Cash for Carbon: A Randomized Trial of Payments for Ecosystem Services to Reduce Deforestation

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July 2017
Authors: 
S. Jayachandran
This study evaluates a program of payments for ecosystem services (PES) in Uganda that offered forest-owning households annual payments of 70,000 Ugandan shillings per hectare if they conserved their forest. The program was implemented as a randomized controlled trial in 121 villages, 60 of which received the program for two years. 
 
The study found that tree cover declined by just 4.2% during the study period in treatment villages, compared to 9.1% in control villages, and there is no evidence that enrollees shifted their deforestation to nearby land. In addition, the study valued the delayed carbon dioxide (CO2) emissions and found that the estimated benefit of the program ($1.11 per averted MT of CO2) is 2.4 times larger than its costs ($0.46 per averted MT of CO2 for incentive payments to forest owners plus program administration costs).
 
By randomly assigning who was eligible for the program, this study improved on existing studies that are subject to concerns about bias in the estimates due to self-selection into the program or targeting by program administrators. This study also used satellite images with very high resolution to enable the detection of selective tree-cutting in addition to clearcutting and, thereby, help identify whether the thinning of forests is leading to forest loss.
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Country: 
Uganda
Sectors: 
Forestry
Themes: 
Natural Capital
Key search terms: 
green growth, green economy policy, natural capital, natural capital accounting, microfinance, Environmental economics, participation, payments for environmental services

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