Conservation payments under uncertainty

Stefanie Engel, Charles Palmer, Luca Taschini, Simon Urech

Research output: Contribution to journalArticlepeer-review

Abstract

The decision of whether to retain forest or convert to another land use is affected by uncertainty over future land use returns. This paper examines the design of conservation payments to landowners under uncertainty. Payments are either indexed to the returns from deforestation (agriculture), or to a market value associated with forest nonuse benefits. Payment size depends on the degree of correlation between payments and agricultural returns, and their relative volatility. Market-based payments for reducing emissions from deforestation and degradation (REDD) are simulated for Brazilian soybean growers. Payments indexed to carbon prices are larger than those indexed to international soybean prices.

Original languageEnglish
Pages (from-to)36-56
Number of pages21
JournalLand Economics
Volume91
Issue number1
DOIs
Publication statusPublished - 1 Jan 2015

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