Katharine R. E. Sims

Designing payments for ecosystem services: Lessons from previous experience with incentive-based mechanisms

Payments for ecosystem services (PES) policies compensate individuals or communities for undertaking actions that increase the provision of ecosystem services such as water purification, flood mitigation, or carbon sequestration. PES schemes rely on incentives to induce behavioral change and can thus be considered part of the broader class of incentive- or market-based mechanisms for environmental policy. By recognizing that PES programs are incentive-based, policymakers can draw on insights from the substantial body of accumulated knowledge about this class of instruments. In particular, this article offers a set of lessons about how the environmental, socioeconomic, political, and dynamic context of a PES policy is likely to interact with policy design to produce policy outcomes, including environmental effectiveness, cost-effectiveness, and poverty alleviation.

Protected areas reduced poverty in Costa Rica and Thailand

As global efforts to protect ecosystems expand, the socioeconomic impact of protected areas on neighboring human communities continues to be a source of intense debate. The debate persists because previous studies do not directly measure socioeconomic outcomes and do not use appropriate comparison groups to account for potential confounders. We illustrate an approach using comprehensive national datasets and quasi-experimental matching methods. We estimate impacts of protected area systems on poverty in Costa Rica and Thailand and find that although communities near protected areas are indeed substantially poorer than national averages, an analysis based on comparison with appropriate controls does not support the hypothesis that these differences can be attributed to protected areas. In contrast, the results indicate that the net impact of ecosystem protection was to alleviate poverty.

Forest Conservation and Slippage: Evidence from Mexico's National Payments for Ecosystem Services Program

We investigate a Mexican federal program that compensates landowners for forest protection. We use matched controls from the program applicant pool to establish counterfactual deforestation rates. Deforestation was reduced by 50% in enrolled parcels, but expected average clearing rates without the program were low (0.8% per year), suggesting modest total avoided deforestation benefits. We test for two types of slippage: increased deforestation on other property belonging to program recipients and increased deforestation within markets where there are high levels of program participation. We find evidence of both, with substitution impacts reducing program effectiveness in common properties by about 4% on average. (JEL O13, Q24)

Conditions associated with protected area success in conservation and poverty reduction

Protected areas are the dominant approach to protecting biodiversity and the supply of ecosystem services. Because these protected areas are often placed in regions with widespread poverty and because they can limit agricultural development and exploitation of natural resources, concerns have been raised about their potential to create or reinforce poverty traps. Previous studies suggest that the protected area systems in Costa Rica and Thailand, on average, reduced deforestation and alleviated poverty. We examine these results in more detail by characterizing the heterogeneity of responses to protection conditional on observable characteristics. We find no evidence that protected areas trap historically poorer areas in poverty. In fact, we find that poorer areas at baseline seem to have the greatest levels of poverty reduction as a result of protection. However, we do find that the spatial characteristics associated with the most poverty alleviation are not necessarily the characteristics associated with the most avoided deforestation. We show how an understanding of these spatially heterogeneous responses to protection can be used to generate suitability maps that identify locations in which both environmental and poverty alleviation goals are most likely to be achieved.

More strictly protected areas are not necessarily more protective: evidence from Bolivia, Costa Rica, Indonesia, and Thailand

National parks and other protected areas are at the forefront of global efforts to protect biodiversity and ecosystem services. However, not all protection is equal. Some areas are assigned strict legal protection that permits few extractive human uses. Other protected area designations permit a wider range of uses. Whether strictly protected areas are more effective in achieving environmental objectives is an empirical question: although strictly protected areas legally permit less anthropogenic disturbance, the social conflicts associated with assigning strict protection may lead politicians to assign strict protection to less-threatened areas and may lead citizens or enforcement agents to ignore the strict legal restrictions. We contrast the impacts of strictly and less strictly protected areas in four countries using IUCN designations to measure de jure strictness, data on deforestation to measure outcomes, and a quasi-experimental design to estimate impacts. On average, stricter protection reduced deforestation rates more than less strict protection, but the additional impact was not always large and sometimes arose because of where stricter protection was assigned rather than regulatory strictness per se. We also show that, in protected area studies contrasting y management regimes, there are y 2 policy-relevant impacts, rather than only y, as

Estimating the impacts of conservation on ecosystem services and poverty by integrating modeling and evaluation

Significance Research shows how the potential services from ecosystem conservation can be modeled, mapped, and valued; however, this integrative research has not been systematically applied to estimate the actual impacts of programs on the delivery of ecosystem services. We bridge this divide by showing how protected areas in Brazil, Costa Rica, Indonesia, and Thailand store carbon and deliver ecosystem services worth at least

Improving Environmental and Social Targeting through Adaptive Management in Mexico's Payments for Hydrological Services Program

5 billion. Impacts on carbon are associated with poverty exacerbation in some settings and with poverty reduction in others. We describe an agenda to improve conservation planning by (i) studying impacts on other ecosystem services, (ii) uncovering the mechanisms through which conservation programs affect human welfare, and (iii) more comprehensively comparing costs and benefits of conservation impacts. Scholars have made great advances in modeling and mapping ecosystem services, and in assigning economic values to these services. This modeling and valuation scholarship is often disconnected from evidence about how actual conservation programs have affected ecosystem services, however. Without a stronger evidence base, decision makers find it difficult to use the insights from modeling and valuation to design effective policies and programs. To strengthen the evidence base, scholars have advanced our understanding of the causal pathways between conservation actions and environmental outcomes, but their studies measure impacts on imperfect proxies for ecosystem services (e.g., avoidance of deforestation). To be useful to decision makers, these impacts must be translated into changes in ecosystem services and values. To illustrate how this translation can be done, we estimated the impacts of protected areas in Brazil, Costa Rica, Indonesia, and Thailand on carbon storage in forests. We found that protected areas in these conservation hotspots have stored at least an additional 1,000 Mt of CO2 in forests and have delivered ecosystem services worth at least

The Ecological Footprint of Poverty Alleviation: Evidence from Mexico's Oportunidades Program

5 billion. This aggregate impact masks important spatial heterogeneity, however. Moreover, the spatial variability of impacts on carbon storage is the not the same as the spatial variability of impacts on avoided deforestation. These findings lead us to describe a research program that extends our framework to study other ecosystem services, to uncover the mechanisms by which ecosystem protection benefits humans, and to tie cost-benefit analyses to conservation planning so that we can obtain the greatest return on scarce conservation funds.

Payments for environmental services supported social capital while increasing land management

Natural resource managers are often expected to achieve both environmental protection and economic development even when there are fundamental trade-offs between these goals. Adaptive management provides a theoretical structure for program administrators to balance social priorities in the presence of trade-offs and to improve conservation targeting. We used the case of Mexicos federal Payments for Hydrological Services program (PSAH) to illustrate the importance of adaptive management for improving program targeting. We documented adaptive elements of PSAH and corresponding changes in program eligibility and selection criteria. To evaluate whether these changes resulted in enrollment of lands of high environmental and social priority, we compared the environmental and social characteristics of the areas enrolled in the program with the characteristics of all forested areas in Mexico, all areas eligible for the program, and all areas submitted for application to the program. The program successfully enrolled areas of both high ecological and social priority, and over time, adaptive changes in the programs criteria for eligibility and selection led to increased enrollment of land scoring high on both dimensions. Three factors facilitated adaptive management in Mexico and are likely to be generally important for conservation managers: a supportive political environment, including financial backing and encouragement to experiment from the federal government; availability of relatively good social and environmental data; and active participation in the review process by stakeholders and outside evaluators.

Economics of Habitat Fragmentation: A Review and Critique of the Literature

We study the consequences of poverty alleviation programs for environmental degradation. We exploit the community-level eligibility discontinuity for a conditional cash transfer program in Mexico to identify the impacts of income increases on deforestation, and use the program’s initial randomized rollout to explore household responses. We find that additional income increases demand for resource-intensive goods. The corresponding production response and deforestation increase is more detectable in communities with poor road infrastructure. These results are consistent with the idea that better access to markets disperses environmental harm and the full effects of treatment can only be observed where poor infrastructure localizes them.