Payments for Environmental Services: Empirical analysis for Costa Rica

Evaluating its impact using the deforestation observed in matched untreated areas, we find that Costa Rica’s ‘PSA’ program of payments for environmental services had little effect on 1997-2000 forest clearing. Reasons include: a low national rate of deforestation; no targeting of those locations more likely to change land usage; and a goal of transferring surplus to landowners. This pioneering effort could save much of its budget, or greatly increase forest impact from current funds, if it could avoid enrolling lands which would remain forested even without such payments.