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Cash for Carbon: A Randomized Controlled Trial of Payments for Ecosystem Services to Reduce Deforestation (WP-16-25)

Seema Jayachandran, Joost de Laat, Eric Lambin, and Charlotte Stanton

This paper evaluates a Payments for Ecosystem Services (PES) program in western Uganda that offered forest-owning households cash payments if they conserved their forest. The program was implemented as a randomized trial in 121 villages, 60 of which received the program for two years. The PES program reduced deforestation and forest degradation: Tree cover, measured using high-resolution satellite imagery, declined by 25 percent in treatment villages compared with 7–10 percent in control villages during the study period. The researchers find no evidence of shifting of tree-cutting to nearby land. They then use the estimated effect size and the "social cost of carbon" to value the delayed carbon dioxide emissions, and compare this benefit to the program's cost.

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Seema Jayachandran, Associate Professor of Economics and IPR Fellow, Northwestern University

Joost de Laat, Principal Investigator, Porticus Foundation

Eric Lambin, George and Setsuko Ishiyama Provostial Professor and Senior Fellow at the Woods Institute for the Environment, Stanford University

Charlotte Stanton, Associate, Carnegie Institution for Science

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