Forest conservation on a budget: Redesigning payments for ecosystem services in Mexico to increase cost-effectiveness

Mexico’s government-financed forest protection program, Pago por Servicios Ambientales (PSA), is one of the largest Payments for Ecosystem Services (PES) programs worldwide. Implemented nationally by the forestry commission (CONAFOR), PSA aims to reduce Mexico‚Äôs pervasive deforestation to mitigate climate change and generate other environmental benefits (e.g., water, biodiversity) by providing annual payments conditional on maintaining forest cover. Many studies find that PSA is effective at reducing deforestation and rural poverty. However, PSA funding has declined sharply recently. This project aims to build a researcher-policymaker partnership to test promising policy design changes to the PSA contract and to strengthen local policymaker capacities to generate and use locally-grounded and rigorous evidence.  Specifically, we will pilot test the impact of randomly requiring PSA participants to enroll all or most of their eligible forested landholdings (i.e. full enrollment requirement), an evidence informed innovation in PES schemes that was previously tested in a randomized trial in Uganda (Jayachandran et al. 2017, https://doi.org/10.1126/science.aan0568), but is not used in PSA or most other national PES programs. In partnership with CONAFOR, a local conservation NGO (Natura y Ecosistemas Mexicanos), and Mexico’s Innovations for Poverty Action (IPA) Country Office, we will pilot a  “full enrollment” PSA modified contract among a cohort of PSA applicants who were rejected due to budget constraints in one municipality of Selva Lacandona (Chiapas). We will assess the treatment’s impact on program take-up rates, avoided deforestation (CO2 abated equivalent), and participants’ income. This pilot will inform a full-scale Randomized Control Trial (RCT) in Selva Lacandona.