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Cost and equity implications of integrating sticks and carrots in conservation programs in Brazil and Peru

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This presentation by Jan Börner (University of Bonn, CIFOR), Eduardo Marinho (CIFOR), and Sven Wunder (CIFOR) discusses the necessity of integrating incentive-based policies into traditional command-and-control strategies to create a sustainable conservation model.

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Cost and equity implications of integrating sticks and carrots in conservation programs in Brazil and Peru

  1. 1. 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)
  2. 2. Background •Mounting empirical evidence suggests that Brazil has effectively reduced deforestation to 70-80% of pre-2004 levels (Hargraveand Kis-Katos, 2013) •Command-and-control (stick) policies are relatively cheap to implement (Börneret al., 2014) •Effective C&C requires complementary incentive- based policies to be sustainable in the long-run (Nepstadet al., 2014)
  3. 3. 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 cost- effective and fair (Peru)?
  4. 4. Policy Mix tradeoffs Cost- effectiveness Income C&C PES
  5. 5. PES design tradeoffs Cost- effectiveness Equity •Concentration of land ownership •Historical deforestation patterns •Spatially variable opportunity costs •Targeting of payments
  6. 6. Study areas
  7. 7. 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
  8. 8. 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 df  d  pF PES d max  ,   f  , d *  pF  PES  s t p TC nd TC B d p I i i i i i I i p i i       1 ' 1 . . max
  9. 9. Spatial analysis •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) Spatial overlay Threatened forests Returns to deforestation Community boundaries Population
  10. 10. Policy mix tradeoff (Brazil)
  11. 11. Net revenue of alternative policy mixes
  12. 12. Welfare effects of alternative policy mixes
  13. 13. PES design tradeoffs 020004000600080001000012000 0.00.20.40.60.81.0 Cost-effectiveness: Peruvian Soles per hectare of conserved forest Inequality: gini coefficient of HH income change current PNCB schemeav. p/ha opp. cost paymentcompensation up to av. opp.costav. department p/ha opp. cost paymentav. province p/ha opp. cost payment1 min. salary per year + pure compensation1 min. salary per year + average opp. cost paymentUNEQUAL & INEFFICIENTEQUAL & EFFICIENT
  14. 14. 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

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