Local Effects of Payments for Environmental Services on Poverty

EfD Discussion Paper
1 January 2014

We estimate local effects of Payment for Environmental Services (PES) programs on poverty in Costa Rica between 2007 and 2009. Using household surveys and spatial geographic data, we are able to control for socioeconomic and geographic characteristics at the individual and census tract level.

We find that the effects are insignificant at a national level. However, this reflects countervailing forces. We find that PES coverage increases poverty in low-slope places and decreases poverty in high-slope places. These results are robust to demographic characteristics of the individuals. However, the magnitudes of the impacts are very low, even when they are statistically significant. We conclude that the PES program has not increased or decreased poverty substantially in Costa Rica. Policymakers could increase the impact on poverty by focusing their efforts in low-slope areas; however, as others have shown, such a focus could also reduce the impact on avoided deforestation.

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Publication | 4 June 2014