agricultural and Applied Economics.
  6. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20035, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  7. Blackman, Allen & Woodward, Richard T., 2010. "User financing in a national payments for environmental services program: Costa Rican hydropower," Ecological Economics, Elsevier, vol. 69(8), pages 1626-1638, June.
  8. Pagiola, Stefano, 2008. "Payments for environmental services in Costa Rica," Ecological Economics, Elsevier, vol. 65(4), pages 712-724, May.
  9. Ferraro, Paul J., 2008. "Asymmetric information and contract design for payments for environmental services," Ecological Economics, Elsevier, vol. 65(4), pages 810-821, May.
  10. Greenstone, Michael, 2004. "Did the Clean Air Act cause the remarkable decline in sulfur dioxide concentrations?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 585-611, May.
  11. Subhrendu K. Pattanayak & Sven Wunder & Paul J. Ferraro, 2010. "Show Me the Money: Do Payments Supply Environmental Services in Developing Countries?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 254-274, Summer.
  12. Stephen Polasky & Jeffrey D. Camm & Brian Garber-Yonts, 2001. "Selecting Biological Reserves Cost-Effectively: An Application to Terrestrial Vertebrate Conservation in Oregon," Land Economics, University of Wisconsin Press, vol. 77(1), pages 68-78.
  13. Engel, Stefanie & Pagiola, Stefano & Wunder, Sven, 2008. "Designing payments for environmental services in theory and practice: An overview of the issues," Ecological Economics, Elsevier, vol. 65(4), pages 663-674, May.
  14. Wünscher, Tobias & Engel, Stefanie & Wunder, Sven, 2008. "Spatial targeting of payments for environmental services: A tool for boosting conservation benefits," Ecological Economics, Elsevier, vol. 65(4), pages 822-833, May.
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