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Conservation Payments under Uncertainty

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  • Stefanie Engel
  • Charles Palmer
  • Luca Taschini
  • Simon Urech

Abstract

The decision of whether to retain forest or convert to another land use is affected by uncertainty over future land use returns. This paper examines the design of conservation payments to landowners under uncertainty. Payments are either indexed to the returns from deforestation (agriculture), or to a market value associated with forest nonuse benefits. Payment size depends on the degree of correlation between payments and agricultural returns, and their relative volatility. Market-based payments for reducing emissions from deforestation and degradation (REDD) are simulated for Brazilian soybean growers. Payments indexed to carbon prices are larger than those indexed to international soybean prices

Suggested Citation

  • Stefanie Engel & Charles Palmer & Luca Taschini & Simon Urech, 2015. "Conservation Payments under Uncertainty," Land Economics, University of Wisconsin Press, vol. 91(1), pages 36-56.
  • Handle: RePEc:uwp:landec:v:91:y:2015:i:1:p:36-56
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gren, Ing-Marie & Zeleke, Abenezer Aklilu, 2016. "Policy design for forest carbon sequestration: A review of the literature," Forest Policy and Economics, Elsevier, vol. 70(C), pages 128-136.
    2. Di Corato, Luca & Dosi, Cesare & Moretto, Michele, 2018. "Multidimensional auctions for long-term procurement contracts with early-exit options: The case of conservation contracts," European Journal of Operational Research, Elsevier, vol. 267(1), pages 368-380.
    3. Palmer, Charles & Taschini, Luca & Laing, Timothy, 2017. "Getting more ‘carbon bang’ for your ‘buck’ in Acre State, Brazil," Ecological Economics, Elsevier, vol. 142(C), pages 214-227.
    4. Di Corato, Luca & Dosi, Cesare & Moretto, Michele, 2015. "Multidimensional auctions for long-term procurement contracts under the threat of early exit: the case of conservation auctions," Working Paper Series 2015:6, Swedish University of Agricultural Sciences, Department Economics.
    5. Reutemann, Tim & Engel, Stefanie & Pareja, Eliana, 2016. "How (not) to pay — Field experimental evidence on the design of REDD+ payments," Ecological Economics, Elsevier, vol. 129(C), pages 220-229.
    6. Jichuan Sheng, 2017. "Effect of Uncertainties in Estimated Carbon Reduction from Deforestation and Forest Degradation on Required Incentive Payments in Developing Countries," Sustainability, MDPI, Open Access Journal, vol. 9(9), pages 1-14, September.
    7. Nizalov, Denys & Thornsbury, Suzanne & Loveridge, Scott & Woods, Mollie & Zadorozhna, Olha, 2016. "Security of property rights and transition in land use," Journal of Comparative Economics, Elsevier, vol. 44(1), pages 76-91.
    8. Neudert, Regina & Olschofsky, Konstantin & Kübler, Daniel & Prill, Laura & Köhl, Michael & Wätzold, Frank, 2018. "Opportunity costs of conserving a dry tropical forest under REDD+: The case of the spiny dry forest in southwestern Madagascar," Forest Policy and Economics, Elsevier, vol. 95(C), pages 102-114.
    9. Gerling, Charlotte & Wätzold, Frank, 2019. "Evaluating policy instruments for the conservation of biodiversity in a changing climate," MPRA Paper 95512, University Library of Munich, Germany.
    10. Koch, Nicolas & Reuter, Wolf Heinrich & Fuss, Sabine & Grosjean, Godefroy, 2017. "Permits vs. offsets under investment uncertainty," Resource and Energy Economics, Elsevier, vol. 49(C), pages 33-47.
    11. François J Dessart & Jesús Barreiro-Hurlé & René van Bavel, 2019. "Behavioural factors affecting the adoption of sustainable farming practices: a policy-oriented review," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 46(3), pages 417-471.
    12. Sheng, Wenping & Zhen, Lin & Xie, Gaodi & Xiao, Yu, 2017. "Determining eco-compensation standards based on the ecosystem services value of the mountain ecological forests in Beijing, China," Ecosystem Services, Elsevier, vol. 26(PB), pages 422-430.
    13. Matthies, Brent D. & Kalliokoski, Tuomo & Ekholm, Tommi & Hoen, Hans Fredrik & Valsta, Lauri T., 2015. "Risk, reward, and payments for ecosystem services: A portfolio approach to ecosystem services and forestland investment," Ecosystem Services, Elsevier, vol. 16(C), pages 1-12.
    14. Hermann, Daniel & Sauthoff, Saramena & Mußhoff, Oliver, 2017. "Ex-ante evaluation of policy measures to enhance carbon sequestration in agricultural soils," Ecological Economics, Elsevier, vol. 140(C), pages 241-250.

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