Conservation Payments Research Articles

Using Cost‐Effective Targeting to Enhance the Efficiency of Conservation Investments in Payments for Ecosystem Services

Ecosystem services are being protected and restored worldwide through payments for ecosystem services in which participants are paid to alter their land-management approaches to benefit the environment. The efficiency of such investments depends on the design of the payment scheme. Land features have been used to measure the environmental benefits of and amount of payment for land enrollment in payment for ecosystem services schemes. Household characteristics of program participants, however, may also be important in the targeting of land for enrollment. We used the characteristics of households participating in China's Grain-to-Green program, and features of enrolled land to examine the targeting of land enrollment in that program in Wolong Nature Reserve. We compared levels of environmental benefits that can be obtained through cost-effective targeting of land enrollment for different types of benefits under different payment schemes. The efficiency of investments in a discriminative payment scheme (payments differ according to opportunity costs, i.e., landholders' costs of forgoing alternative uses of land) was substantially higher than in a flat payment scheme (same price paid to all participants). Both optimal targeting and suboptimal targeting of land enrollment for environmental benefits achieved substantially more environmental benefits than random selection of land for enrollment. Our results suggest that cost-effective targeting of land through the use of discriminative conservation payments can substantially improve the efficiency of investments in the Grain-to-Green program and other payment for ecosystem services programs.

A participatory framework for conservation payments

This paper describes a participatory framework used in Alta Verapaz, Guatemala to analyze the future viability of different conservation measures in a cloud forest area. It presents how in the case of conservation initiatives, participatory developed instruments could provide the incentive for farmers to reinforce or introduce conservation measures in their farming systems to preserve habitats, reduce species disruptions and alleviate poverty. A model's architecture was created with stakeholders of different settings of the region of study. Together, baseline-scenarios and policy-scenarios on land use and income generation were developed. The paper investigates the potential impacts of different policy measures for conservation and poverty reduction through the instrument “payments for environmental services”. Aim was to integrate social, economic and environmental aspects. In the paper, (1) farming systems’ characteristics are described; (2) conservation activities are defined and standardized; and (3) policy recommendations out of different scenarios are given. The paper discusses the possibilities of compensating farmers for the affecting costs of already existing conservation activities by introducing a participatory developed policy instrument that captures the needs of the different farming systems. I suggest that acceptance or rejection of these payments is related to the farm-level strategies for coping with risk. I presuppose that if farmers see an advantage in producing environmental services because it signified an increase in their income and a decrease of risk, they will adopt and augment conservation techniques in their farming systems ( Herrador and Dimas, 2000, 2001). Main findings show that the amount of on-farm production is very significant for the classification of farming systems. Further, scenario for land use and income changes were seen as main drivers for conservation. The paper concludes showing that including in the modeling the economic disparities of the different farming systems and the active participation of stakeholders supports the acceptance and implementation of this policy instrument to promote agricultural landscapes with biodiversity and watershed conservation.

Direct conservation payments in the Brazilian Amazon: Scope and equity implications

This article looks into the scope and equity implications of applying payments for environmental services (PES) as a REDD implementation mechanism in the Brazilian Amazon. We establish a set of economic and institutional preconditions for PES to become a feasible and cost-effective conservation mechanism. We proceed with a macro-scale spatial analysis and overlay of opportunity costs, deforestation patterns, carbon services, and land tenure, in order to assess where these conditions hold. We then screen how the benefits of potential PES schemes might be distributed across different socioeconomic groups of service providers in different land tenure categories. Our economic–quantitative analysis, though sensitive to documented assumptions, suggests that under current carbon prices the economic preconditions are in place to pay for avoided deforestation in over half of threatened forests over the next decade. Unfortunately, the same optimism does not apply to institutional preconditions. Land grabbing, insecure tenure, overlapping claims, and lacking information on private tenure constitute real medium-term impediments to PES. If payments were to accrue to current landholders regardless of current tenure insecurities, large landowners who account for about 80% of all deforestation would reap the highest benefits, though per-capita benefits other tenure categories are also high. Schemes that closely align payments with opportunity costs are preferable for cost-effectiveness, and not necessarily more inequitable in outcomes. Essentially, PES systems cannot substitute command-and-control measures: the former depend on the latter for basic governance systems to secure effective rights of exclusion, which land stewards essentially need in order to become reliable service providers.

An agglomeration payment for cost-effective biodiversity conservation in spatially structured landscapes

Connected habitats are ecologically more valuable than isolated habitats for many species. A key challenge when designing payments for biodiversity in fragmented landscapes is to increase the spatial connectivity of habitats. Based on the idea of an agglomeration bonus we consider a scheme in which land-owners only receive payments if habitats are arranged in an ecologically favourable configuration. We compare the cost-effectiveness of agglomeration payments to spatially homogeneous payments on a conceptual level. Our results suggest that positive efficiency gains exist for agglomeration payments. We use Large Blue butterfly habitat in Germany as a specific case study, and find the agglomeration payments may lead to cost-savings of nearly 70% relative to homogenous payments.

Payments for biodiversity conservation in the context of weak institutions: Comparison of three programs from Cambodia

Implementing any conservation intervention, including Payments for Ecosystem Services (PES), in the context of weak institutions is challenging. The majority of PES programs have been implemented in situations where the institutional framework and property rights are strong and target the behaviours of private landowners. By contrast, this paper compares three PES programs from a forest landscape in Cambodia, where land and resource rights are poorly defined, governance is poor, species populations are low and threats are high. The programs vary in the extent to which payments are made directly to individuals or to villages and the degree of involvement of local management institutions. The programs were evaluated against three criteria: the institutional arrangements, distribution of costs and benefits, and the conservation results observed. The most direct individual contracts had the simplest institutional arrangements, the lowest administrative costs, disbursed significant payments to individual villagers making a substantial contribution to local livelihoods, and rapidly protected globally significant species. However, this program also failed to build local management organisations or understanding of conservation goals. By contrast the programs that were managed by local organisations were slower to become established but crucially were widely understood and supported by local people, and were more institutionally effective. PES programs may therefore be more sustainable when they act to empower local institutions and reinforce intrinsic motivations.

Is better drinking water valued in the Latin American countryside? Some evidence from Cotacachi, Ecuador

To investigate the financial contribution that rural people might make to the improvement of the potable water systems that serve them, 274 households in Cotacachi in the Ecuadorian Andes were surveyed about payments for watershed conservation, which would reduce seasonal shortages. While monthly payments of $1 or $2 were acceptable to most households, there was little support for payments above $3/month. In addition, multiple regression analysis suggests that 10% growth in annual earnings leads to an increase of 2.8% in payments from rural households for watershed conservation.

Towards a climate change adaptation strategy for coffee communities and ecosystems in the Sierra Madre de Chiapas, Mexico

The mountain chain of the Sierra Madre de Chiapas in southern Mexico is globally significant for its biodiversity and is one of the most important coffee production areas of Mexico. It provides water for several municipalities and its biosphere reserves are important tourist attractions. Much of the forest cover outside the core protected areas is in fact coffee grown under traditional forest shade. Unless this (agro)forest cover can be sustained, the biodiversity of the Sierra Madre and the environmental services it provides are at risk. We analyzed the threats to livelihoods and environment from climate change through crop suitability modeling based on downscaled climate scenarios for the period 2040 to 2069 (referred to as 2050s) and developed adaptation options through an expert workshop. Significant areas of forest and occasionally coffee are destroyed every year by wildfires, and this problem is bound to increase in a hotter and drier future climate. Widespread landslides and inundations, including on coffee farms, have recently been caused by hurricanes whose intensity is predicted to increase. A hotter climate with more irregular rainfall will be less favorable to the production of quality coffee and lower profitability may compel farmers to abandon shade coffee and expand other land uses of less biodiversity value, probably at the expense of forest. A comprehensive strategy to sustain the biodiversity, ecosystem services and livelihoods of the Sierra Madre in the face of climate change should include the promotion of biodiversity friendly coffee growing and processing practices including complex shade which can offer some hurricane protection and product diversification; payments for forest conservation and restoration from existing government programs complemented by private initiatives; diversification of income sources to mitigate risks associated with unstable environmental conditions and coffee markets; integrated fire management; development of markets that reward sustainable land use practices and forest conservation; crop insurance programs that are accessible to smallholders; and the strengthening of local capacity for adaptive resource management.

Direct payments for biodiversity conservation in developing countries: practical insights for design and implementation

The idea of direct payments for biodiversity conservation in developing countries has generated much debate. Despite substantial experience with related economic instruments in high-income countries such approaches are rare in tropical developing countries, where conservation action is most urgently needed. We explore current experience with the application of direct payments in developing countries through an extensive review and subsequent analysis of the efforts of Conservation International. Our review identifies a broad spectrum of possible direct payment contracts. However, we focus on those involving international conservation interests. Firstly, we develop a framework for the design of direct payment applications, addressing four major aspects: contractual arrangements, definition of conservation services, performance payments, and monitoring and enforcement systems. Secondly, we discuss implementation issues, highlighting the need to consider social factors such as participatory processes, property rights, local institutions and contract legitimacy. Finally, we discuss important considerations for future payment schemes. These include the need for social responsibility, as well as rigorous assessments of effectiveness. We conclude that direct payments show potential as an innovative tool for engaging local communities or resource users in conservation and as a mechanism for channelling global investments in biodiversity conservation services to site-based initiatives.

Linking social norms to efficient conservation investment in payments for ecosystem services.

An increasing amount of investment has been devoted to protecting and restoring ecosystem services worldwide. The efficiency of conservation investments, including payments for ecosystem services (PES), has been found to be affected by biological, political, economic, demographic, and social factors, but little is known about the effects of social norms at the neighborhood level. As a first attempt to quantify the effects of social norms, we studied the effects of a series of possible factors on people's intentions of maintaining forest on their Grain-to-Green Program (GTGP) land plots if the program ends. GTGP is one of the world's largest PES programs and plays an important role in global conservation efforts. Our study was conducted in China's Wolong Nature Reserve, home to the world-famous endangered giant pandas and >4,500 farmers. We found that, in addition to conservation payment amounts and program duration, social norms at the neighborhood level had significant impacts on program re-enrollment, suggesting that social norms can be used to leverage participation to enhance the sustainability of conservation benefits from PES programs. Moreover, our results demonstrate that economic and demographic trends also have profound implications for sustainable conservation. Thus, social norms should be incorporated with economic and demographic trends for efficient conservation investments.

Payments for environmental services and rural livelihood strategies in Ecuador and Guatemala

ABSTRACTPresented in this paper are the results of two contingent valuation analyses, one undertaken in Ecuador and the other in Guatemala, of potential payments for environmental services (PES) directed toward rural households. We find that minimum compensation demanded by these households is far from uniform, depending in particular on individual strategies for raising incomes and dealing with risks. Our findings strengthen the case for allowing conservation payments to vary among recipients, which would be a departure from the current norm for PES initiatives in Latin America.

Paying for Watershed Services in Latin America: A Review of Current Initiatives

Latin American experience with payments for watershed environmental services is examined in this article. Interest in the approach is substantial in the region, probably more so than in other parts of the developing world. However, existing conservation payments frequently lack key features, such as conditionality. Impediments to the approach are analyzed, including factors that drive up costs or interfere with internalization of benefits. Included in this article is detailed examination of three schemes: two local initiatives in Ecuador (one in Pimampiro and the other in Quito), as well as a nationwide program in Mexico.

Factors affecting land reconversion plans following a payment for ecosystem service program

Humans have altered much of the natural land cover, resulting in ecosystem degradation and biodiversity loss worldwide. Many countries have implemented conservation payment programs for agricultural land conversion to counter this trend. However, the sustainability of ecosystem services from these programs is unknown due to uncertainty about land uses when payments cease. We studied post-program land use plans for China’s Grain-to-Green Program (GTGP), one of the world’s largest ecosystem service payment programs, in Wolong Nature Reserve for giant pandas. Although farmers in the reserve planned to reconvert only 22.6% of the land that was enrolled in the GTGP to agriculture after payments cease, these GTGP plots are distributed across the landscape and may be important for many ecosystem services. Along with regional differences, the amount of GTGP land households planned to reconvert was significantly reduced by the respondent’s age and off-farm household income and was significantly increased by the number of household laborers and total amount of land the household had enrolled in the GTGP. Thus, regional, demographic and economic factors should be considered to more efficiently sustain conservation benefits from payment for ecosystem service programs.

Conservation Payments, Liquidity Constraints, and Off‐Farm Labor: Impact of the Grain‐for‐Green Program on Rural Households in China

AbstractThis study evaluates the labor response of rural households participating in the Grain‐for‐Green program in China, the largest payments for ecosystem services program in the developing world. Using a panel data set that we designed and implemented, we find that the participating households are increasingly shifting their labor endowment from on‐farm work to the off‐farm labor market. However, the effects vary depending on the initial level of human and physical capital. The results support the view that one reason why the participants are more likely to find off‐farm employment is because the program is relaxing households' liquidity constraints.

Financial compensation and uncertainty: using mean-variance rule and stochastic dominance to derive conservation payments for secondary forests

The expected opportunity costs of conserving a specific land use are usually considered adequate as financial compensation. However, a “conservation premium” is sometimes proposed as an added incentive, i.e., compensation greater than the expected opportunity costs. This paper discusses various methodological opportunities for deriving effective compensation under uncertainty. Based on cumulative distribution functions of possible opportunity costs (a Douglas-fir ( Pseudotsuga menziesii (Mirb.) Franco) plantation was considered the alternative to conserving a Chilean secondary forest), generated through Monte Carlo simulations, we derived an inclusive range of possible compensations from 77 up to 375 US$·ha–1·year–1. If we assumed that the two land-use alternatives were mutually exclusive and independent from other risky investments, a compensation of 375 US$·ha–1·year–1 was necessary to convince every decision maker to maintain the secondary forest. However, only 77 US$·ha–1·year–1 was enough for a risk-averse decision maker (given average opportunity costs of 113 US$·ha–1·year–1). Yet, it turned out that the greatest possible opportunity costs would already be compensated for with 199 US$·ha–1·year–1, given an error probability of 0.05. Compensating for the last 5% of possible opportunity costs would thus require an additional 176 US$·ha–1·year–1. Our approach had two main limitations, namely we did not consider portfolio effects, which would allow diversifying away unsystematic risks, and we did not take into account the different systematic risks of the compared alternatives. These limitations may have led to an overestimation of effective compensation.

Targeting conservation payments to achieve multiple outcomes

This paper describes an environmental conservation planning model used in Queensland, Australia to purchase agreements on 66 sites covering 81,046 ha at a cost of A$1.9 million. The model was used as part of a competitive tendering program called “NatureAssist”. The model maximises conservation benefit subject to a cost constraint using binary combinatorial optimisation. Multiple criteria analysis (MCA) is used to capture investor preferences and measure benefit over multiple outcomes. Conservation costs are drawn from real market data; i.e. the prices being offered by sellers (landholders) to supply conservation services to a buyer (the government). This study shows the potential strengths, and weaknesses, of taking an MCA approach to select conservation sites in a real market context.

Efficiency of incentives to jointly increase carbon sequestration and species conservation on a landscape

We develop an integrated model to predict private land-use decisions in response to policy incentives designed to increase the provision of carbon sequestration and species conservation across heterogeneous landscapes. Using data from the Willamette Basin, Oregon, we compare the provision of carbon sequestration and species conservation under five simple policies that offer payments for conservation. We evaluate policy performance compared with the maximum feasible combinations of carbon sequestration and species conservation on the landscape for various conservation budgets. None of the conservation payment policies produce increases in carbon sequestration and species conservation that approach the maximum potential gains on the landscape. Our results show that policies aimed at increasing the provision of carbon sequestration do not necessarily increase species conservation and that highly targeted policies do not necessarily do as well as more general policies.

Protecting the African elephant: A dynamic bioeconomic model of ivory trade

A dynamic bioeconomic model of ivory trade is used to investigate the efficacy of conservation payments, tourism benefits, quota regimes and a trade ban on the protection of the African elephant ( Laxadonta africana). The model consists of four ivory exporting regions and one demand region. Results indicate that a trade ban might not be successful in maintaining elephants, even if it increases the costs of marketing ivory and leads to a stigma effect that reduces demand. Indeed, trade in elephant products may offer some hope for the elephant, but only if there exist effective institutions that translate in situ protection into economic values.

Wildlife conservation payments to address habitat fragmentation and disease risks

ABSTRACTWe develop a bioeconomic model to gain insight into the challenges of Payments for Environmental Services (PES) as applied to protect endangered species given wildlife-livestock disease risks and habitat fragmentation. We show how greater connectivity of habitat creates an endogenous trade-off. More connectedness both (i) ups the chance that populations of endangered species will grow more rapidly, while (ii) simultaneously increasing the likelihood diseases will spread more quickly. We examine subsidies for habitat connectedness, livestock vaccination, and reduced movement of infected livestock. We find the cost-effective policy is to first subsidize habitat connectivity rather than vaccinations – this serves to increase habitat contiguousness. Once habitat is sufficiently connected, disease risks increase to a level to make disease-related subsidies worthwhile. Highly connected habitat requires nearly all the government budget be devoted to disease prevention and control. The result of the conservation payments is significantly increased wildlife abundance, increased livestock health and abundance, and increased development opportunities.

A model-based approach for designing cost-effective compensation payments for conservation of endangered species in real landscapes

An approach is presented which integrates an economic and an ecological model for designing cost-effective compensation payments for conservation of endangered species in real landscapes. The approach is used to develop a cost-effective payment scheme for conservation of an endangered butterfly species ( Maculinea teleius) protected by the EU Habitats Directive in the region of Landau, Germany. The results of the case study are used to analyse the effect of metapopulation dynamics on the cost-effectiveness of payment schemes, to compare spatially homogeneous and heterogeneous payments, and to evaluate existing conservation policies.

A software tool for designing cost-effective compensation payments for conservation measures

Compensation payments to farmers who apply species-friendly farming activities are a common instrument to reconcile nature conservation with agriculture in Europe. In order to design cost-effective and ecologically effective compensation payments for conservation measures an ecological–economic modelling procedure has been developed using the example of protecting Large Blue butterflies. The modelling procedure forms the basis for the decision support tool EcoEcoMod. By comparing the effects of different mowing regimes on the butterfly populations for a given budget, the user can identify the cost-effective mowing regime and the corresponding compensation payments for that budget.