Can Environmental Cash Transfers Reduce Deforestation and Improve Social Outcomes? A Regression Discontinuity Analysis of Mexico's National Program (2011-2014)

66 Pages Posted: 18 Jan 2019 Last revised: 24 Jan 2019

See all articles by Jennifer Alix‐Garcia

Jennifer Alix‐Garcia

University of San Francisco - College of Arts & Sciences

Katharine R. Emans Sims

Amherst College

Victor Orozco-Olvera

World Bank

Laura Costica

World Bank - Research Department

Jorge David Fernandez Medina

National Forestry Commission of Mexico

Sofia Romo-Monroy

National Forestry Commission of Mexico

Stefano Pagiola

World Bank - Environment and Natural Resources Division

Date Written: January 17, 2019

Abstract

Environmental conditional cash transfers, or "payments for ecosystem services" are a centerpiece of global efforts to protect biodiversity, safeguard watersheds, and mitigate climate change by reducing forest loss. This paper evaluates the impacts of Mexico's national payments for ecosystem services program, which provides five years of payments to landowners in exchange for maintaining and managing natural land cover. Using a regression discontinuity design, the paper studies impacts on environmental, socioeconomic, and social capital outcomes for the 2011-14 program cohorts. The analysis finds that treated communities increased management activities to protect land cover, such as patrolling for illegal conversion or combatting soil erosion (by 48 percent compared to controls). The program reduced the loss of tree cover in areas at high risk of deforestation (by 29 percent compared to controls), with effects being larger for those that have been in the program the longest (38 percent compared to controls). These results are similar to estimates of impact for earlier program cohorts and continue to highlight the importance of targeting the program to areas of high risk of land cover loss to increase environmental effectiveness. The program continued to reach poor communities and households, but estimated impacts on household wealth indicators are small in magnitude and not statistically significant. These results indicate that community-level conditional payments did not harm household-level socioeconomic indicators, a key safeguard requirement of conservation policies of the United Nations Programme on Reducing Emissions from Deforestation and Forest Degradation. The data also show that payments for ecosystem services significantly increased community social capital -- the institutions, attitudes, and values that govern human interactions -- (by 9 percent compared to controls), and these externally provided incentives did not crowd out household contributions to other community work.

Keywords: Global Environment, Environmental Disasters & Degradation, Global Environment Facility, Biodiversity, Disability, Economic Assistance, Access of Poor to Social Services, Services & Transfers to Poor, Natural Resources Management, Forests and Forestry, Forestry, Sustainable Land and Crop Management, Environmental Protection, Forestry Management, Natural Resources Management and Rural Issues, Energy and Natural Resources, Coastal and Marine Resources, Sustainable Land Management

Suggested Citation

Alix-Garcia, Jennifer and Sims, Katharine R. Emans and Orozco-Olvera, Victor H. and Costica, Laura and Fernandez Medina, Jorge David and Romo-Monroy, Sofia and Pagiola, Stefano, Can Environmental Cash Transfers Reduce Deforestation and Improve Social Outcomes? A Regression Discontinuity Analysis of Mexico's National Program (2011-2014) (January 17, 2019). World Bank Policy Research Working Paper No. 8707. Available at SSRN: https://ssrn.com/abstract=3317966

Jennifer Alix-Garcia (Contact Author)

University of San Francisco - College of Arts & Sciences ( email )

San Francisco, CA 94117
United States

HOME PAGE: http://www.usfca.edu/artsci/fac_staff/A/alix-garcia_jennifer.html

Katharine R. Emans Sims

Amherst College ( email )

Amherst, MA 01002
United States

Victor H. Orozco-Olvera

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Laura Costica

World Bank - Research Department

1818 H Street, N.W.
Washington, DC 20433
United States

Jorge David Fernandez Medina

National Forestry Commission of Mexico

Mexico

Sofia Romo-Monroy

National Forestry Commission of Mexico

Mexico

Stefano Pagiola

World Bank - Environment and Natural Resources Division

Washington, DC 20433
United States

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