Can you pay people to leave trees standing halfway around the world?

Tuesday, July 25, 2017

Photo courtesy of Bernard Dupont.

Is there a viable market to keep people from chopping down their own trees? The question is the type that could provide endless fodder for proponents and detractors of the idea that nature provides goods and services that can be traded efficiently and systematically—so-called payments for ecosystem services.

Forests store 80 percent of the planet’s above-ground carbon. Cutting down trees in tropical countries, usually to turn them into charcoal or to make way for agriculture, accounts for a big chunk of carbon emissions. So if you’re worried about these emissions and inclined toward market-based strategies, an appealing solution would seem straightforward: Pay people in the tropics to leave their trees standing.

A new study carried out in western Uganda suggests that this strategy might be gaining some purchase. Research published last week in the journal Science found that paying participants 70,000 Ugandan shillings (roughly $28) per hectare (about 2.5 acres) of forest left standing on their land each year reduced the rate of deforestation to less than half that of control groups.

The two-year experiment was essentially an environmental version of a conditional cash transfer, a type of program popular in development circles that pays participants for delivering upon a certain promised behavior. (These conditional-payment programs took off in Brazil and Mexico in the early 2000s, with government programs that paid mothers to make sure their children attended school or went to preventative medical check ups.) The Uganda experiment garnered attention partly because the researchers employed another approach now popular in development economics: a randomized controlled trial.

The study included 121 villages, with 60 of them randomly selected as the controls, where villagers did not have the option to participate in the payment program. From 2011-13, tree cover decreased by 9.1 percent in those control villages. By contrast, in the villages where landowners had the option to receive the payment, tree cover shrunk by just 4.2 percent—despite the fact that only about one in three forest owners enrolled in the program.

The average forested landholding of enrollees was 2 hectares, so the typical participant earned about $56 a year for compliance, equal to 5 percent of their average household income. The annual payment for intact tree cover seems to have encouraged participants to cut down fewer trees to sell as timber, make charcoal, or use for some other purpose. Or put another way, the payment increased the marginal value of leaving a hectare of timber standing.

When it comes to valuing ecosystem services, environmental economist David Simpson has noted that many ecologists and other non-economists have often overlooked a salient fact: “Nature may provide services of immense value to humanity in total, but marginal values are what matter. And in the case of many ecosystem services, marginal benefits are likely to be low.” The results from the Uganda experiment suggest that most participating villagers deemed the marginal benefits of intact forest to be at least more valuable than timber products or cleared land would have been. The study reports that 159 of the 180 enrollees conserved their forests and therefore qualified for the payment.

The program was funded by a U.N. grant to the Ugandan government and implemented by the Chimpanzee Sanctuary and Wildlife Conservation Trust, a local conservation NGO. (Ugandan forests not only sequester carbon but also provide habitat for endangered chimpanzees, a draw for the country’s tourism industry.) Monitors employed by the NGO spot-checked landowners’ forests for felled trees, and the researchers used high-resolution satellite imagery to gauge deforestation within a radius that included not only entire treatment villages but also areas beyond village boundaries. That way, the study attempted to account for the possibility that participating villagers could pocket the money while simply harvesting trees elsewhere, whether on non-participating neighbors’ farms or village outskirts.

The Uganda experiment is just one data point, but it could have wider implications. Concern over tropical deforestation has led governments to create various programs whereby rich countries pay poor ones to leave trees standing. The signature U.N. program, known as REDD+, aims to create “a financial value for the carbon stored in forests by offering incentives for developing countries to reduce emissions from forested lands” through the promise of “results-based payments for results-based actions.” But where property rights are not formalized, secured, or recognized by national governments, creating a market mechanism for forest carbon could do more harm than good. Bestowing new value upon intact timber creates incentives to strip people of customary land-use rights in forests, and it’s little surprise that these sorts of top-down, bureaucratic programs are also open to capture by national politicians, local elites, or both.

In western Uganda, the recent initiative had the benefit of being much smaller and cleaner—it involved a few hundred private landowners who control their land and the trees on it. Before the program, those standing trees had little or no market value to villagers—they had to get out an ax or machete to realize any payoff from them. The payment system offered landowners a way to put money in their pockets by leaving their forests standing. Questions may remain about how scalable such an initiative can be, but it underscores a key lesson about how to align conservation incentives with people halfway around the world: if you want it, buy it.

Tate Watkins, Research Fellow at PERC
Tate Watkins is a research and publications fellow at PERC. He worked with small-scale farmers in the Haitian coffee sector for two years, helping set up an initiative to boost growers’ coffee production, quality, and livelihoods. Prior to that, he worked as a freelance journalist in Haiti reporting on economic development, foreign aid, and...
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