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Realistic REDD: Improving the Forest Impacts of Domestic Policies in Different Settings

Alexander Pfaff, Gregory S. Amacher, Erin O. Sills
Review of Environmental Economics and Policy, volume 7, issue 1, winter 2013, pp. 114–135 doi:10.1093/reep/res023

PDF link iconThis article, which is part of a symposium on the economics of REDD, identifies three common settings for forest loss involving different types of decision-making agents that operate under different markets and institutions. That suggests using different theoretical frameworks for these three settings, which in turn generates different predictions concerning policies’ impacts. The first model, “producer profit maximization given market integration,” has been applied to many private decisions about the best locations for profitable land uses, such as agriculture and forest. Its predictions have been widely studied empirically, beginning no later than von Thunen (1826). The second model, “rural household optimization given incomplete markets and household heterogeneity,” has been applied to more isolated settings featuring high transactions costs that yield incomplete integration of households in input and output markets. Its policy impact predictions have been tested with surveys at household and village levels. In the third model, “public optimization given production and corruption responses by private firms,” a public agency determines public forest access by balancing public goods, public revenue needs, and private rents to award concessions. There is potential for corruption, and the decisions may be affected by decentralization. This model’s predictions can be tested using observed policies. We find that past policies rarely addressed the incentives driving forest loss effectively. This helps to explain the limited impact of past policies on deforestation and forest degradation. It also suggests directions for the design of future policies. In sum, the theory and the evidence suggest that REDD success requires an understanding of all the incentives that drive forest loss, so that domestic policy can be tailored to specific settings (i.e., relevant agents and institutions).

 

Improving stove evaluation using survey data: who received which intervention matters

Valerie Mueller, Alexander Pfaff, John Peabody, Yaping Liu, Kirk R. Smith
Ecological Economics 93 (2013) 301–312

PDF link iconAs biomass fuel use in developing countries causes substantial harm to health and the environment, efficient stoves are candidates for subsidies to reduce emissions. In evaluating improved stoves’ relative benefits, little attention has been given to who received which stove intervention due to choices that are made by agencies and households. Using Chinese household data, we find that the owners of more efficient stoves (i.e., clean-fuel and improved-biomass stoves, as compared with traditional-biomass and coal stoves) live in less healthy counties and differ, across and within counties, in terms of household characteristics such as various assets. On net, that caused efficient stoves to look worse for health than they actually are.We control for counties and household characteristics in testing stove impacts. Unlike tests that lack controls, our preferred tests with controls suggest health benefits from clean-fuel versus traditional-biomass stoves. Also, they eliminate surprising estimates of health benefits from coal, found without using controls. Our results show the value, for learning, of tracking who gets which intervention.

 

Ecopayments and Deforestation in Costa Rica: a nationwide analysis of PSA’s initial years

Juan Robalino, Alexander Pfaff
Land Economics (2013) volume 89 (3): 432–448

PDF link iconWe offer a nationwide analysis of the initial years of Costa Rica’s PSA program, which pioneered environmental-services payments and inspired similar initiatives. Our estimates of this program’s impact on deforestation, between 1997 and 2000, range from zero to one-fifth of 1% per year (i.e., deforestation is avoided on, at most, 2 out of every 1,000 enrolled hectares). The main explanation for such a low impact is an already low national deforestation rate. We also consider the effect of enrollment. Predicted deforestation on enrolled versus nonenrolled hectares, and matching analyses suggest an enrollment bias toward lower clearing threat. Enrolling land facing higher threat could raise payments’ impact on deforestation.

 

Governance, Location and Avoided Deforestation from Protected Areas: greater restrictions can have lower impact, due to differences in location

Alexander Pfaff, Juan Robalino, Eirivelthon Lima, Catalina Sandoval, Diego Herrera
World Development 2014 volume 55, pp. 7–20

PDF link iconFor Acre, in the Brazilian Amazon, we find that protection types with differences in governance, including different constraints on local economic development, also differ in their locations. Taking this into account, we estimate the deforestation impacts of these protection types that feature different levels of restrictions. To avoid bias, we compare these protected locations with unprotected locations that are similar in their characteristics relevant for deforestation. We find that sustainable use protection, whose governance permits some local deforestation, is found on sites with high clearing threat. That allows more avoided deforestation than from integral protection, which bans clearing but seems feasible only further from deforestation threats. Based on our results, it seems that the political economy involved in siting such restrictions on production is likely to affect the ability of protected areas to reduce emissions from  deforestation and degradation.

 

Evolution of households’ responses to the groundwater arsenic crisis in Bangladesh: information on environmental health risks can have increasing behavioral impact over time

Soumya Balasubramanya, Alexander Pfaff, Lori Bennear, Alessandro Tarozzi, Kazi Matin Ahmed, Amy Schoenfeld, Alexander van Geen
Environment and Development Economics 19: 631–647

PDF link iconA national campaign of well testing through 2003 enabled households in rural Bangladesh to switch, at least for drinking water, from high-arsenic wells to neighboring lower arsenic wells. We study the well-switching dynamics over time by re-interviewing, in 2008, a randomly selected subset of households in the Araihazar region who had been interviewed in 2005. Contrary to concerns that the impact of arsenic information on switching behavior would erode over time, we find that not only was 2003–2005 switching highly persistent but also new switching by 2008 doubled the share of households at unsafe wells who had switched. The passage of time also had a cost: 22 per cent of households did not recall test results by 2008. The loss of arsenic knowledge led to staying at unsafe wells and switching from safe wells. Our results support ongoing well testing for arsenic to reinforce this beneficial information.

 

On the Endogeneity of Resource Comanagement: Theory and Evidence from Indonesia

Stefanie Engel, Charles Palmer, Alexander Pfaff
Land Economics 2013 89(2):308-329

PDF link iconWe examine theoretically the emergence of participatory comanagement agreements that share between state and user the management of resources and the benefits from use. Going beyond user-user interactions, our state-user model addresses a critical question—when will comanagement arise?— in order to consider the right baseline for evaluating comanagement’s forest and welfare impacts. We then compare our model’s hypotheses concerning de facto rights, negotiated agreements, and transfers (all endogenous) with community-level data including observed agreements in a protected Indonesian forest. These unique data could refute the model, despite being limited, but instead offer support.

 

Unequal Information, Unequal Allocation: bargaining field experiments in NE Brazil

Alexander Pfaff, Maria Alejandra Velez, Renzo Taddei, Kenneth Broad
Environmental Science & Policy 26 (2013) 90-101

PDF link iconWe assess how unequal information affects the bargaining within resource allocation, a stakeholder interaction that is critical for climate adaptation within the water sector. Motivated by water allocation among unequal actors in NE Brazil, within Ceara´ State, we employ ‘ultimatum’ field experiments in which one participant lacks information. We find that, despite having veto power, the less informed are vulnerable to inequity. When all are informed, we see a typical resource split (60% initiator–40% responder) that balances an initiator’s advantage with a responder’s willingness to punish greed. When instead responders have only a resource forecast upon which to base decisions, the fully informed initiators get 80% of resources for conditions of resource scarcity. Thus, despite each of the stakeholder types having an unquestioned ‘seat at the table’, information asymmetries make bargaining outcomes more unequal. Our results are widely relevant for adaptation involving the joint use of information, and suggest that equity can rise with dissemination of scientific outputs that are integral in adaptation.

 

Impact of a randomized controlled trial in arsenic risk communication on household water-source choices in Bangladesh

Lori Bennear, Alessandro Tarozzi, Alexander Pfaff, Soumya Balasubramanya, Kazi Matin Ahmed, Alexander van Geen
Journal of Environmental Economics and Management 65 (2013) 225–240

PDF link iconWe conducted a randomized controlled trial in rural Bangladesh to examine how household drinking-water choices were affected by two different messages about risk from naturally occurring groundwater arsenic. Households in both randomized treatment arms were informed about the arsenic level in their well and whether that level was above or below the Bangladesh standard for arsenic. Households in one group of villages were encouraged to seek water from wells below the national standard. Households in the second group of villages received additional information explaining that lower-arsenic well water is always safer and these households were encouraged to seek water from wells with lower levels of arsenic, irrespective of the national standard. A simple model of household drinking-water choice indicates that the effect of the emphasis message is theoretically ambiguous. Empirically, we find that the richer message had a negative, but insignificant, effect on well-switching rates, but the estimates are sufficiently precise that we can rule out large positive effects. The main policy implication of this finding is that a one-time oral message conveying richer information on arsenic risks, while inexpensive and easily scalable, is unlikely to be successful in reducing exposure relative to the status-quo policy.