Cash for Carbon: Paying People to Conserve Trees Works, Study Finds

A first-of-its-kind study led by a Northwestern University professor shows that giving people a financial incentive to conserve trees is an effective strategy for fighting climate change.

The study, led by Seema Jayachandran, associate professor of economics in Northwestern’s Weinberg College of Arts and Sciences, examined two groups of people who own forests in more than 120 villages in western Uganda.

Members of one group were given cash rewards if they kept their forest intact and refrained from deforesting it. Those in the other group received no monetary incentives.

Two years later, villages where forest owners were not incentivized to conserve trees had lost about twice as much tree cover compared to villages where people received cash for keeping trees.

“The payments changed people’s behavior and prompted them to conserve,” said Jayachandran, also a faculty fellow with Northwestern’s Institute for Policy Research, in a press release. “And we didn’t find any evidence that they simply shifted their tree-cutting elsewhere. This truly was a net increase in forest cover in the study region.”

Forest owners in the one group received $28 per hectare per year, Jayachandran said. The typical forest owner owned two hectares of forest (about five acres) and therefore received $56 per year, a significant payment considering the average annual household income in Uganda is roughly $1,000.

The study, published July 21 in the journal Science, sought to evaluate the effectiveness of a strategy known as Payments for Ecosystems (PES) at reducing deforestation.

Researchers were also able to measure the cost of the program compared to other approaches aimed at reducing carbon emissions, such as subsidies for hybrid or electric vehicles in the U.S. Using an indicator referred to as the social cost of carbon, the study found that the benefit of delayed carbon dioxide emissions from the intact forests was twice as large as the program costs.

(“Cash for carbon: A randomized trial of payments for ecosystems services to reduce deforestation")(“Cash for carbon: A randomized trial of payments for ecosystems services to reduce deforestation")

Jayachandran said that with many other environmental policies, the value of the averted CO2 winds up being smaller than the program costs.

The findings highlight the potential for reducing carbon emissions in developing countries. Although the benefit of conserving a tree is the same regardless of location, paying individuals to conserve forests in developing countries like Uganda is less expensive, making it cheaper to reduce overall emissions, the researchers said.

Given that deforestation accounts for nearly 10 percent of human-induced carbon emissions, the researchers said the tree payment program represents “a cost-effective way to avert deforestation in developing countries, and hence a powerful tool to mitigate climate change,” according to the press release.

Contact Alex Ruppenthal: @arupp aruppenthal@wttw.com | (773) 509-5623


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