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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]

One of the major global trends linked to the process of globalization is the expansion of agro-industry into the humid tropics. Although agro-industry is an important source of income for Brazil, it is also leading to the displacement of local populations and extensive clearing of native vegetation. In this context, we focus on a second trend resulting from globalization in which financial institutions have demonstrated increasing concern with environmental and social responsibility, notably through the inclusion of environmental and social conditions in loans to the agricultural sector. In this article, we provide an assessment of the potential for this type of economic instrument to help reduce the negative impacts of agro-industrial expansion, and how the different actors who are shaping this debate (non-governmental organizations, industries, the finance sector, government) can best help to realize this potential. We evaluate this broader question through the lens of two International Finance Corporation loans to Brazil's Grupo Maggi, the world's largest independently-held soybean exporter. We identify four areas in which private sector self-regulation can improve to realize environmental and social performance goals: (a) Financial institutions and firms can increase the clarity, quality, timeliness, and regularity of monitoring and reporting; (b) Civil society can develop a more sophisticated approach to distinguishing between companies and initiatives that essentially maintain the status quo and those that are trying to improve; (c) Civil society can help to develop simple, standard measures of environmental and social performance of agricultural lands for use by financial institutions and firms in establishing environmental and social management systems; and (d) Governments can develop strong regulations that capitalize on voluntary regulation mechanisms' flexibility and efficiency, as well as developing incentive systems for producers and firms that demonstrate high social and environmental performance in their operations. [ABSTRACT FROM AUTHOR]

The article offers information related to the impact of amazon fires on Brazil’s agribusiness. Topics discussed include series of disastrous changes to its environmental policies including cuts to government agencies that enforce environmental protection laws; impact of fires set by farmers leads to an increase in deforestation and affects protected areas and indigenous lands; and create new pastures and plantations is both environmentally and economically unsustainable.