Abstract
Payments for Environmental Services (PES) have become a popular forest conservation tool in recent years, with numerous new schemes springing up around the world, particularly in developing countries. Nonetheless, despite an expanding literature on the subject, their long-term environmental and economic impacts are still understudied. This thesis explores the effectiveness of PES programs in the Brazilian Amazon using impact analysis methods, focusing on concrete and emblematic initiatives aimed at addressing the issue of climate change (CC) in the tropics. The first and second chapters examine the performance of the Sustainable Settlements in the Amazon (SSA) program, which between 2013 and 2017 provided technical and financial incentives to 350 households in the state of Pará for preserving their forest. The first chapter estimates the effectiveness of the SSA program on preserving natural forests using two deforestation datasets. Using matching and panel data from a sample of farm holders both enrolled and not enrolled in the program, we estimated the forest loss that would have occurred in the absence of the program. We find evidence that the program was successful in reducing deforestation during its early years of implementation. Nonetheless, at the end of the program, the participants resume their normal rate of deforestation. Despite this, we found no evidence of participants catching up on avoided deforestation after payments were suspended, suggesting that the program's gains were permanent. We calculated the delayed CO2 emissions highlighted by the impact assessment and found that the benefits of the SSA program outweighed the costs. Our study adds to the existing literature by providing new evidence on the additionality, permanence and cost-effectiveness of PES-based forest conservation programs. The second chapter complements the previous analysis by mobilizing additional data to determine which decisions relating to land use and agricultural practices have enabled participants in the SSA program to forgo cutting part of their forest. Using counterfactual impact evaluation methods we assessed the impact of the project over 2013-2019, i.e., from its first year until two years after its end. Based on the Theory of Change, we focused on land use and socioeconomic outcomes likely to have been impacted by the initiative. The main findings suggest that the decrease in deforestation has occurred mainly by cattle ranching intensification. Furthermore, our results indicate that the program had a positive impact on farmers' incomes and on alternative livelihood production activities. Our findings suggest that conservation programs that combine PES with support to farmers for the adoption of low-impact activities can be effective in the fight against CC without jeopardizing the livelihood of local populations. This study adds to the existing literature by providing unique evidence on the permanence of the impacts of conservation programs on locals' livelihoods. The third chapter provides the results of an experimental auction implemented in western Brazilian Amazon among a sample of 300 landowners. The auction had the aim of eliciting farmers' willingness to accept (WTA) to enter two PES contracts with different forest conservation thresholds. The main findings suggest that the average WTA is low relative to the social cost of carbon and that farmers tend to bid higher in a PES auction that offers contracts with more challenging environmental targets. Furthermore, our data reveal a typology, indicating that one set of farmers typically bids higher and values flexibility in PES contracts more than the other group. Although further research from the field is warranted to determine which type of PES contract is ultimately most cost-effective, these results suggest that measuring WTA provides a key input for shaping pricing policy and guiding the magnitude and targeting of forest conservation PES contracts in the Amazon.