Journal of Development Economics 97 (2012) 427–436
We estimate neighbor interactions in deforestation in Costa Rica. To address simultaneity and the presence of spatially correlated unobservables, we measure for neighbors’ deforestation using the slopes of neighbors’ and neighbors’ neighbors’ parcels. We find that neighboring deforestation significantly raises the probability of deforestation. Policies for agricultural development or forest conservation in one area will affect deforestation rates in non-targeted neighboring areas. Correct estimation of the interaction reverses the naive estimate’s prediction of multiple equilibria.
Resources 2007 volume 165:20-22
Even a perfect measure of the ecosystem services provided by each parcel enrolled in a PES program would be insufficient to measure the overall effectiveness of the program. The simple reason is that if a PES program does not lead to an increase in the provision of ecosystem services compared to what would have happened in the absence of the program—that is, the baseline or “counterfactual”—then it has not accomplished anything. Imagine a PES program focused on forest conservation that makes payments to managers of ecologically rich forest land, who have no incentive to clear the land because it is illsuited for logging, agriculture, or urbanization. Payments to these managers would have little impact on deforestation because the risk of clearing was minimal to begin with. In contrast, payments to managers who have incentives to clear their land would be much more likely to have an impact.