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Greater Flexibility in Payments for Ecosystem Services: Evidence from an RCT in the 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 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

    (CEC - Chaire Economie du Climat - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

Abstract

In Payment for Ecosystem Services (PES) programs, incentive payments conditional on zero deforestation do not always match the time profile of landowners' opportunity costs. In this study, we examine the impact of adding some flexibility to PES contracts to allow landowners the possibility of receiving part of the financial incentive if some deforestation is detected during the contract period. We ran a pilot PES program in the Brazilian Amazon during the last years of Jair Bolsonaro's mandate, at a time when incentives to deforest were strong. Using the Becker-DeGroot-Marschak (BDM) mechanism, we implemented a PES procurement auction to elicit landowners' reservation prices for forest conservation. We embedded the BDM auction in a randomized controlled trial (RCT), which included one control group and two PES treatment groups of about 150 voluntary landowners each. In line with theoretical predictions, we found that, while the flexible PES contract allowing some deforestation saved slightly more forest, the fixed payment contract requiring zero deforestation exhibited a higher benefit-cost ratio.

Suggested Citation

  • Gabriela Demarchi & Julie Subervie & Cauê Carrilho & Thibault Catry & Antoine Pfefer & Philippe Delacote, 2024. "Greater Flexibility in Payments for Ecosystem Services: Evidence from an RCT in the Amazon," Working Papers hal-04462983, HAL.
    • Handle: RePEc:hal:wpaper:hal-04462983
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04462983
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