Search

Payments for Ecosystem Services (PES) can use many design features. We investigate the impact of payment conditionality types, i.e. different specifications when to pay and when not to pay, for PES on deforestation and agricultural production in a lab-in-the-field experiment. Our experiment also tests variations in contract period and payment volatility. We designed a highly visual simulation game to characterize the decision situation of a cattle rancher in Brazil. The player can expand extensive pasture by deforestation or intensify existing pasture. The model includes both a land and a capital constraint. We applied the game in an economic, framed lab-in-the-field experiment in Tocantins, Brazil. Payments conditional on forest carbon stock lead to slow, but steady deforestation, while payments conditional on forest carbon stock-change suppressed deforestation more strongly. But payments conditional on stock increase cattle production while payments conditional on stock-change have no effect on production. Thus, depending on the level of leakage, either type of conditionality can be more cost-effective in reducing global carbon emissions. Contracts with limited periods lead to strong deforestation after the end of the payment period. Payment volatility had no significant effect. [ABSTRACT FROM AUTHOR]

Brazil has created a market mechanism for compensating past deforestation based on the acquisition of forest surplus from different properties. This mechanism, known in Brazil as the 'CRA market', could become the world's largest forest compensation program. The success of this market depends on the specifics of regulations that are yet to come. The objective of this article was to explore three relevant issues to the regulation of a future CRA market within the Atlantic Forest of Minas Gerais state: the balance between supply and demand; incentives for trade in priority areas; and potential policy overlaps between different compensation programs. Based on geospatial evaluations and content analysis of government documents, the study revealed a potential oversupply of CRAs in the Minas Gerais Atlantic Forest, as surplus areas were found to be 2.76 greater than deficit areas. Eventual incentives for trade in priority areas could lessen oversupply, but unfold into sensitive territorial trade-offs. The potential overlap between the CRA market and the existing compensation program of the Atlantic Forest Act, while still unclear, is unlikely to be a very relevant one. Future avenues of research are suggested. • The CRA market could become the world's largest forest compensation program. • Relevant issues for an eventual Atlantic Forest market are evaluated. • CRA oversupply is likely to occur. • Incentive for trade in priority areas could unfold into controversial trade-offs. • Interactions between compensation programs need further investigation. [ABSTRACT FROM AUTHOR]