Cost and equity implications of
integrating sticks and carrots in
conservation programs in Brazil and Peru
Jan Börner (University of Bonn, CIFOR)
Eduardo Marinho (CIFOR)
Sven Wunder (CIFOR)
Background
• Mounting empirical evidence suggests that Brazil
has effectively reduced deforestation to 70-80%
of pre-2004 levels (Hargrave and Kis-Katos, 2013)
• Command-and-control (stick) policies are
relatively cheap to implement (Börner et al.,
2014)
• Effective C&C requires complementary incentivebased policies to be sustainable in the long-run
(Nepstad et al., 2014)
Research questions
1. What tradeoffs in terms of cost-effectiveness
and land user income do policy makers face
when attempting to integrate sticks (C&C)
and carrots (PES) for forest conservation
(Brazil)?
2. How can the incentive component be
designed to make conservation both costeffective and fair (Peru)?
Policy Mix tradeoffs
Costeffectiveness
C&C
PES
Income
PES design tradeoffs
Costeffectiveness
•
•
•
•
Concentration of land ownership
Historical deforestation patterns
Spatially variable opportunity costs
Targeting of payments
Equity
Study areas
Study areas
BRAZILIAN AMAZON
• High historical deforestation
• High concentration of land
ownership
• Commercial agriculture and
cattle operations at the
agricultural frontiers
• Relatively well developed
forest monitoring and law
enforcement infrastructure
• Large-scale PES planned
PERUVIAN AMAZON
• Historically low deforestation
• Relatively homogeneous
distribution of land
• Predominantly subsistence
cattle production and small but
growing commercial sector
• Relatively weak forest
monitoring and law
enforcement infrastructure
• Large-scale PES implemented
Modelling decisions
Land user
• Deforestation is a function of
expected profits and policy
incentives
EPA
• Enforcement is a budget
constrained optimization of
deterrence through in situ
inspections
max d d  f  , d   pF  PES 
I
max
p
d
i
pi
i 1
I
f  , d *  pF  PES 
s.t . p i TC i  nd i TC i'  B
i 1
Spatial analysis
Spatial overlay
• District-based opportunity cost
analysis
• Grid-based spatial simulation of:
– Avoided deforestation (Brazil + Peru)
– Land user income change (Brazil + Peru)
– Command-and-control implementation
costs (Brazil)
– Sticks & Carrot integration (Brazil)
– Alternative PES payment modalities
(Peru)
Threatened
forests
Community
boundaries
Population
Returns to
deforestation
Policy mix tradeoff (Brazil)
Net revenue of alternative policy mixes
Welfare effects of alternative policy
mixes
1.0
0.4
0.6
0.8
UNEQUAL & INEFFICIENT
0.2
current PNCB scheme
av. p/ha opp. cost payment
compensation up to av. opp.cost
av. department p/ha opp. cost payment
av. province p/ha opp. cost payment
1 min. salary per year + pure compensation
1 min. salary per year + average opp. cost payment
EQUAL & EFFICIENT
0.0
Inequality: gini coefficient of HH income change
PES design tradeoffs
0
2000
4000
6000
8000
10000
Cost-effectiveness: Peruvian Soles per hectare of conserved forest
12000
Key findings
• Mixing carrots to sticks can make REDD+ fairer,
but also more expensive (Brazil)
• If PES are intended to complement C&C (as
common under REDD+) enforcement quality is
key to cost-effectiveness (not necessarily fairness)
• Designing PES requires knowledge about spatial
patterns of deforestation and opportunity costs
• Simple and feasible adjustments to the PNCB can
boost its cost-effectiveness and equity effects