Payments for environmental services and coffee production in Colombia: Technical efficiency across the world heritage status borders

Abstract

The breakdown of the Coffee Agreement from the International Coffee Organization in 1989 led to instability of prices in the world coffee market. Uncertainty pushed coffee producers to search for diversified income sources. With land-use change threatening environmental sustainability, UNESCO included the Colombian Coffee Cultural Landscape in the World Heritage (WH) List in 2011 to protect the coffee regions. Also, the government and private firms supported coffee producers with payments for environmental services (PES). This study explores the extent to which PES can affect coffee producers' performance at the Coffee Cultural Landscape using stochastic frontier analysis. The survey data used allowed us to analyze 385 coffee producers around the Andes for the cropping year 2017. The location of each farmer was recorded by GPS. The paper found that the combination of both receiving PES and located within the WH increases efficiency, while the presence of only one of the PES or WH is associated with lower technical efficiency. In general, farms with PES found to be more efficient than farms without PES. While farms outside of WH without PES exhibit higher technical efficiency than farms inside of WH without PES. Both WH status and PES schemes can support policies oriented to economic, environmental and social development.