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Adding flexibility to payments for environmental services enhances cost-effectiveness in the Brazilian Amazon

Author

Listed:
  • Gabriela Demarchi

    (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

  • Julie Subervie

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier)

  • Cauê D Carrilho

    (USP - Universidade de São Paulo = University of São Paulo)

  • Thibault Catry

    (UMR 228 Espace-Dev, Espace pour le développement - IRD - Institut de Recherche pour le Développement - UPVD - Université de Perpignan Via Domitia - AU - Avignon Université - UR - Université de La Réunion - UNC - Université de la Nouvelle-Calédonie - UG - Université de Guyane - UA - Université des Antilles - UM - Université de Montpellier)

  • Antoine Pfefer

    (UMR 228 Espace-Dev, Espace pour le développement - IRD - Institut de Recherche pour le Développement - UPVD - Université de Perpignan Via Domitia - AU - Avignon Université - UR - Université de La Réunion - UNC - Université de la Nouvelle-Calédonie - UG - Université de Guyane - UA - Université des Antilles - UM - Université de Montpellier)

  • Philippe Delacote

    (BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEC - Chaire Economie du Climat - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

Abstract

Payments for Environmental Services (PES) are widely used to protect tropical forests, but rigid pricing may fail when landowners' opportunity costs fluctuate. Inflexible incentives can lead to contract breaches, reducing environmental benefits. We test whether flexible PES contracts improve outcomes by allowing partial payments when deforestation remains below a threshold. Using a Becker-DeGroot-Marschak auction within a randomized controlled trial, we compare a flexible PES contract, a zero-deforestation contract, and a control group. Although the zero-deforestation contract had greater potential to avoid deforestation, high breach rates reduced realized conservation. The flexible PES contract, while more costly due to higher compliance, achieved greater forest protection per hectare: participants deforested 31% less than under the stringent contract in the peak period (95% CI [2%, 60%], d = 0.12). These findings suggest that flexible PES contracts can improve the effectiveness and cost-effectiveness of conservation programs.

Suggested Citation

  • Gabriela Demarchi & Julie Subervie & Cauê D Carrilho & Thibault Catry & Antoine Pfefer & Philippe Delacote, 2026. "Adding flexibility to payments for environmental services enhances cost-effectiveness in the Brazilian Amazon," Post-Print hal-05735513, HAL.
    • Handle: RePEc:hal:journl:hal-05735513
    DOI: 10.1038/s41467-026-75322-z
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-05735513v1
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