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

Author

Listed:
  • 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.

Suggested Citation

  • Suzi Kerr & Leslie Lipper & Alexander S.P. Pfaff & Romina Cavatassi & Benjamin Davis & Joanna Hendy & Arturo Sanchez, 2004. "Will Buying Tropical Forest Carbon Benefit The Poor? Evidence from Costa Rica," Working Papers 04-20, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  • Handle: RePEc:fao:wpaper:0420
    as

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    File URL: ftp://ftp.fao.org/docrep/fao/007/ae402e/ae402e00.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Suzi Kerr & Shuguang Liu & Alexander S. P. Pfaff & R. Flint Hughes, 2003. "Carbon Dynamics and Land-Use Choices: Building a Regional-Scale Multidisciplinary Model," Working Papers 03_06, Motu Economic and Public Policy Research.
    3. 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, vol. 81(4), pages 812-824.
    4. Oscar J. Cacho & Graham R. Marshall & Mary Milne, 2003. "Smallholder Agroforestry Projects: Potential for carbon sequestration and poverty alleviation," Working Papers 03-06, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    5. 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.
    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 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 337-352, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. Coomes, Oliver T. & Grimard, Franque & Potvin, Catherin & Sima, Philip, 2008. "The fate of the tropical forest: Carbon or cattle?," Ecological Economics, Elsevier, vol. 65(2), pages 207-212, April.
    3. Andersen, Lykke & Busch, Jonah & Curran, Elizabeth & Ledezma, Juan Carlos & Mayorga, Joaquín & Ruiz, Pablo, 2014. "Impactos socioeconómicos y ambientales de compensaciones por la reducción de emisiones de deforestación en Bolivia: resultados del modelo OSIRIS-Bolivia," Revista Latinoamericana de Desarrollo Economico, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana, issue 22, pages 7-48, Noviembre.
    4. van Benthem, Arthur A. & Kerr, Suzi, 2010. "Optimizing Voluntary Deforestation Policy in the Face of Adverse Selection and Costly Transfers," 2010 Conference, August 26-27, 2010, Nelson, New Zealand 96813, New Zealand Agricultural and Resource Economics Society.
    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. Fortmann, Lea & Cordero-Salas, Paula & Sohngen, Brent & Brian, Roe, 2016. "Incentive Contracts for Environmental Services and their Potential in REDD," International Review of Environmental and Resource Economics, now publishers, vol. 9(3-4), pages 363-409, September.
    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 143088, Southern Agricultural Economics Association.
    8. van Benthem, Arthur & Kerr, Suzi, 2013. "Scale and transfers in international emissions offset programs," Journal of Public Economics, Elsevier, vol. 107(C), pages 31-46.
    9. Melania Michetti & Matteo Zampieri, 2014. "Climate–Human–Land Interactions: A Review of Major Modelling Approaches," Land, MDPI, Open Access Journal, vol. 3(3), pages 1-41, July.
    10. 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. 151427, Agricultural and Applied Economics Association.

    More about this item

    Keywords

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

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices

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