DP11349 Cash for Carbon: A Randomized Controlled Trial of Payments for Ecosystem Services to Reduce Deforestation

Author(s): Joost de De Laat, Seema Jayachandran, Eric F. Lambin, Charlotte Stanton
Publication Date: June 2016
Keyword(s): climate change, conditional cash transfers, deforestation, REDD+
JEL(s): O13, Q54
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=11349

This paper evaluates a Payments for Ecosystem Services (PES) program in western Uganda that offered forest-owning households cash payments if they conserved their forest. The program was implemented as a randomized trial in 121 villages, 60 of which received the program for two years. The PES program reduced deforestation and forest degradation: Tree cover, measured using high-resolution satellite imagery, declined by 2% to 5% in treatment villages compared to 7% to 10% in control villages during the study period. We find no evidence of shifting of tree-cutting to nearby land. We then use the estimated effect size and the social cost of carbon to value the delayed CO2 emissions, and compare this benefit to the program's cost.